Valiant Capital’s Performance, Holdings, and India Investments

Christopher R. Hansen founded Valiant Capital Management in 2008, after having worked as Managing Director of Blue Ridge Capital, led by John Griffin, a Tiger Cub. In 2012, the fund had $2.7 billion in assets and had been closed to investors until 2016. Even though it opened to new capital in 2016, it still remained relatively small and has around $2.77 billion in regulatory assets under management. The fund explained its decision to remain small, stating that it would allow it to be more active.

The fund rose to prominence due to its investments in start-ups, including several tech unicorns – start-ups valued at over $1.0 billion. Among Valiant’s most profitable investments were Facebook Inc (NASDAQ:FB) and Alibaba Group Holdings Ltd (NYSE:BABA), which netted gains of over 30% each. According to Fortune, last year Valiant had 23 investments in various start-ups including Dropbox, Evernote, Pinterest and Uber.

Even though Valiant only opened to new money in 2016, it had launched another fund in 2014. The Wall Street Journal reported that the fund, called Valiant JM India Opportunities Fund, planned to raise up to $900 million and was going to invest in distressed assets in India. Valiant JM India Opportunities was founded in partnership with JM Financial, which had experience in reconstructing bad assets.

The decision to invest in India came after the Bharatiya Janata Party-led government and prime minister Narendra Modi promised to increase foreign investment and to end the red tape that was stalling billions of dollars in public projects, as well as reform the labor market. In addition, India’s central bank had started to put more pressure on state-controlled banks to clear up their problem loans. With higher interest rates and slowing economic growth, many Indian companies had not been able to service their debt, but with anticipation of economic reforms and revival, investors flocked into the Indian distressed market hoping to capitalize on the new opportunities. Among Valiant’s investments in India is Mahindra First Choice Wheels Ltd., Mahindra Group’s used-car retail business, which in 2015 raised $15 million from Valiant.

Valiant Capital Management is also one of some 650 funds that we track at Insider Monkey as part of our small-cap investment strategy. Every quarter we analyze the 13F portfolios of the funds in our database and identify their collective sentiment towards thousands of stock. We then select several stocks and share them with our premium subscribers in quarterly or monthly newsletters (see more details). Since February 2016, our strategy managed to return over 45%.

In its latest 13F filing with the SEC, Valiant Capital reported a portfolio worth $1.80 billion as of the end of June, which contained 17 positions, including one holding containing ‘Call’ options underlying shares of Apple Inc (NASDAQ:AAPL) and three ‘Put’ positions underlying shares of three exchange-traded funds: PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ), iShares Russell 2000 Index (ETF) (NYSEARCA:IWM), and iShares MSCI Emerging Markets Indx (ETF) (NYSEARCA:EEM). The biggest chunk of Valiant’s 13F portfolio was invested in technology stocks, which amassed over 40% of the value. The fund held shares of seven tech companies heading into the third quarter and in this article we are going to take a closer look at them.

1. Zillow Group, Inc. (NASDAQ:Z)

Zillow Group, Inc. (NASDAQ:Z) is Valiant Capital Management’s largest position, which contains 1.49 million shares worth $73.06 million at the end of June. During the second quarter, the fund cut its stake in the company by 10%. Another investor bullish on Zillow Group, Inc. (NASDAQ:Z) is billionaire Jim Simons’ Renaissance Technologies, which initiated a stake containing 161,800 shares during the second quarter.

Zillow Group, Inc. (NASDAQ:Z), which owns and operates a portfolio of real estate platforms, has recently reported its financial results for the second quarter, which included EPS of $0.04 and revenue of $266.85 million, which beat the estimates by $0.05 and $4.35 million respectively; the revenue increased by 28% on the year and set a new record for the company. Zillow Group, Inc. (NASDAQ:Z) also said that it registered an increase of 6% year-over-year in the number of average monthly unique users, which totaled 178 million. For the third quarter, Zillow Group, Inc. (NASDAQ:Z) expects revenue in the range of $273 million to $278 million.

2. Facebook Inc (NASDAQ:FB)

After having reduced its position in Facebook Inc (NASDAQ:FB) by 19% between April and June, Christopher Hansen’s fund remained with some 479,600 shares valued at $72.41 million. Other prominent shareholders of Facebook Inc (NASDAQ:FB) include Philippe Laffont’s Coatue Management, Dan Loeb’s Third Point, and Daniel S. Och’s OZ Management.

As stated earlier, Valiant has held shares of Facebook Inc (NASDAQ:FB) since before the company’s IPO and it first publicly disclosed holding shares of the social media giant in its 13F for the third quarter of 2012, when the company went public. Since its IPO, Facebook Inc (NASDAQ:FB)’s stock has surged by over 680%. The company has been one of the most successful at monetizing its platforms and integrating advertisements and it still has more room to grow, given that the monetization of its Messenger platform is still in process.

3. Amazon.com, Inc. (NASDAQ:AMZN)

In Amazon.com, Inc. (NASDAQ:AMZN), Valiant reported a $71.49 million stake that contains 73,850 shares, down by 4% over the quarter. Billionaire Ken Fisher’s Fisher Asset Management also trimmed its position in Amazon.com, Inc. (NASDAQ:AMZN) by 17% to 1.70 million shares during the last quarter.

Valiant has held shares of Amazon.com, Inc. (NASDAQ:AMZN) since the end of 2014 and has seen the stock rally by over 200%. In its financial report for the first quarter of 2015, Amazon reported the financial results of its cloud segment, Amazon Web Services, for the first time and in its latest report it showed that AWS sales advanced by 42% on the year to $4.10 billion in the second quarter of 2017. The retail giant has also ventured into several other businesses in the last couple of years, including logistics and, most recently, ticketing. Reuters has recently reported that Amazon.com, Inc. (NASDAQ:AMZN) is looking to set partnerships with US venue owners to sell event tickets, which would allow it to enter into a highly lucrative market currently dominated by Ticketmaster.

4. Apple Inc. (NASDAQ:AAPL)

During the second quarter, Valiant Capital Management had unloaded 102,800 shares of Apple Inc. (NASDAQ:AAPL) and owned 464,000 shares worth $66.83 million at the end of June. In addition, the fund owns ‘Call’ options underlying 4.0 million shares of Apple. The stock of the iPhone maker have jumped by 38% since the beginning of the year, driven by positive financial results and strong iPhone sales. In its most recent quarter, the company sold slightly over 41 million iPhones, beating the expectations of 40.7 million, even though consumers usually anticipate a new model around this time of the year and hold off on buying an iPhone. Apple’s latest flagship smartphone, the iPhone 8, is expected to be announced this fall.

Apple Inc. (NASDAQ:AAPL) has also increased its dividend earlier this year to $0.63 from $0.57 and its stock currently has an yield of 1.58%. Other investors bullish on the company include Fisher Asset Management, Coatue Management, and Diamond Hill Capital.

5. Alphabet Inc (NASDAQ:GOOG)

Valiant Capital also held around 71,400 shares of Alphabet Inc (NASDAQ:GOOG)’s class C stock heading into the third quarter, down by 17% compared to the end of March; the value of the position amounted to $64.87 million. On the other hand, Phill Gross And Robert Atchinson’s Adage Capital Management increased its stake in Alphabet Inc (NASDAQ:GOOG) by 60,750 shares and owns 451,400 class C shares as of the end of the second quarter.

Alphabet Inc (NASDAQ:GOOG) has been included in Valiant’s equity portfolio since the third quarter of 2015 and the stock has grown by over 45% during this time. The stock is poised to grow further this year, according to MKM analyst Rob Sanderson. Sanderson has recently hiked its price target on Alphabet Inc (NASDAQ:GOOG) to $1,210, saying that the tech giant should register a higher revenue due to higher contributions from YouTube, which has faced some disruption as corporations were concerned about some videos that contained their ads.

6. Priceline Group Inc (NASDAQ:PCLN)

Priceline Group Inc (NASDAQ:PCLN) is represented in Valiant’s 13F portfolio by a $63.49 million stake that contained some 33,900 shares at the end of June; the fund sold 7,600 shares during the second quarter. Principal Global Investors’ Columbus Circle Investor is another shareholder of Priceline Group Inc (NASDAQ:PCLN), which reported holding 52,800 shares in its latest 13F filing.

Priceline Group Inc (NASDAQ:PCLN) has reported a great second-quarter, with EPS of $15.14, topping the estimates of $14.20, while revenue of $3.02 billion increased by 18% on the year and was $30 million higher than expected. However, the company’s third-quarter guidance was for EPS between $32.40 and $34.10, which failed to beat the consensus estimate of $34.14. The disappointing guidance sent Priceline’s stock lower and given that it still hasn’t fully recovered, it might represent an interesting opportunity for long-term investors.

7. Snap Inc (NYSE:SNAP)

In Snap Inc (NYSE:SNAP), Christopher Hansen’s fund reduced its position by 58% during the second quarter and currently holds 671,100 shares valued at $11.93 million. One of the top shareholders of Snap Inc (NYSE:SNAP) is Coatue Management, which added 940,900 shares to its stake during the second quarter and amassed 21.90 million shares at the end of June.

Owner and operator of Snapchat, Snap Inc (NYSE:SNAP) went public in March in a very hyped IPO. However, since the stock went public it lost nearly 50%, as the company missed both top- and bottom-line estimates in both financial reports disclosed since the IPO. Investors were also disappointed to see weak user growth numbers, with second-quarter Daily Active Users amounting to 173 million, up by 7.0 million sequentially, but lower than than the expected 175.20 million. The company managed to grow its Average Revenue per User (ARPU) to $1.05 from $0.50 a year earlier, but its still significantly behind its peer Facebook Inc (NASDAQ:FB), which has an ARPU of $4.57. Nevertheless, the company posted some growth, even though it was lower than expected and the drop in shares could be attributed to an overreaction following a lot of hype surrounding the company after the IPO. In this way, Snap Inc (NYSE:SNAP) might be a good investment for long-term investors.

Disclosure: none