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Chase Coleman Tiger Global's Largest Buys, YNDX, CCE, GOOG, LNKD, RBCN

August 16, 2011 | About:

Holly LaFon

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Chase Colman is the founder of Tiger Global Management LCC. Coleman learned from the legendary Julian Robertson, inventor of the hedge fund, and is one of his incredibly successful protégés, dubbed Tiger Cubs. Coleman frequently invests in small caps and technologies. His second quarter portfolio is heavy on Internet stocks, including a large stake in Russian search engine Yandex. He also became the first Guru to invest in the controversial LinkedIn social media site. His top five buys this quarter are:Yandex N.V. (YNDX), CocaCola Enterprises Inc. (CCE), Google Inc. (GOOG), LinkedIn (LNKD), Rubicon Technology Inc. (RBCN). Yandex N.V. (YNDX)

Yandex N.V. is a Russian IT company that operates the Russian version of Google (GOOG) and Baidu (BIDU). Blog searches offered by the company's website include feeds from leading blog hosting and social networking sites in Russia, including LiveJournal, Vkontakte and Facebook. The company also offers a wide range of specialized search, personalized and location-based services, including Yandex.News, Yandex.Market, Yandex.Mail and Yandex.Maps. Yandex N.V. and is headquartered in Moscow, the Russian Federation. Yandex N.V. has a market cap of $9.88 billion; its shares were traded at around $30.66. The company has a P/E ratio of 66.07.

Yandex has a 64% market share of the Russian search engine space and has been ranked the most popular web site in Russia, with 56 million users. The company held an IPO in May 2011 where it opened at $35 per share and raised $1.3 billion.

JP Morgan recently recommended buying Yandex and Mail.re Group, Bloomberg reported. An analyst there said that Yandex may increase revenues due to accelerated online advertising growth. According to the IAB’s 2010 AdEx report, market growth for Internet advertising grew 37% in Russia.

Yandex had significant growth for their first quarter on the American stock exchange. Second-quarter revenue grew 57% year over year, adjusted EBITDA rose 32% and operating margin was 30.3%. The company also saw a 41% year-over-year increase in its number of advertisers to 144,000.

Coleman bought 54,058,062 million shares of Yandex in the second quarter. The current price is $30.66.

CocaCola Enterprises Inc. (CCE)

Coca-Cola Enterprises is the world's largest marketer, distributor, and producer of bottle and can liquid nonalcoholic refreshment. Cocacola Enterprises Inc. has a market cap of $8.7 billion; its shares were traded at around $25.95 with a P/E ratio of 13.59 and P/S ratio of 1.3. The dividend yield of Cocacola Enterprises Inc. stocks is 1.94%.

CocaCola Enterprises reported revenue of $2.41 billion in the second quarter, up 22 percent year over year. Its second-quarter volume grew 4.5 percent, driven by growth in core trademark brands, sparkling flavors, solid execution and positive response to planned promotions. The company expects $475 to $500 million in free cash flow, with capital expenditures of approximately $400 million, for the full year 2011. As part of its $1 billion share repurchase program, the company bought $200 million of its share in the second quarter, for a total of $600 million in share repurchases so far.

Chase Coleman bought 1,906,000 shares of CocaCola Enterprises at an average price of $28.43.

Google Inc. (GOOG)

Google is a public and profitable company focused on search services. Google Inc. has a market cap of $181.68 billion; its shares were traded at around $562.13 with a P/E ratio of 19.29 and P/S ratio of 6.2. Google Inc. had an annual average earnings growth of 58.4% over the past 10 years.

Bill Nygren wrote at length about Google in his second-quarter shareholder letter: “Google (GOOG — $506) Google is the world's dominant Internet search engine. In 2007, its stock price hit an all-time high of $747. The company then earned just over $13 per share for a P/E of 56 times. At that point, the business was selling for $702, net of $45 per share in cash. That was still about 56 times earnings, net of interest income. Google is expected to earn $35 per share in 2012, and to end the year with $146 of cash per share. Therefore, net of that cash and its interest income, Google (GOOG) sells at $360—less than 11 times projected earnings. The S&P 500 trades at about 12 times expected 2012 earnings. That means the market is now valuing Google as a below-average business, yet Google's 2011 revenues and earnings are expected to be more than double their 2007 levels. Cash per share is expected to increase $100 over the five years ending next year. Clearly Google has been growing faster and generating more cash than the average business. And we expect Internet usage and search activity to continue growing. Google continues to improve its targeting algorithms, which makes Internet advertising—the source of virtually all of the company's profits—more valuable to its clients. Today Google's share of global search advertising revenue is approximately 80%, which is as high as it has ever been. Despite these positives, the stock, net of cash, has fallen by nearly half. We believe that paying less than a market multiple to buy a global leader in an above-average growth industry—especially when that company's free cash flow approximates reported earnings—is usually a very good investment.”

Today, Google announced that it would acquire Motorola Mobility for $40 per share in cash, or a total of out $12.4 billion, a premium of 63% to the closing price of Motorola Mobility. Google said in a statement that the acquisition of a dedicated Android partner would enable them to supercharge the Android ecosystem and enhance competition in mobile computing. It will run Motorola Mobility as a separate business.

Coleman has owned Google stock since the second quarter 2007 when it was at an average price of $486.85. He has sold out twice previously, once in the third quarter of 2008 and again in the second quarter of 2010. He reopened his position in the second quarter, buying 88,000 shares at an average price of $527.28.

LinkedIn (LNKD)

LinkedIn Corporation is an online professional network which allows members to create, manage, and share their professional identity online, build and engage with their professional network, access shared knowledge and insights, and find business opportunities. LinkedIn has a market cap of $8.62 billion; its shares were traded at around $88.4 with and P/S ratio of 35.46.

LinkedIn is one of the first Internet social media sites to go public. It has been the subject of much debate among investors, primarily because it has an $8.62 billion market cap and earned net income of $4.5 million in the second quarter and expects EBITDA of approximately $65 million - $70 million for the full fiscal year 2011. Revenue increased 120% year over year to $121 million. GAAP earnings per share was $0.04.

In the second quarter, the number of members of the site grew 61% year over year to 115.8 million, and page views increased 80% to 7.1 billion. LinkedIn opened an Asian regional headquarters in Singapore in May and a Northern Europe hub in Stockholm in June. It now has 12 offices outside the U.S. Turkish, Russian and Romanian versions of Linked in were also made available, for a total of nine language options.

Some believe that LinkedIn is overvalued and part of a growing Tech Bubble replay. GuruFocus writer Ben Strubel discusses the issue in his Are We in the Middle of Another Tech Bubble?, and Charles Mizrahi addresses it in his Hit the Books: This Time Is Not Different.

Coleman initially bought LinkedIn shares on the secondary market before the company’s IPO on May 19. According to SEC filings, Tiger Global bought 1,306,927 common shares from August 10, 2010 to April 15, 2011, for an aggregate amount of $29,796,007.50 or about $22.80 a share. Coleman bought 300,000 additional shares post IPO at $45 a share.

Rubicon Technology Inc. (RBCN)

Rubicon Technology Inc.is an advanced electronic materials provider that develops, manufactures and sells monocrystalline sapphire and other innovative crystalline products. The company’s products are integral parts of end markets such as light-emitting diodes (LEDs), radio frequency integrated circuits (RFICs) and blue laser diodes. Rubicon Technology Inc. has a market cap of $318.36 million; its shares were traded at around $14.1 with a P/E ratio of 5.81 and P/S ratio of 4.12.

In the second quarter, Rubicon reported revenues of $43 million, a 172% year over year increase, and a 13% sequential increase. It also grew its gross margin 63% year over year, and grew its operating margin 54% year over year. Rubicon has cash of $20 million on its balance sheet, as well as $14.6 million in total liabilities and no long-term debt.

On August 1, Rubicon fell below its 52-week low of $13.99 and traded for $13.87. Rubicon CEO Raja Parvez said in a statement, "Prolonged weakness in the LED backlighting market is now having an impact on demand for two through four inch diameter cores, we have limited visibility at the moment for new core sales and, given our polishing customers have ample core inventory at the moment, current pricing for two through four inch diameter cores is down as much as 60 percent sequentially. While we believe this situation will improve by the end of the quarter, it will have an impact on our third quarter results."

Rubicon’s board of directors recently authorized a $25,000,000 stock repurchase program. It has not reported buying any shares yet.

Coleman used to own 200,000 Rubicon shares at an average price of $27.46 in the third quarter of 2010. He sold them in the first quarter of 2011 at an average price of $22.69. In the second quarter he bought 750,000 at an average price of $23.54.


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