As shares of Starry Group Holdings Inc. (STRY, Financial) continue to decline, Chase Coleman (Trades, Portfolio), founder of Tiger Global Management and one of the late Julian Robertson (Trades, Portfolio)’s former “tiger cubs,” has disclosed over the past several weeks further reductions in his stake.
The guru’s New York-based hedge fund, which was established in 2001, is known for focusing on small-cap stocks and technology startups, having been an early investor in companies like Facebook parent Meta Platforms Inc. (META, Financial) and Spotify Technology SA (SPOT, Financial).
This strategy has not worked out very well for the hedge fund this year, however. Reuters reported Coleman’s firm recorded a 50% decline in its flagship fund for the first half of 2022 as worries over the Federal Reserve’s tightening monetary policy and surging inflation crippled many of the growth and tech stocks in its portfolio.
Due to the meltdown in the tech sector, Coleman slashed or completely exited most of Tiger Global’s holdings during the second quarter.
Starry Group stake
According to GuruFocus Real-Time Picks, a Premium feature based on 13D, 13G and Form 4 filings, Coleman trimmed the Starry Group (STRY, Financial) position by a combined 3.88%, selling a total of 743,482 shares of the Boston-based internet company on Sept. 28, Oct. 5 and Oct. 10. The stock traded for an average price of $1.68 per share on the day of the first transaction and had fallen to $1.04 on the day of the most recent transaction.
He now holds a total of 18.61 million shares, which account for 0.16% of the equity portfolio. GuruFocus estimates Coleman has lost 79.40% on the investment since establishing it in the first quarter.
The company, which provides fixed wireless broadband internet services, has a $168.47 million market cap; its shares were trading around $1.01 on Wednesday with a price-book ratio of 26.56 and a price-sales ratio of 3.35.
After an initial increase, the stock has tumbled nearly 90% since going public via special purpose acquisition company on March 29.
Financial results and outlook
Starry Group posted its second-quarter results on Aug. 9.
During the three months ended June 30, revenue grew 52.3% from the prior-year quarter to $7.8 million. The company recorded a net loss of $36.3 million, or a loss of 22 cents per share, which was an improvement from a year ago.
The company attributed its strong performance to a 19.6% year-over-year increase in the number of homes serviceable, which was 5.7 million at the end of the quarter. The growth came on the back of network improvements and expansion in existing markets.
It also noted a net addition of 9,703 customer relationships. In total, customer relationships came to 80,950 at the end of the period, growing 69.4% year over year.
In a statement, co-founder and CEO Chet Kanojia praised the company’s “laser-focused” execution.
“For the second quarter in a row, our team has hit our customer growth and network expansion targets, even amidst challenging macroeconomic headwinds in what is acknowledged historically as a seasonally soft quarter for the industry,” he said. “Our disciplined approach to driving efficiencies in our business through technology innovation has created a strong foundation to continue to accelerate and grow the business.”
Starry is planning to launch its services in Las Vegas during the third quarter. Based on its performance so far, Alex Moulle-Berteaux, the company’s co-founder and chief operating officer, said management is confident of its continued success.
“Our team’s ability to consistently execute against our business goals gives us the confidence that we can continue to scale and accelerate our growth cadence on customer relationships, network deployment, customer satisfaction and continue to meaningfully expand digital access in underserved communities through Starry Connect and the Affordable Connectivity Program,” he said.
Looking ahead, Chief Financial Officer Komal Misra said the company is “on strong footing to realize steady increases in revenue, net income and Ebitda over time.”
Financial strength and profitability
GuruFocus rated Starry Group’s financial strength 2 out of 10, weighed down by low debt-related ratios and an Altman Z-Score of -3.53 that warns it could be at risk of bankruptcy if it does not improve its liquidity.
The company’s profitability did not fare as well, scoring a 1 out of 10 rating on the back of negative margins and returns on equity, assets and capital that are underperforming versus a majority of competitors.
Guru ownership
With an 11.16% stake, Coleman is by far Starry Group’s largest guru shareholder. George Soros (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) also have positions in the stock as of the second quarter.
Portfolio composition
Over half of Coleman’s $11.93 billion equity portfolio, which was composed of 73 stocks as of the end of the second quarter, was invested in the technology sector, followed by smaller exposures to the consumer cyclical, communication services and financial services spaces.
According to the 13F filing for the three months ended June 30, other communication services companies the guru was invested in as of June 30 were Meta Platforms, Alphabet Inc. (GOOGL, Financial), DoorDash Inc. (DASH, Financial), Zillow Group Inc. (Z, Financial), Roblox Corp. (RBLX, Financial), Spotify, Twilio Inc. (TWLO, Financial)and Nextdoor Holdings Inc. (KIND, Financial).
Investors should be aware that 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
