Coatue Management recently disclosed its portfolio updates for the fourth quarter of 2020, which ended on Dec. 31.
Founded in 1999 and headquartered in New York, Coatue Management is an employee-owned private hedge fund sponsor. It launches and manages various hedge funds for clients and is perhaps best known for its tech-focused hedge fund. The firm mainly invests in U.S. and non-U.S. publicly traded equity securities, but it also has short positions and investments in private equity and hedging markets. Chief Investment Officer Philippe Laffont (Trades, Portfolio), who founded the firm after leaving Tiger Management, takes a top-down approach to stock picking and focuses on the information technology sector.
Based on its investing criteria, the firm's top buys for the quarter were for DoorDash Inc. (DASH, Financial), Sunrun Inc. (RUN, Financial), Uber Technologies Inc. (UBER, Financial) and XPeng Inc. (XPEV, Financial).
DoorDash
The firm established a new holding worth 8,750,705 shares in DoorDash (DASH, Financial), impacting the equity portfolio by 4.67%. Shares traded for an average price of $159.61 during the quarter.
DoorDash is a food delivery service that connects customers with local restaurants. Launched in Palo Alto, California in 2012, the company has since grown to have the largest share of the third-party food delivery market in the U.S.
On Feb. 22, shares of DoorDash traded around $178.07 for a market cap of $56.57 billion. Since its initial public offering on Dec. 9, the stock has lost 2%.
The company has a financial strength rating of 5 out of 10. Following its highly successful IPO, DoorDash's cash-debt ratio is 4.16, which is higher than 52% of industry peers. The operating margin of -69.60% and net margin of -75.37% indicate that the company is still far from being profitable.
Sunrun
The firm saw an increase of 10,431,994 shares, or 126.28%, in its Sunrun (RUN, Financial) investment for a total holding of 18,692,965 shares due to Sunrun's acquisition of Vivint Solar Inc. (VSLR), which the firm also owned shares of. Sunrun got a boost of 2.71% in the equity portfolio as a result. During the quarter, shares of Sunrun traded for an average price of $61.80.
Based in San Francisco, Sunrun is a home solar panel and battery storage company. It provides solar panels, batteries, installation, education and other solar power equipment and services through both rental and purchase agreements to residential homeowners in 23 U.S. states.
On Feb. 22, shares of Sunrun traded around $63.39 for a market cap of $12.52 billion. According to the GuruFocus Value chart, the stock is significantly overvalued.
The company has a financial strength rating of 2 out of 10 and a profitability rating of 3 out of 10. The Altman Z-Score of 1.73 and Piotroski F-Score of 2 out of 9 indicate poor business operations. The three-year revenue growth rate is 15.1%, while the three-year Ebitda growth rate is 29.9%.
Uber Technologies
The firm upped its stake in Uber Technologies (UBER, Financial) by 9,333,658 shares, or 78.88%, for a total investment of 21,166,062 shares. The trade impacted the equity portfolio by 1.78%. Shares traded for an average price of $44.94 during the quarter.
Most famous for being the world's largest ridesharing company, Uber also offers food delivery, electric bikes and scooters and has various technology projects. The company is based in San Francisco and operates in 63 countries worldwide.
On Feb. 22, shares of Uber traded around $55.31 for a market cap of $102.41 billion. Since its IPO on May 9, 2019, the stock is up 31%.
The company has a financial strength rating of 4 out of 10 and a profitability rating of 1 out of 10. The Altman Z-Score of 2.05 and Piotroski F-Score of 3 out of 9 put the company in the grey zone in terms of financial strength. The operating margin of -40.26% and net margin of -56.04% indicate the company is not yet profitable.
XPeng
The firm established a new holding of 10,379,425 shares in XPeng (XPEV, Financial), impacting the equity portfolio by 1.66%. During the quarter, shares traded for an average price of $37.02.
On Feb. 22, shares of XPeng traded around $38 for a market cap of $27.10 billion. Since the company's IPO in late August, the stock has gained 79%.
XPeng, also known as Xiaopeng Motors or XMotors.ai, is a Chinese electric vehicle manufacturer headquartered in Guangzhou in China and Mountain View, California in the U.S. It builds smart electric cars with "Internet DNA" geared toward younger generations.
The company has a financial strength rating of 5 out of 10. Following its IPO, the cash-debt ratio is strong at 7.63. The operating margin of -116.86% and net margin of -80.24% indicate the company is not yet profitable.
Portfolio overview
As of the quarter's end, the equity portfolio consisted of holdings in 76 stocks valued at $26.73 billion. The firm made 17 new buys, sold out of 14 stocks and added to or reduced several other positions for a turnover of 23% during the period.
The top holdings were The Walt Disney Co. (DIS, Financial) with 7.49% of the equity portfolio, PayPal Holdings Inc. (PYPL, Financial) with 6% and Tesla Inc. (TSLA, Financial) with 5.68%. In terms of sector weighting, the firm was most invested in technology, communication services and consumer cyclical.
Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Portfolio updates reflect only common stock positions as per the regulatory filings for the quarter in question and may not include changes made after the quarter ended.
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