Chase Coleman (Trades, Portfolio)'s Tiger Global Management is one of the most successful hedge funds of all time. Its flagship long-short equity fund has compounded investors' capital at 21% per annum after fees for the past 20 years.
An investment in the fund at inception would have grown 43 times net of fees over the last two decades, compared to a growth rate of five times for an investment in the S&P 500 index over the same period.
In comparison, the long-only version of the equity fund has returned 22% since its launch in October 2013. Since its founding, the group's private equity business has generated a 33% growth fund internal rate of return.
Last year, Tiger Global earned its investors $10.4 billion, more than any other hedge fund. With that in mind, I thought it might be interesting to take a look at the top holdings of this legendary hedge fund to see if we could learn anything from these positions.
Hedge fund holdings
The information below is based on the hedge fund's 13F report for the fourth quarter of 2020. The report details positions across the firm, but it does not profile individual investments on a fund-by-fund basis.
What's more, 13Fs only contain details on equity positions. They do not detail private equity, cash, or credit holdings. This means they only provide a limited picture of fund holdings. Nevertheless, they can be a great place to start when trying to dig up holdings that may be worthy of further research.
The largest holding across the firm at the end of the fourth quarter of last year was Chinese e-commerce giant JD.com Inc. (JD, Financial). At the end of December, Tiger Global owned just under 52 million shares of the business, a position worth $4.5 billion, or 11.6% of its total equity holdings.
This was near twice the size of the next most significant position, Microsoft Corp (MSFT, Financial). At the end of the quarter, Tiger Global owned just under 12 million Microsoft shares, giving it a 7% weight in the equity portfolio.
Looking at the equity positions of Tiger Global according to its latest 13F report, two things become immediately apparent to me. First of all, the fund has 35% of total equity assets in its top five positions. This is notable because the 13F details just under 100 different equity positions in total. Most of the assets are invested in the top 20 equity holdings. Moving down the list, some positions have just a few million dollars invested. In at least two cases, there is less than $500k invested.
As a 13F only gives a snapshot into a hedge fund's portfolio at any one point in time, these smaller positions should be disregarded as they may be nothing more than short-term trades or hedges. Still, it is interesting to see the level of concentration at the top of the portfolio.
The second interesting trait of the Tiger Global equity portfolio is that of the top five holdings, just two, Microsoft and Amazon (AMZN, Financial), are Western companies. All of the top five holdings are tech stocks, but apart from Amazon and Microsoft, the rest are Chinese internet firms. This indicates where Coleman and his team of traders and portfolio managers believe they will see the best returns over the next few years. Asian technology champions seem to be their investment of choice. The strategy has worked out incredibly well over the past 12 to 24 months.
It seems the hedge fund also believes its larger holdings are still undervalued, as it was adding to positions in Microsoft, Amazon and SEA LTD. in the fourth quarter.
Disclosure: The author owns no share mentioned.
Read more here:
- Value Hedge Funds Tend to Have More Concentrated Portfolios Than Growth Funds
- Why I Sold Wells Fargo
- Why Hedge Funds Are Piling Into SPACs
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