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5 Software Companies These 2 Tiger Cubs Agree On

An overview of Chase Coleman and Philippe Laffont's common holdings

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Jun 09, 2021
Summary
  • These gurus both had Julian Robertson as a mentor.
  • Their portfolios are heavily invested in tech stocks.
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Legendary investor

Julian Robertson (Trades, Portfolio) is not just known for his leadership of Tiger Management, but also for taking a group of protégés under his wing. These student investors, many of whom later opened their own practices, are commonly referred to as “tiger cubs.”

As they were mentored by the same investor, it is no surprise that some of these guru fund managers have similar styles and even invest in some of the same stocks. An example of this is

Chase Coleman (Trades, Portfolio), who now heads up Tiger Global Management, and Philippe Laffont (Trades, Portfolio), leader of Coatue Management.

As of the end of the first quarter, the Aggregated Portfolio, a Premium GuruFocus feature, found both gurus have positions in Snowflake Inc. (

SNOW, Financial), Uber Technologies Inc. (UBER, Financial), Square Inc. (SQ, Financial), CrowdStrike Holdings Inc. (CRWD, Financial) and Shopify Inc. (SHOP, Financial), among other stocks.

Snowflake

Coleman boosted his Snowflake (

SNOW, Financial) stake by 27.26% in the first quarter, while Laffont upped his holding by 28.88%. The stock has a combined weight of 7.77% in their equity portfolios.

The Bozeman, Montana-based company, which operates a cloud-based data warehouse, has a $74.34 billion market cap; its shares were trading around $250.59 on Wednesday with a price-book ratio of 14.97 and a price-sales ratio of 87.08.

The price chart shows the stock has fallen 1.35% since its initial public offering in September 2020.

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GuruFocus rated Snowflake’s financial strength 7 out of 10. In addition to adequate interest coverage, the Altman Z-Score of 45.93 indicates the company is in good standing even though its Sloan ratio is indicative of poor earnings quality.

The company’s profitability did not fare as well, scoring a 1 out of 10 rating on the back of negative margins and returns that underperform a majority of its competitors.

According to GuruFocus, Coleman has lost an estimated 1.73% on his investment since the third quarter of 2020. Laffont has gained roughly 2.33% over the same period.

Of the gurus invested in Snowflake,

Warren Buffett (Trades, Portfolio) has the largest stake with 2.12% of outstanding shares. Frank Sands (Trades, Portfolio), Baillie Gifford (Trades, Portfolio) and Steve Mandel (Trades, Portfolio) also own the stock.

Uber Technologies

In the first quarter, Coleman reduced his Uber (

UBER, Financial) position by 24.78%, while Laffont trimmed his holding by 36.93%. They have a combined equity portfolio weight of 6.6% in the stock.

The ridesharing company headquartered in San Francisco, which also offers food and package delivery services, has a market cap of $93.05 billion; its shares were trading around $49.49 on Wednesday with a price-book ratio of 6.82 and a price-sales ratio of 8.46.

According to the median price-sales ratio chart, the stock is overvalued currently.

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GuruFocus rated Uber’s financial strength 4 out of 10. As a result of issuing approximately $4.7 billion in new long-term debt over the past three years, the company has poor interest coverage. The low Altman Z-Score of 1.75 also warns it could be at risk of going bankrupt 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 that underperform a majority of industry peers. Uber has a low Piotroski F-Score of 2, indicating is operating conditions are in poor shape. The company has also recorded losses in operating income as well as declines in revenue per share over the past several years.

GuruFocus estimates Coleman has gained 23.51% on his investment since the second quarter of 2019, while Laffont has gained roughly 13.57% over the same period.

With a 1.79% stake, Sands is Uber’s largest guru shareholder. Other top guru investors include

Spiros Segalas (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Daniel Loeb (Trades, Portfolio) and Lee Ainslie (Trades, Portfolio).

Square

Coleman increased his Square (

SQ, Financial) holding by 88.49% in the first quarter, while Laffont curbed his stake by 36.76%. They have a combined portfolio weight of 5.23% in the stock.

The San Francisco-based company, which provides payment processing services to merchants, has a $96.78 billion market cap; its shares were trading around $212.54 on Wednesday with a price-earnings ratio of 299.35, a price-book ratio of 41.77 and a price-sales ratio of 8.21.

Based on the GF Value Line, which considers historical ratios, past performance and future earnings projections, the stock is modestly undervalued currently.

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Square's financial strength was rated 6 out of 10 by GuruFocus. As a result of issuing approximately $3.5 billion in new long-term debt over the past three years, the company has poor interest coverage. It has a robust Altman Z-Score of 8.13, however, indicating it is in good standing even though assets are building up at a faster rate than revenue is growing. The return on invested capital has also fallen below the weighted average cost of capital, indicating it struggles to create value as the company grows.

The company’s profitability scored a 3 out of 10 rating despite having margins and returns that outperform over half of its competitors. Square is also supported by a moderate Piotroski F-Score of 4, suggesting business conditions are stable, but has recorded losses in operating income over the past several years.

GuruFocus data shows Coleman has lost an estimated 3.33% on his investment since the fourth quarter of 2020. Laffont has gained roughly 90.08% since the first quarter of 2016.

Catherine Wood (Trades, Portfolio) is the company’s largest guru shareholder with 2.41% of outstanding shares. Sands, Segalas, Mandel and Ken Fisher (Trades, Portfolio) also have significant stakes.

CrowdStrike

Coleman left his CrowdStrike (

CRWD, Financial) stake unchanged during the first quarter, while Laffont slashed his holding by 53.45%. The gurus have a combined portfolio weight of 5.01% in the stock.

The cybersecurity company headquartered in Sunnyvale, California has a market cap of $48.61 billion; its shares were trading around $215.31 on Wednesday with a forward price-earnings ratio of 777.91, a price-book ratio of 57.73 and a price-sales ratio of 47.58.

The median price-sales chart suggests the stock is overvalued.

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GuruFocus rated CrowdStrike’s financial strength 5 out of 10. Despite having a high Altman Z-Score of 14.66, the Sloan ratio indicates the company has poor earnings quality.

The company’s profitability scored a 1 out of 10 rating on the back of negative margins and returns that underperform a majority of industry peers. CrowdStrike is supported by a moderate Piotroski F-Score of 4, however.

Coleman has gained roughly 135.3%% on his investment since the second quarter of 2019. GuruFocus data shows Laffont has gained around 225.17% since the first quarter of 2020.

Of the gurus invested in CrowdStrike, Coleman has the largest stake with 3.37% of its outstanding shares. Laffont has the third-largest holding with 0.82% of outstanding shares. Segalas and

Jim Simons (Trades, Portfolio)’ Renaissance Technologies also have significant holdings.

Shopify

During the first quarter, Coleman increased his Shopify (

SHOP, Financial) holding by 167.03% while Laffont trimmed his holding by 41.06%. They have a combined equity portfolio weight of 2.89% in the stock.

The Canadian e-commerce company has a $152.27 billion market cap; its shares were trading around $1,221.31 on Wednesday with a price-earnings ratio of 91.38, a price-book ratio of 16 and a price-sales ratio of 41.16.

According to the GF Value Line, the stock appears to be significantly overvalued currently.

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GuruFocus rated Shopify’s financial strength 8 out of 10, driven by a comfortable level of interest coverage and a robust Altman Z-Score of 54.4. The ROIC also eclipses the WACC, indicating good value creation. The company may be becoming less efficient, however, since assets are building up at a faster rate than revenue is growing.

The company’s profitability scored a 3 out of 10 rating despite being supported by strong margins and returns that outperform a majority of competitors. Shopify also has a moderate Pitroski F-Score of 5.

Since establishing the position in second-quarter 2015, GuruFocus estimates Coleman has gained 20.72% on the investment. Laffont has gained approximately 68.98% since entering the position in the second quarter of 2017.

With a 4.72% stake,

Baillie Gifford (Trades, Portfolio) is the company’s largeset guru shareholder. Mandel, Segalas, Sands and Wood also have large positions in the stock.

Portfolio composition

Coleman’s $43.47 billion equity portfolio, which was composed of 120 stocks as of the end of the first quarter, is largely invested in the technology, consumer cyclical and communication services sectors. The guru’s New York-based hedge fund focuses on small-cap stocks and technology companies, especially startups.

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Laffont’s $18.24 billion equity portfolio, which consisted of 66 stocks as of March 31, is heavily invested in the technology and communication services sectors. The investor’s New York-based firm takes a fundamental analysis approach to investing with both long-short strategies and top-down stock picking.

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Disclosures

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
The views of this author are solely their own opinion and are not endorsed or guaranteed by GuruFocus.com
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