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 referred to as “tiger cubs.”
As they were influenced the same teacher, it is no surprise that some of these guru fund managers have similar investing 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 Robert Karr (Trades, Portfolio), leader of Joho Capital. Both gurus are known for their investments in tech and online media stocks.
According to the Aggregated Portfolio, a Premium GuruFocus feature, the two value investors both have positions in Adobe Inc. (ADBE, Financial), Dynatrace Inc. (DT, Financial), Uber Technologies Inc. (UBER, Financial), Microsoft Corp. (MSFT, Financial) and ServiceNow Inc. (NOW, Financial) as of the second quarter.
Adobe
Both gurus left their holdings in Adobe (ADBE, Financial) unchanged. Coleman holds 737,500 shares, while Karr has 5,610 shares. The combined equity portfolio weight is 1.27%.
The San Jose, California-based software company has a $274.77 billion market cap; its shares were trading around $578.75 on Tuesday with a price-earnings ratio of 47.76, a price-book ratio of 19.07 and a price-sales ratio of 18.42.
The GF Value Line suggests the stock is modestly overvalued currently based on its historical ratios, past performance and future earnings projections.
GuruFocus rated Adobe’s financial strength 7 out of 10, driven by a comfortable level of interest coverage and a robust Altman Z-Score of 16.55 that implies it is in good standing. The return on invested capital also overshadows the weighted average cost of capital, indicating value is being created as the company grows.
The company’s profitability scored a 9 out of 10 rating on the back of an expanding operating margin, strong returns on equity, assets and capital that outperform a majority of competitors and a high Piotroski F-Score of 8 out of 9, indicating conditions are healthy. Adobe also has a predictability rank of one out of five stars. According to GuruFocus, companies with this rank return an average of 1.1% annually over a 10-year period.
GuruFocus says Coleman has gained an estimated 27.81% on his investment since the second quarter of 2018, while Karr has gained 19.61% since establishing the holding in the fourth quarter of 2020.
PRIMECAP Management (Trades, Portfolio) is the company’s largest guru shareholder with 1.54% of outstanding shares. Other top guru investors include Ken Fisher (Trades, Portfolio), Steve Mandel (Trades, Portfolio), Spiros Segalas (Trades, Portfolio), Pioneer Investments, Chuck Akre (Trades, Portfolio) and Jeremy Grantham (Trades, Portfolio).
Dynatrace
Karr upped his stake in Dynatrace (DT, Financial) by 50.91% to 1.1 million shares during the quarter, while Coleman left his holding unchanged with 500,000 shares. They have a combined equity portfolio weight of 9.25% in the stock.
The company headquartered in Waltham, Massachusetts, which operates a software intelligence platform, has a market cap of $20.49 billion; its shares were trading around $72.83 on Tuesday with a price-earnings ratio of 280.96, a price-book ratio of 17.92 and a price-sales ratio of 27.72.
According to the Peter Lynch chart, the stock is overvalued.
Dynatrace’s financial strength was rated 6 out of 10 by GuruFocus. In addition to adequate interest coverage, the company has a high Altman Z-Score of 11.75. The WACC, however, eclipses the ROIC, indicating it may struggle to create value.
The company’s profitability did not fare as well, scoring a 2 out of 10 rating despite having strong margins and returns that outperform over half of its industry peers. Dynatrace also has a high Piotroski F-Score of 8.
GuruFocus data shows Coleman has gained an estimated 222.73% on his investment since the third quarter of 2019, while Karr has generated a 47.37% return since the fourth quarter of 2020.
Of the gurus invested in Dynatrace, Ron Baron (Trades, Portfolio) has the largest stake with 0.57% of outstanding shares. Steven Cohen (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Paul Tudor Jones (Trades, Portfolio), Ray Dalio (Trades, Portfolio), Pioneer Investments, Louis Moore Bacon (Trades, Portfolio) and Caxton Associates (Trades, Portfolio) also own the stock.
Uber Technologies
In the second quarter, Coleman trimmed his Uber (UBER, Financial) position by 0.35%, while Karr left his holding unchanged at 20,950 shares. The gurus have a combined equity portfolio weight of 2.08% in the stock.
The San Francisco-based ridesharing company, which also offers food and package delivery services, has an $87.7 billion market cap; its shares were trading around $46.66 on Tuesday with a price-book ratio of 6.17 and a price-sales ratio of 7.06.
Based on the median price-sales ratio chart, the stock is overvalued currently.
GuruFocus rated Uber’s financial strength 4 out of 10. As a result of issuing approximately $3.3 billion in new long-term debt over the past three years, the company has poor interest coverage. The low Altman Z-Score of 1.78 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 competitors. 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 19.65% on his investment since the second quarter of 2019, while Karr has lost roughly 16.3% since the first quarter of the year.
With a 1.77% stake, Frank Sands (Trades, Portfolio) is Uber’s largest guru shareholder. Other top guru investors include Segalas, Philippe Laffont (Trades, Portfolio), Cohen, Daniel Loeb (Trades, Portfolio), Lee Ainslie (Trades, Portfolio) and David Tepper (Trades, Portfolio).
Microsoft
While Coleman curbed his stake in Microsoft (MSFT, Financial) by 4.31% in the second quarter, Karr left his 743,200-share position unchanged. Together, the gurus have a combined equity portfolio weight of 35.23%.
Headquartered in Redmond, Washington, the software company founded by Bill Gates (Trades, Portfolio) has a market cap of $2.21 trillion; its shares were trading around $293.97 on Tuesday with a price-earnings ratio of 36.61, a price-book ratio of 15.6 and a price-sales ratio of 13.33.
The GF Value Line suggests the stock is significantly overvalued currently.
Microsoft’s financial strength was rated 6 out of 10 by GuruFocus on the back of a good cash-debt ratio of 1.92 and sufficient interest coverage. The company has a robust Altman Z-Score of 8.73, suggesting it is in good shape even though assets are building up at a faster rate than revenue is growing. The ROIC also surpasses the WACC, indicating good value creation is occurring.
The company’s profitability scored a 9 out of 10 rating, driven by an expanding operating margin, strong returns that outperform a majority of industry peers and a high Piotroski F-Score of 8. Having recorded consistent earnings and revenue growth, Microsoft also has a 2.5-star predictability rank. GuruFocus says companies with this rank return 7.3% on average annually.
According to GuruFocus, Coleman has gained an estimated 141.47% on his investment since the fourth quarter of 2016. Karr has gained approximately 120.97% since the first quarter of 2019.
Fisher is the company’s largest guru shareholder with a 0.33% stake. Other gurus with large positions in the stock include Pioneer Investments, PRIMECAP Management (Trades, Portfolio), Dodge & Cox, Baillie Gifford (Trades, Portfolio), Segalas, Mandel, Andreas Halvorsen (Trades, Portfolio) and Grantham.
ServiceNow
During the quarter, Coleman increased his ServiceNow (NOW, Financial) stake by 2.33%. Karr left his 6,690-share holding untouched. The two gurus have a combined equity portfolio weight of 2.78% in the stock.
The Santa Clara, California-based software company, which operates a cloud computing platform to help customers manage digital workflows and enterprise operations, has a $124.19 billion market cap; its shares were trading around $629.51 on Tuesday with a price-earnings ratio of 746.33, a price-book ratio of 37.92 and a price-sales ratio of 24.49.
According to the GF Value Line, the stock is modestly overvalued currently.
GuruFocus rated ServiceNow’s financial strength 6 out of 10. In addition to adequate interest coverage, the company has a high Altman Z-Score of 13.05, indicating it is in good standing even though assets are building up at a faster rate than revenue is growing. The WACC also tops the ROIC, suggesting the company struggles to create value.
The company’s profitability scored a 3 out of 10 rating as its margins and returns outperform over half of its competitors. ServiceNow also has a low Piotroski F-Score of 3 and a one-star predictability rank.
Of the gurus invested in ServiceNow, Sands has the largest stake with 1.43% of outstanding shares. Other major guru shareholders include Mandel and Halvorsen.
Portfolio composition
Coleman’s $53.16 billion equity portfolio, which is composed of 142 stocks, is largely invested in the technology and consumer cyclical sectors. The guru’s New York-based hedge fund is known for focusing on small-cap stocks and technology startups.
Like his fellow tiger cub, Karr’s $704 million equity portfolio, which is composed of 22 stocks, is heavily invested in the technology and consumer cyclical sectors. His firm, which is now run as a family office, focuses on a concentrated number of investments and specializes in online media stocks.
