Investing legend 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 started their own practices, are known as “tiger cubs.”
As they learned from 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 Steve Mandel (Trades, Portfolio), leader of Lone Pine Capital.
As of the second quarter, the two value investors both have positions in Amazon.com Inc. (AMZN, Financial), Booking Holdings Inc. (BKNG, Financial), Microsoft Corp. (MSFT, Financial), Facebook Inc. (FB, Financial) and TransDigm Group Inc. (TDG, Financial).
Amazon
In the second quarter, Coleman did not make any changes to his Amazon stake, while Mandel trimmed his holding by 26.5%.
The Seattle-based e-commerce company has a $971.03 billion market cap; its shares were trading around $1,990.88 on Wednesday with a price-earnings ratio of 157.76, a price-book ratio of 27.70 and a price-sales ratio of 4.76.
The Peter Lynch chart suggests the stock is overpriced since it is trading higher than its fair value.
GuruFocus rated Amazon’s financial strength 7 out of 10 as it has sufficient interest coverage and a high Altman Z-Score of 7.65, which indicates it is fiscally sound. The company’s profitability and growth scored a 9 out of 10 rating, boosted by an expanding operating margin and a high Piotroski F-Score of 7. The e-commerce giant also has a business predictability rank of four out of five stars. In addition to having consistent earnings and revenue growth, GuruFocus says companies with this rank typically see their stock prices gain 9.8% per year on average.
GuruFocus estimates Coleman has gained 88% on his investment since the second quarter of 2015. Mandel has gained approximately 60% since the fourth quarter of 2017.
Of the gurus invested in Amazon, Frank Sands (Trades, Portfolio) has the largest position with 0.36% of outstanding shares. Other top guru shareholders include Ken Fisher (Trades, Portfolio), Spiros Segalas (Trades, Portfolio), Chris Davis (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio), Pioneer Investments (Trades, Portfolio) and Steven Cohen (Trades, Portfolio).
Booking Holdings
Mandel expanded his position in Booking Holding by 4.57% in the second quarter. Coleman made no changes.
The online travel agency, which is headquartered in Norwalk, Connecticut, has a market cap of $89.21 billion; its shares were trading around $1,879.12 on Wednesday with a price-earnings ratio of 33.75, a price-book ratio of 8.57 and a price-sales ratio of 6.77.
According to the Peter Lynch chart, the stock is overpriced.
Booking’s financial strength was rated 7 out of 10 by GuruFocus. Although the company has issued approximately $2 billion in new long-term debt over the last three years, it is manageable since it has sufficient interest coverage. In addition, the Altman Z-Score of 5.94 indicates the company is in good financial standing. The company’s profitability and growth scored a 9 out of 10 rating as it has an expanding operating margin, a high Piotroski F-Score of 7 and a 3.5-star business predictability rank. According to GuruFocus, companies with this rank see their stock prices gain an average of 9.3% per year and have good earnings and revenue growth.
Coleman has, according to GuruFocus, gained an estimated 28% on its investment since the fourth quarter of 2015. Mandel has yet to post a profit on his investment, which was established in the third quarter of 2017.
With 1.45% of outstanding share, Dodge & Cox is the company’s largest guru shareholder. Sands, Pioneer, Segalas, Ruane Cunniff (Trades, Portfolio), Manning & Napier Advisors, Bill Nygren (Trades, Portfolio), Chris Davis (Trades, Portfolio) and many other gurus also hold the stock.
Microsoft
While Coleman trimmed his Microsoft holding by 0.43% in the second quarter, Mandel boosted his stake by 3.54%.
The California-based software company has an $853.01 billion market cap; its shares were trading around $111.38 on Wednesday with a price-earnings ratio of 52.72, a price-book ratio of 10.32 and a price-sales ratio of 7.83.
Based on the Peter Lynch chart, the stock appears to be overpriced since it is trading higher than its fair value.
Microsoft’s financial strength was rated 6 out of 10 by GuruFocus. Despite issuing approximately $39.5 billion in new long-term debt over the last three years, the company has a sufficient level of interest coverage. Additionally, the Altman Z-Score of 4.42 indicates the company is in good financial standing. The company’s profitability and growth scored a 9 out of 10 rating. While the operating margin and gross margin have declined in recent years, they still outperform a majority of industry peers. Its returns also outperform competitors. The company also has a Piotroski F-Score of 6, which suggests operations are stable, and a 4.5-star business predictability rank. In addition to posting strong revenue and earnings growth, GuruFocus says companies with this rank see their stock prices gain an average of 10.6% per year.
GuruFocus data shows Coleman has gained an estimated 49% on his investment since the fourth quarter of 2016. Similarly, Mandel has gained approximately 46% on his investment, which was established in the second quarter of 2017.
PRIMECAP Management (Trades, Portfolio) is the company’s largest guru shareholder with 0.54% outstanding shares. Other guru investors include Dodge & Cox, Bill Gates (Trades, Portfolio), Pioneer, Fisher, Segalas and First Eagle Investment (Trades, Portfolio).
Mandel reduced his Facebook stake by 55.79% in the second quarter. Coleman added 6.23% to his position.
The social media giant, which is based in California, has a market cap of $471.45 billion; its shares were trading around $163.29 on Wednesday with a price-earnings ratio of 25.28, a price-book ratio of 5.94 and a price-sales ratio of 9.93.
The Peter Lynch chart suggests the stock is overpriced.
Supported by good interest coverage, no debt and a high Altman Z-Score, GuruFocus rated Facebook’s financial strength a perfect 10 out of 10. The company’s profitability and growth scored a 9 out of 10 rating, driven by good returns, an expanding operating margin and a high Piotroski F-Score of 7.
GuruFocus estimates Coleman has lost 4% on his investment since the fourth quarter of 2016, while Mandel has gained 37% since the third quarter of 2014.
Of the gurus invested in the company, Sands has the largest stake with 0.3% of outstanding shares. Andreas Halvorsen (Trades, Portfolio), Segalas, Davis, David Tepper (Trades, Portfolio), Lee Ainslie (Trades, Portfolio) and Jim Simons (Trades, Portfolio)’ Renaissance Technologies, among others, are also shareholders.
TransDigm Group
In the second quarter, Coleman curbed his TransDigm stake by 11.97% and Mandel upped his holding by 24.92%.
The Cleveland-based manufacturer of engineered aerospace components has an $18.84 billion market cap; its shares were trading around $357.92 on Wednesday with a price-earnings ratio of 26.05 and a price-sales ratio of 5.38.
According to the Peter Lynch chart, the stock is overvalued.
Weighed down by new long-term debt and a slowdown in revenue per share growth, TransDigm’s financial strength was rated 4 out of 10 by GuruFocus. In addition, the Altman Z-Score suggests the company is in danger of going bankrupt. The company’s profitability and growth fared much better, scoring a 9 out of 10 rating as it has an expanding operating margin, a high Piotroski F-Score of 7 and a perfect five-star business predictability rank. According to GuruFocus, companies with this coveted rank see their stock prices gain an average of 12.1% per year.
As the company’s two largest shareholders, GuruFocus data shows Coleman has gained an estimated 25% on his investment since the fourth quarter of 2016 and Mandel has gained 27% since the fourth quarter of 2017.
Other gurus with positions in the stock are Primecap, Alan Fournier (Trades, Portfolio), Sands, Pioneer, Wallace Weitz (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Cohen and Caxton Associates (Trades, Portfolio).
Portfolio composition
Coleman’s $19.22 billion equity portfolio, which is composed of 61 holdings, is largely invested in the consumer cyclical and tech sectors. The guru’s firm also takes an interest in small-cap stocks and invests when it sees a trend in certain sectors, often getting in during the early stages.
Mandel’s $18.91 billion equity portfolio, which is made up of 28 positions, is largely invested in the tech sector. The value investor’s firm picks stocks using a long-short strategy based on bottom-up, fundamental analysis.
Disclosure: No positions.
