In recent months, GuruFocus began tracking a new investor, Philippe Laffont (Trades, Portfolio) of global investment firm Coatue Management.
Laffont began his investment career three years before Coatue as an employee of Julian Robertson (Trades, Portfolio)’s Tiger Management hedge fund. The experience earned him the designation of “Tiger Cub,” placing him in the company of other noted hedge fund managers who launched their own funds after time at Robertson’s firm, such as Andreas Halvorsen (Trades, Portfolio), Chase Coleman (Trades, Portfolio) and Lee Ainslie (Trades, Portfolio).
Since his firm’s inception in 1999, Laffont has focused primarily on the technology sector, which composed 62.4% of his long portfolio as of the end of the third quarter. Consumer cyclicals, which include companies like Netflix (NFLX, Financial) and Amazon (AMZN), and communication services stocks make up more than 30%. Laffont’s investing style “consists of making a small number of investments based on rigorous proprietary research” and holding for more than a year, according to the firm’s description.
One of the themes he has traced in recent years is artificial intelligence. Coatue has made large investments based on its belief in the ascendance of the technology, buying stakes in Intel (INTC, Financial), Twitter (TWTR) and Google (GOOGL, Financial) as the companies develop their offerings in the space.
“If you leave with one takeaway today it is that you must have various aspects of your portfolio, your investments, and your conversations with your clients talking about A.I. It is the absolutely most interesting and biggest trend since the internet," he told investors at a Las Vegas conference in February, Forbes reported.
More recently, he has steered his portfolio toward greater diversification due to trends in the global economy, such as the threat of trade war with China and governments’ increasing scrutiny of global companies. That thinking influenced his decisions to cut holdings in internet companies such as Facebook (FB, Financial) and Alibaba (BABA, Financial) and buy more software companies. In the third quarter, he branched out by starting positions in semiconductor maker Qualcomm, pay TV provider Roku Inc. (ROKU, Financial) and application software company Tableau Software Inc. (DATA, Financial).
“We plan to build up our portfolio for all weather sailing," he wrote in a quarterly letter that was seen by Bloomberg in October.
Coatue has about $16 billion in assets under management, with the public long stock portfolio valued around $9.54 billion as of the end of the third quarter. With portfolio weightings ranging from around 6-8% each, his largest positions were: Activision Blizzard Inc. (ATVI, Financial), Liberty Broadband Corp. (LBRDK, Financial), Microsoft Corp. (MSFT, Financial), Facebook Inc. (FB, Financial) and Netflix Inc. (NFLX, Financial).
Activision Blizzard Inc. (ATVI, Financial)
Laffont holds 8,765,375 shares of the electronic gaming company that produced World of Warcraft, or about 1.15% of shares outstanding. He has invested in Activision Blizzard since the fourth quarter of 2014 when the price averaged around $20. It had risen to an average price of $76 in the third quarter, when Laffont trimmed the position by 23%.
Activision Blizzard Inc. has a market cap of $35.89 billion; its shares were traded around $47.03 Wednesday with a price-earnings ratio of 64.41 and price-sales ratio of 5.06. The trailing 12-month dividend yield of Activision Blizzard Inc. stocks is 0.72%. The forward dividend yield of Activision Blizzard Inc stocks is 0.73%. Activision Blizzard Inc. had an annual average earnings growth of 22.40% over the past 10 years. GuruFocus rated Activision Blizzard Inc the business predictability rank of 3.5-star.
Liberty Broadband Corp. (LBRDK, Financial)
Laffont holds 8,654,352 shares of the cable company, giving him 4.77% of shares outstanding. After starting the position in the second quarter of 2016 when the price averaged $58, he added 0.06% to it in the third quarter when the price averaged $83.
Liberty Broadband Corp. has a market cap of $13.16 billion; its shares were traded around $72.56 Wednesday with a price-earnings ratio of 6.23 and price-sales ratio of 598.49.
Microsoft Corp. (MSFT, Financial)
Laffont holds 6,208,508 shares of Microsoft Corp., or about 0.08% of shares outstanding. He started eh position in the second quarter of 2014 when the price averaged $40 and in the third quarter trimmed 14.55% from the stake when the price averaged $108.
Microsoft Corp. has a market cap of $776.22 billion; its shares were traded around $101.12 Wednesday with a price-earnings ratio of 41.95 and price-sales ratio of 6.81. The trailing 12-month dividend yield of Microsoft Corp. stocks is 1.70%. The forward dividend yield of Microsoft Corp. stocks is 1.81%. Microsoft Corp. had an annual average earnings growth of 7.40% over the past 10 years. GuruFocus rated Microsoft Corp. the business predictability rank of 4.5-star.
Laffont holds 4,198,898 shares of social media giant Facebook, or about 0.15% of the company. He started the position in the fourth quarter of 2013 when the price averaged $50 and in the third quarter reduced it by 33.4% at an average price of $181.
Facebook Inc. has a market cap of $389.92 billion; its shares were traded around $135.68 with a price-earnings ratio of 20.46 and price-sales ratio of 7.69. Facebook Inc. had an annual average earnings growth of 63.50% over the past five years.
Netflix Inc. (NFLX, Financial)
Laffont owns 1,695,746 of streaming video service Netflix, or 0.39% of shares outstanding. He has owned shares since before the fourth quarter of 2013 when the price averaged $49, but has sold more than 150 million shares since the first quarter of 2015 as the price climbed. In the third quarter, he reduced the position by 0.96% as Netflix’s price averaged $363.
Netflix Inc. has a market cap of $116.72 billion; its shares were traded around $267.66 with a price-earnings ratio of 95.94 and price-sales ratio of 8.09. Netflix Inc had an annual average earnings growth of 6.10% over the past 10 years.
See more of Philippe Laffont (Trades, Portfolio)’s portfolio here.
