Actavis, CDK Global and JD.com attracted a surge of interest in the first quarter from hedge fund managers with ties to Julian Robertson Jr.’s Tiger Management Corp.
The three companies were among the most broadly held stocks of the nearly 50 so-called Tiger Cubs, Tiger Seeds and Tiger Grandcubs, as well as Tiger Management itself, tracked by New York–based Novus, a portfolio intelligence platform that, among other things, analyzes the quarterly filings of hedge funds.
However, just one of the three was a top holding of this widely followed group of hedge fund firms in the fourth quarter of 2014.
Actavis is not a big surprise. At the end of the first quarter, the Irish drug company also ranked No. 1 among all stocks that most frequently appear among the largest ten holdings of hedge funds tracked by Goldman Sachs.
The acquisitive Actavis acquired Allergan after the Botox maker spurned a hostile offer from Valeant Pharmaceuticals International last year.
Altogether, 17 Tiger-related funds held Actavis shares at the end of the first quarter, up from 11 the previous three-month period. Actavis ranked among the top five holdings of eight funds and top ten holdings of 14 funds.
As we earlier reported, Actavis was Viking Global Investors’ largest position at the end of the first quarter, accounting for 5.5 percent of the Greenwich, Connecticut, firm’s long-short fund’s assets and 5.8 percent of its long-only fund’s assets.
CDK Global, along with Chinese Internet services company Baidu, ranks as the sixth-largest holding among the Tiger crowd, according to Novus. Altogether, 11 funds within the den owned shares of the stock at the end of the first quarter.
Automatic Data Processing spun off software company CDK Global, which serves the auto industry, last October.
The stock does not enjoy the same conviction among the Tiger funds as Actavis. No Tiger fund counts it among its top five holdings, and only two include it among their top ten.
CDK Global stock, however, has attracted a lot of attention from activists.
We reported in May that New York–based Elliott Associates disclosed it owns 7.6 percent of CDK Global. The company has been a target of at least two other New York–based activist hedge funds, Sachem Head Capital Management and Fir Tree Partners. None of these funds has Tiger roots.
JD.com — the Chinese e-commerce giant — attracted ten Cubs and related funds in the first quarter, compared with six in the previous period. The stock was among the top five holdings of five of the ten funds. This group includes Stephen Mandel Jr.’s Lone Pine Capital, which in the first quarter more than tripled its stake in JD.com. The company is now the Greenwich, Connecticut, firm’s second-largest U.S. stock holding. Lone Pine is the company’s second-largest shareholder.
Tiger Global Management is JD.com’s fourth-largest shareholder. In its first-quarter letter to clients, the New York hedge fund firm devoted the bulk of its discussion to JD.com, calling it “the leading fulfillment-based e-commerce company in China” and the second-largest e-commerce company in China behind Alibaba Group Holding. “JD is levered to ‘retail leapfrogging’ in emerging markets, which we believe is one of the most powerful secular themes globally,” Tiger Global wrote.
Although the number of Tiger funds with positions in Facebook remained at 16, the social networking powerhouse slipped to second place from first. However, only four funds included the stock among their top five holdings and just seven among their top ten. In the third quarter of 2014, 18 Tiger funds owned the stock.
In the first quarter, Lone Pine sold about 40 percent of its Facebook shares, while smaller funds sold major parts or all of their holdings.
Meanwhile, Alibaba, the big Chinese e-commerce company, continued to lose Tiger support in the first quarter. Nine funds owned the stock compared with 11 in the fourth quarter, according to Novus. Alibaba went public in late September.
After the initial euphoria, the stock has steadily declined since November, and is now down about 25 percent from its peak — although it is up 9 percent since the end of the first quarter.
Fleetcor Technologies, which provides various kinds of payment cards for businesses, ranks No. 4, down from second place at year-end. Fourteen Tiger-related investors invested in the stock in both periods, so there was no change in sentiment, according to Novus data.
Here are the 18 most popular stocks among the Tiger crowd at the end of the first quarter, with the number of managers investing:
Actavis, 17 managers
Facebook, 16
Charter Communications, 15
Fleetcor Technologies, 14
Apple, 13
Baidu Holdings, 11
CDK Global, 11
Valeant Pharmaceuticals International, 10
JD.com, 10
Cheniere Energy, 10
Priceline Group, 10
Dollar Tree, 10
Google, 10
Alibaba Group Holding, 9
Walgreens Boots Alliance, 9
Transdigm Group, 9
Liberty Global, 9
MasterCard, 9
