<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Legendary investor Julian Robertson (Trades, Portfolio) is not just known for his leadership of Tiger Management, but also for taking a group of proteges under his wing. These student investors, many of whom later opened their own practices, are referred to as "tiger cubs."” data-reactid=”12″>Legendary investor Julian Robertson (Trades, Portfolio) is not just known for his leadership of Tiger Management, but also for taking a group of proteges under his wing. These student investors, many of whom later opened their own practices, are referred to as “tiger cubs.”
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="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.” data-reactid=”19″>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 Alibaba Group Holding Ltd. (NYSE:BABA), Ceridian HCM Holdings Inc. (NYSE:CDAY) and Microsoft Corp. (NASDAQ:MSFT) as of the first quarter.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Alibaba” data-reactid=”21″>Alibaba
While Coleman expanded his Alibaba stake by 27.76% in the first quarter, Karr left his position unchanged with 688,471 shares.
The Chinese e-commerce company has a $592.13 billion market cap; its shares were trading around $220.72 on Wednesday with a price-earnings ratio of 27.76, a price-book ratio of 5.62 and a price-sales ratio of 8.13.
The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.
GuruFocus rated Alibaba’s financial strength 7 out of 10, driven by a comfortable level of interest coverage and a high Altman Z-Score of 7.09.
The company’s profitability and growth scored a 9 out of 10 rating. Although the operating margin is in decline, it still outperforms a majority of competitors. Alibaba is also supported by strong returns, a high Piotroski F-Score of 7, which suggests business conditions are healthy, and consistent earnings and revenue growth. It also has a business predictability rank of 2.5 out of five stars. According to GuruFocus, companies with this rank typically return an average of 7.3% per annum over a 10-year period.
GuruFocus says Coleman has gained an estimated 17.5% on his investment since the third quarter of 2016, while Karr has gained 119.96% since establishing the holding in the second quarter of 2015.
PRIMECAP Management (Trades, Portfolio) is the company’s largest guru shareholder with 0.51% of outstanding shares. Other top guru investors include Ken Fisher (Trades, Portfolio), Frank Sands (Trades, Portfolio), Steve Mandel (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Spiros Segalas (Trades, Portfolio), Chris Davis (Trades, Portfolio), Dodge & Cox and Philippe Laffont (Trades, Portfolio).
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Ceridian HCM Holdings” data-reactid=”62″>Ceridian HCM Holdings
While Karr established a 60,537-share position in Ceridian during the quarter, Coleman left his holding unchanged with 170,000 shares.
The Minneapolis-based company, which develops human resource management software, has a market cap of $11.01 billion; its shares were trading around $76.27 on Wednesday with a price-earnings ratio of 148.8, a price-book ratio of 6.09 and a price-sales ratio of 13.49.
According to the Peter Lynch chart, the stock is overvalued.
Ceridian’s financial strength was rated 5 out of 10 by GuruFocus. While the company has a good cash-debt ratio of 5.45 that is outperforming compared to both its industry and its history, it has poor interest coverage. In addition, the Altman Z-Score of 1.61 indicates the company could be in danger of going bankrupt.
The company’s profitability fared even worse, scoring a 3 out of 10 rating on the back of returns that underperform at least half of its industry peers. Ceridian has a high Piotroski F-Score of 7, though, which indicates its operating conditions are healthy.
GuruFocus data shows Coleman has gained an estimated 116.44% on his investment since the second quarter of 2018, while Karr has generated a 14.65% return.
Of the gurus invested in Ceridian, Mandel has the largest stake with 2.24% of outstanding shares. Ron Baron (Trades, Portfolio) and Jim Simons (Trades, Portfolio)’ Renaissance Technologies also own the stock.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Microsoft” data-reactid=”107″>Microsoft
While Coleman curbed his stake in Microsoft by 0.82% in the first quarter, Karr reduced his position by 17.36%.
Headquartered in Redmond, Washington, the software company founded by Bill Gates (Trades, Portfolio) has a $1.46 trillion market cap; its shares were trading around $193.80 on Wednesday with a price-earnings ratio of 32.14, a price-book ratio of 12.93 and a price-sales ratio of 10.71.
Based on the Peter Lynch chart, the stock appears to be overvalued. The GuruFocus valuation rank of 1 out of 10 aligns with this assessment since the share price and price ratios are near 10-year highs.
GuruFocus rated Microsoft’s financial strength 7 out of 10 on the back of a good cash-debt ratio of 1.86 and adequate interest coverage. The company has a robust Altman Z-Score of 6.08, suggesting it is in good shape even though assets are building up at a faster rate than revenue is growing. The return on invested capital is also significantly above the weighted average cost of capital, indicating good profitability.
The company’s profitability and growth scored a 9 out of 10 rating, driven by an expanding operating margin, strong returns that outperform a majority of competitors and a high Piotroski F-Score of 8. Having recorded consistent earnings and revenue growth, Microsoft also has a four-star business predictability rank. GuruFocus says companies with this rank typically see their stocks return 9.8% on average per year.
According to GuruFocus, Coleman has gained an estimated 115.1% on his investment since the fourth quarter of 2016. Karr has gained approximately 56.9% since the first quarter of 2019.
With a 0.34% stake, PRIMECAP is the company’s largest guru shareholder. Other gurus with large positions in the stock include Fisher, Dodge & Cox, Pioneer, Segalas, Mandel, Hotchkis & Wiley, Andreas Halvorsen (Trades, Portfolio), Sands, First Eagle Investment (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), Laffont and Barrow, Hanley, Mewhinney & Strauss.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Portfolio composition” data-reactid=”148″>Portfolio composition
Coleman’s $16.61 billion equity portfolio, which is composed of 74 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 $386 million equity portfolio, which is composed of 10 stocks, is heavily invested in the consumer cyclical and technology sectors. His firm, which is now run as a family office, focuses on a concentrated number of investments and specializes in online media stocks.
Disclosure: No positions.
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