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Julian Robertson's Top 2nd-Quarter Trades

GuruFocus.com

- By Margaret Moran

Julian Robertson (Trades, Portfolio)'s Tiger Management recently disclosed its portfolio updates for the second quarter of 2020, which ended on June 30.


Often called the "father of the hedge fund," Robertson founded Tiger Management in 1980, turning an initial $8 million into over $22 billion by the late 1990s. After losing 4% in 1998 and 19% in 1999 as rivals rode the dot-com bubble to its peak, he shut down the fund in 2000, and Tiger Management now only manages money from internal sources (mainly Robertson's personal wealth). Robertson's long-short strategy is based on investing in the best companies and shorting the worst companies, and he is known for "betting the farm" on his best ideas. Robertson also mentored a number of young hedge fund managers known as the "Tiger Cubs," a group that includes Andreas Halvorsen (Trades, Portfolio), Chase Coleman (Trades, Portfolio), Philippe Laffont (Trades, Portfolio), John Griffin (Trades, Portfolio), Lee Ainslie (Trades, Portfolio) and Steve Mandel (Trades, Portfolio).

Robertson's top buys for the quarter were Qualcomm Inc. (NASDAQ:QCOM) and SLM Corp. (NASDAQ:SLM), while his top sells were Alibaba Group Holding Ltd (NYSE:BABA) and Amazon.com Inc. (NASDAQ:AMZN).

Qualcomm

The guru established a new holding of 174,900 shares in Qualcomm after selling out of his previous investment in the company in the first quarter of 2020. The trade had a 4.40% impact on the equity portfolio. During the quarter, shares traded for an average price of $79.85.

Julian Robertson's Top 2nd-Quarter Trades
Julian Robertson's Top 2nd-Quarter Trades

Qualcomm is a multinational semiconductor company based in San Diego. Its main focus is on communications technology, particularly for use in smartphones, 5G and artificial intelligence. It is perhaps best known for its widely used cellular modems.

On Aug. 26, shares of Qualcomm traded around $115.79 for a market cap of $130.77 billion and a price-earnings ratio of 49.03. According to the Peter Lynch chart, the stock is trading above its intrinsic value.

Julian Robertson's Top 2nd-Quarter Trades
Julian Robertson's Top 2nd-Quarter Trades

GuruFocus gives the company a financial strength rating of 5 out of 10 and a profitability rating of 8 out of 10. The cash-debt ratio of 0.67 is lower than 68.25% of competitors, but the Altman Z-Score of 4.11 indicates that the company is not in danger of bankruptcy. The return on invested capital exceeds the weighted average cost of capital, indicating that the company is creating value for shareholders.

Julian Robertson's Top 2nd-Quarter Trades
Julian Robertson's Top 2nd-Quarter Trades

SLM

Robertson increased his holding in SLM by 1,368,800 shares, or 198.13%, for a total holding of 2,059,655 shares. The trade impacted the equity portfolio by 2.65%. Shares traded for an average price of $7.46 during the quarter.

Julian Robertson's Top 2nd-Quarter Trades
Julian Robertson's Top 2nd-Quarter Trades

Based in Newark, Delaware, SLM, or Sallie Mae, was originally a government entity providing federal student loans. The company has undergone many changes since the financial crisis, becoming a broader financial services company providing private loans, insurance and banking services to students.

On Aug. 26, shares of SLM traded around $7.46 for a market cap of $2.81 billion and a price-earnings ratio of 5.97. According to the Peter Lynch chart, the stock is trading below its intrinsic value.

Julian Robertson's Top 2nd-Quarter Trades
Julian Robertson's Top 2nd-Quarter Trades

GuruFocus gives the company a financial strength rating of 3 out of 10 and a profitability rating of 5 out of 10. The cash-debt ratio of 1.12 is 67.63% of other companies in the credit services industry, while the Piotroski F-Score of 4 out of 9 indicates a stable financial situation. The company's return on equity and return on assets plunged into the negatives in the most recent quarter due to the pandemic and economic crisis, but the return on equity has typically been above 15% in recent years.

Julian Robertson's Top 2nd-Quarter Trades
Julian Robertson's Top 2nd-Quarter Trades

Alibaba Group Holding

The guru sold out of the 64,000-share Alibaba Group Holding position, impacting the equity portfolio by -4.18%. During the quarter, shares traded for an average price of $207.72.

Julian Robertson's Top 2nd-Quarter Trades
Julian Robertson's Top 2nd-Quarter Trades

Alibaba is a Chinese multinational conglomerate with holdings in e-commerce, retail, internet and technology assets, among many others. By volume, Alibaba is the largest e-commerce company in the world, with millions of merchants and hundreds of millions of users.

On Aug. 26, shares of Alibaba traded around $291.17 for a market cap of $785.30 billion and a price-earnings ratio of 10.93. According to the Peter Lynch chart, the stock is undervalued.

Julian Robertson's Top 2nd-Quarter Trades
Julian Robertson's Top 2nd-Quarter Trades

GuruFocus gives the company a financial strength rating of 8 out of 10 and a profitability rating of 9 out of 10. The cash-debt ratio of 2.08 and interest coverage ratio of 20.85 are higher than 68.11% of other retailers. The company has a three-year revenue growth rate of 45% and a three-year earnings per share without non-recurring items growth rate of 47.9%.

Julian Robertson's Top 2nd-Quarter Trades
Julian Robertson's Top 2nd-Quarter Trades

Amazon.com

Robertson reduced the Amazon.com position by 2,990 shares, or -81.03%, for a remaining holding of 700 shares, impacting the equity portfolio by -1.96%. Shares traded for an average price of $2,403.24 during the quarter.

Julian Robertson's Top 2nd-Quarter Trades
Julian Robertson's Top 2nd-Quarter Trades

Amazon is a multinational e-commerce giant based in Seattle. Its vast network allows it to deliver many products to customers within one or two days, giving it tremendous pricing power. The company also has cloud computing, digital streaming, artificial intelligence and other tech operations.

On Aug. 26, shares of Amazon traded around $3,435.57 for a market cap of $1.72 trillion and a price-earnings ratio of 130.41. According to the Peter Lynch chart, the stock is trading above its intrinsic value but in line with its median historical valuation.

Julian Robertson's Top 2nd-Quarter Trades
Julian Robertson's Top 2nd-Quarter Trades

GuruFocus gives the company a financial strength rating of 6 out of 10 and a profitability rating of 8 out of 10. The cash-debt ratio of 0.94 is more than double the industry median of 0.46, while the Altman Z-Score of 7.21 shows the company is not in danger of bankruptcy. The company has a three-year revenue growth rate of 25.6% and a three-year EPS without NRI growth rate of 67.5%.

Julian Robertson's Top 2nd-Quarter Trades
Julian Robertson's Top 2nd-Quarter Trades

Portfolio overview

During the quarter, Tiger Management established 13 new holdings, sold out of 12 stocks and added to or reduced several other positions for a turnover rate of 15%. As of the quarter's end, Tiger Management held shares of 41 stocks in an equity portfolio valued at $363 million.

The firm's top holdings were Adaptive Biotechnologies Corp. (NASDAQ:ADPT) with a 14.89% portfolio weight, AerCap Holdings NV (NYSE:AER) with 9.68% and Blackstone Group Inc. (NYSE:BX) with 8.96%. In terms of sector weighting, the firm was most invested in technology, communication services and financial services.

Julian Robertson's Top 2nd-Quarter Trades
Julian Robertson's Top 2nd-Quarter Trades

Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Portfolio updates reflect only common stock positions as per the regulatory filings for the quarter in question and may not include changes made after the quarter ended.

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This article first appeared on GuruFocus.