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Tech Investor Chase Coleman Drives Away With Carvana

- By Sydnee Gatewood

Chase Coleman (Trades, Portfolio), leader of Tiger Global Management and former "tiger cub" of Tiger Management's Julian Robertson (Trades, Portfolio), disclosed on Tuesday he expanded his stake in Carvana Co. (CVNA) by 30.77%.


Known for being an early investor in both Facebook Inc. (FB) and Spotify Technology SA (SPOT), the guru's New York-based hedge fund focuses on small-cap stocks and technology startups.

According to GuruFocus Real-Time Picks, a Premium feature, after establishing an initial stake during the first quarter, Coleman invested in an additional 630,769 shares of the Tempe, Arizona-based company on June 3. He now holds 2.6 million shares in total, which represent approximately 0.85% of the equity portfolio. The stock traded for an average price of $57.88 per share.

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The company, which operates an online platform for buying and selling used cars, has an $8.65 billion market cap; its shares were trading around $59.12 on Wednesday with a price-book ratio of 45 and a price-sales ratio of 0.91.

GuruFocus estimates the stock has climbed 82% year to date.

Carvana, which is also known for its unique delivery service and car vending machines, where customers can pick up the vehicles they purchased online, released first-quarter results on May 8, posting an adjusted earnings loss of 69 cents per share on $755.2 million in revenue. Analysts were anticipating an adjusted loss of 47 cents per share on $702 million in revenue.

On Wednesday, the company announced it had expanded its presence in Central Florida, launching services in Lakeland and North Port. It now offers vehicle delivery in seven Florida markets and a total of 131 markets across the U.S.

As a result of poor earnings quality and issuing approximately $788.51 million in new long-term debt over the last three years, GuruFocus rated Carvana's financial strength 5 out of 10. The robust Altman Z-Score of 6.22, however, indicates the company is in good fiscal standing.

The company's profitability and growth fared much worse, scoring a 3 out of 10 rating on negative margins and returns that underperform a majority of competitors. The low Piotroski F-Score of 3 also implies Carvana has poor operating conditions.

Of the gurus invested in Carvana as of the end of the first quarter, Coleman has the largest stake with 1.41% of outstanding shares. Jeremy Grantham (Trades, Portfolio), Paul Tudor Jones (Trades, Portfolio) and Mario Gabelli (Trades, Portfolio) also established positions during the quarter, while Steven Cohen (Trades, Portfolio) reduced his holding by 41.83%. Chuck Royce (Trades, Portfolio) is also a shareholder.

Portfolio composition

Coleman's $18.11 billion equity portfolio, which is composed of 69 stocks, is largely invested in the technology and consumer cyclical sectors.

His five largest holdings as of the end of the first quarter were JD.com Inc. (JD), Microsoft Corp. (MSFT), Facebook, Fiat Chrysler Automobiles NV (FCAU) and Amazon.com Inc. (AMZN).

Disclosure: No positions.

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This article first appeared on GuruFocus.