- The two investors are known for their focus on tech.
- They both had positions in Microsoft
as of the first quarter.
Legendary investor Julian Robertson (Trades, Portfolio) is not just known for his leadership of Tiger Management, but also for taking a group of protégés under his wing. These student investors, many of whom later opened their own practices, are known as “tiger cubs.”
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 based on 13F filings, the two value investors both have positions in Microsoft Corp. (MSFT, Financial), Uber Technologies Inc. (UBER, Financial) and ServiceNow Inc. (NOW, Financial) as of the three months ended March 31.
Investors should be aware that 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
While Coleman curbed his stake in Microsoft (MSFT, Financial) by 13.79% in the first quarter, Karr left his 618,000-share position unchanged. Together, the gurus have a combined equity portfolio weight of 35.66% in the stock.
The Redmond, Washington-based software company founded by Bill Gates (Trades, Portfolio) has a $2.02 trillion market cap; its shares were trading around $273.59 on Monday with a price-earnings ratio of 28.19, a price-book ratio of 12.40 and a price-sales ratio of 10.60.
The GF Value Line
GuruFocus rated Microsoft’s financial strength 8 out of 10 on the back of adequate interest coverage and a robust Altman Z-Score of 8.63, 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 significantly outshines the weighted average cost of capital, indicating good value creation is occurring as the company grows.
The company’s profitability fared even better with a 10 out of 10 rating, driven by an expanding operating margin, strong returns on equity, assets and capital that outperform a majority of competitors and a high Piotroski F-Score of 8 of 9, meanings business conditions are healthy. Having recorded consistent earnings and revenue growth, Microsoft also has a predictability rank of 2.5 out of five stars. According to GuruFocus research, companies with this rank return an average of 7.3% annually over a 10-year period.
GuruFocus says Coleman has gained an estimated 141.72% on his investment since the fourth quarter of 2016. Karr has gained approximately 112.48% since the first quarter of 2019.
Of the gurus invested in Microsoft, Ken Fisher (Trades, Portfolio) has the largest stake with 0.37% of its outstanding shares. PRIMECAP Management (Trades, Portfolio), Dodge & Cox, Baillie Gifford (Trades, Portfolio), Spiros Segalas (Trades, Portfolio), Steve Mandel (Trades, Portfolio), Andreas Halvorsen (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), Mairs and Power (Trades, Portfolio) and Hotchkis & Wiley, among others, also have significant positions in the stock.
During the first quarter, Coleman slashed his Uber (UBER, Financial) stake by 93.1%, while Karr left his holding unchanged at 26,950 shares. The gurus have a combined equity portfolio weight of 0.31% in the stock.
The ridesharing company headquartered in San Francisco, which also offers food and package delivery services, has a market cap of $47.42 billion; its shares were trading around $24.87 on Monday with a price-book ratio of 5.31 and a price-sales ratio of 2.19.
According to the GF Value Line, the stock, while undervalued, is a possible value trap currently. As such, potential investors should conduct thorough research before making a decision.
Uber’s financial strength and profitability were both rated 4 out of 10 by GuruFocus. As a result of issuing approximately $2.9 billion in new long-term debt over the past three years, the company has poor interest coverage. The low Altman Z-Score of -0.05 also warns it could be at risk of going bankrupt if it does not improve its liquidity.
The company is also being weighed down by negative margins and returns that underperform a majority of industry peers. Uber has a low Piotroski F-Score of 3, indicating its operating conditions are in poor shape. The company has also recorded losses in operating income as well as declines in revenue per share over the past several years.
GuruFocus estimates Coleman has gained 4.67% on his investment since the second quarter of 2019, while Karr has lost roughly 53.45% since the first quarter of 2021.
With a 1.22% stake, Fisher is Uber’s largest guru shareholder. Other top guru investors include Frank Sands (Trades, Portfolio), Segalas, Halvorsen, Philippe Laffont (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Larry Robbins (Trades, Portfolio), Lee Ainslie (Trades, Portfolio), First Pacific Advisors (Trades, Portfolio) and David Tepper (Trades, Portfolio).
Coleman increased his ServiceNow (NOW, Financial) stake by 10.82% during the quarter. Karr left his 6,202-share holding untouched. The two gurus have a combined equity portfolio weight of 5.60% in the stock.
The Santa Clara, California-based software company, which operates a cloud computing platform to help customers manage digital workflows and enterprise operations, has a $98.72 billion market cap; its shares were trading around $496.10 on Monday with a price-earnings ratio of 447.71, a price-book ratio of 24.64 and a price-sales ratio of 15.99.
Based on the GF Value Line, the stock appears to be modestly undervalued currently.
GuruFocus rated ServiceNow’s financial strength 7 out of 10. In addition to adequate interest coverage, the company has a high Altman Z-Score of 9.19, indicating it is in good standing even though assets are building up at a faster rate than revenue is growing. The WACC also eclipses the ROIC, suggesting the company struggles to create value.
The company’s profitability did not fare as well, scoring a 4 out of 10 rating on the back of margins and returns that over half of its competitors. ServiceNow has a moderate Piotroski F-Score of 5, indicating operations are typical for a stable company, as well as a one-star predictability rank. GuruFocus data found companies with this rank return an average of 1.1% annually.
GuruFocus data shows Coleman has gained 20.96% on his investment since the third quarter of 2017, while Karr has recorded a return of 14.76% since the fourth quarter of 2020.
Sands has the largest stake in ServiceNow with 1.36% of its outstanding shares. Coleman, Mandel and Fisher also have notable positions in the stock.
Coleman’s $26.64 billion equity portfolio, which is composed of 88 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 $701 million equity portfolio, which is composed of 19 stocks, is heavily invested in the technology, consumer cyclical, basic materials and industrials sectors. His firm, which is now run as a family office, focuses on a concentrated number of investments and specializes in online media stocks.
I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours.