As a “Tiger Cub,” or former protégé of the legendary investor Julian Robertson (Trades, Portfolio), it’s little surprise that Chase Coleman (Trades, Portfolio) has achieved his own success at his investment firm Tiger Global Management, which manages about $20 billion.
Despite being known as one of the best and youngest investors today, the firm has suffered some losses recently due to the slowdown in the Chinese economy. The public equity fund is invested heavily in Chinese internet stocks such as Vipshop Holdings (VIPS, Financial) and Autohome Inc. (ATHM, Financial), which are down 33% and 25% for the year.
During the third quarter, the firm initiated new positions in the following four stocks.
Anheuser-Busch Inbev SA (BUD, Financial)
Tiger Global bought 1,885,000 shares of Anheuser-Busch for an average of $116.11 per share. On Nov. 11, the brewing company completed its agreement to acquire its largest competitor SABMiller for $106 billion.
Anheuser-Busch’s stock has risen 12% over the past year and currently trades at 24x earnings, or $124.18. The merger still requires approval from regulators, which may be a challenge as the combined company would control about 30% of beer sales worldwide. Its brands include Budweiser and Stella Artois, while SABMiller’s includes Grolsch and Peroni.
Despite steady EPS increases over the years, earnings dropped to $5.54 in 2014, down from $8.72 the year before.
Anheuser-Busch’s dividend yield is close to the 10-year high at 3.18%, with a 61% payout ratio.
Time Warner Cable Inc. (TWC, Financial)
Tiger Global purchased 580,000 shares of Time Warner Cable for an average price of $186.80 per share. The stock is up 29% over the past year and is now trading at 27.69x earnings.
EPS has been steadily increasing since 2008 when Time Warner posted a wide loss of $22.55 per share.
The company’s dividend yield is near the five-year low at 1.62, while the payout ratio is 56%.
One warning sign is Time Warner’s current liabilities are close to double the current assets, making for a weak balance sheet. It also carries a high level of long-term debt at $22.7 billion.
Eros International PLC (EROS, Financial)
The firm also bought 1,200,000 shares of Eros International, which traded for an average price of $32.01 during the quarter.
Eros is a media company that co-produces and distributes Indian language films. The stock dropped 60% in the past year and is now trading at 10.8x earnings at $8.55.
Eros’ earnings have been struggling since 2012 at below $1.00, compared to $1.14 in 2011.
Murray Stahl (Trades, Portfolio) and Jim Simons (Trades, Portfolio) also added to their stakes in the company during the third quarter.
Arista Networks Inc. (ANET, Financial)
Tiger Global’s fourth new buy was 400,000 shares in Arista Networks, which supplies Cloud networking solutions, for an average price of $76.39 per share. The company went public in June 2014.
The stock is down 8% over the last year at $71.14 and is trading at a high premium at 48x earnings. During the third quarter, Arista reported net income of $28.7 million, up from $21.9 million in the year-ago quarter. Looking ahead to the fourth quarter, Arista expects revenue will be in the range of $238 million to $242 million.
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