Hedge fund legend Philippe Laffont of the Coatue Management fund has made a number of wise portfolio moves in the last quarter. According to the latest 13F forms filed with the SEC, Coatue’s Founder and Chief Investment Officer has now boosted holdings of Apple Inc. (NASDAQ:AAPL), Alibaba Group (NYSE:BABA), and JD.com (NASDAQ:JD).
Mr. Philippe P. Laffont founded the $12.24 billion equity hedge fund Coatue Management in 1999. The New York-based fund has delivered stellar returns in recent years, with 38.72% average return in the past 12 months and an annualized return of 24.34% over the last three years. The measured performance of the fund stands at 134.2%, outperforming both the S&P 500 (62.99%) and the average hedge fund portfolio (104.0%). As a result, Laffont has a four-star ranking on financial accountability engine TipRanks and is ranked an impressive #11 out of 203 tracked hedge funds.
One of the most prolific investors in technology companies, Laffont is also among the highest-earning hedge fund managers reveals Forbes. Laffont graduated from the Massachusetts Institute of Technology, Cambridge, Massachusetts, with a Master’s in Computer Science (1991) and Bachelor of Science degrees in Computer Science and Economics (1989). After graduation, he worked for McKinsey & Co. as an analyst for management consulting projects in Madrid, Spain. He then joined luminary Julian Robertson’s Tiger Management in 1996 as a research analyst (thus earning the name “Tiger Cub”) and worked for three years before quitting to form Coatue. Interestingly, the hedge fund is believed to be named after one of Laffont’s choice vacation spots in Nantucket, Massachusetts.
He is an outstanding technology stock-picker, and arguably one of the best in the industry. Coatue is characterized as a long/short, tech-focused hedge fund, aligning with Laffont’s strong domain expertise due to his time at MIT and his passion and understanding of technology.
Let us now take a closer look at three of Laffont’s key stock moves.
After trimming his AAPL stake in Q2, Laffont seems to have reversed his stance about Apple Inc. this time around. Laffont made a whopping 147.10% increase in his holdings of the tech giant to $1.1 billion, making it one of the top stocks of the portfolio at nearly 8.97% of the overall value and just behind the fund’s No.1 stock FB. We can already see that AAPL has performed quite well since the last filing with an 11.42% gain to-date.
The likelihood of higher interest in Apple products in general over the upcoming holiday season, is expected to help AAPL continue its growth story. UBS’ Steven Milunovich is a big fan of the iPhone X and says “The interest that we’re seeing around the iPhone X is because of the fact that it looks and feels like a whole new generation and era of iPhone. That’s really exciting for the market.” He cites research showing that 30% of Android owners plan to switch to an AAPL iPhone- half of which give the iPhone X as the reason for the transition.
Based on the ratings given by 31 analysts covering the stock, AAPL has an overall consensus rating of ‘Strong Buy’ and a price target of $187.30. This PT is an upside of 10.08% from the last close price of $170.15. Notably, no one has rated AAPL as ‘Sell’. 25 analysts rated AAPL as ‘Buy’ while 6 analysts gave a ‘Hold’ rating for the stock.
China-based Alibaba Group has been reporting accelerated growth after smashing second-quarter revenue and earnings estimates. Laffont seems to be set on clinching a part of the profits expected from the e-commerce giant. After upping the stake of BABA in Q2, Laffont has continued to increase the holdings by 11.34% in Q3 to $1.01 billion. The stock, which currently accounts for 8.22% of the portfolio, has reported a 7.36% gain since the last filing.
Alibaba’s record-breaking sales during the massively successful Single’s day, the expanding reach of BABA through cloud computing and logistics businesses like Ling Shou Tong (connect retail), as well as the massive revenue from its cloud computing arm (Alibaba Cloud) is expected to catapult its stock prices in the upcoming days. The bigger-than-expected China urbanization boom seems to be making Alibaba’s growth runway quite long indeed.
The analysts seem to be in agreement, as there is a rare 100% consensus of ‘Strong Buy’ for the stock as per TipRanks data. Based on 18 recent analyst ratings, BABA has an average price target of $209.50 which suggests an upside of 13.16% from the last close.
Laffont had been taking a step back and offloading positions in JD.com over the past few quarters. However, as per the latest disclosures with SEC, the hedge fund has now added 0.57% of JD, making it 3.94% of the total portfolio with a value of $482 million.
JD.com is not only the biggest retailer in China but also the fastest growing notable retailer. The 11/11 Single’s Day haul for JD amounted to a whopping $19.1 billion, a 50% YoY increase. The company announced solid third-quarter results, with both revenues and earnings topping expectations. Given the huge market opportunity and robust margin expansion potential, the stock seems to be one of the undervalued growth gems.
JD.com has an overall bullish outlook according to the Street with a ‘Strong Buy’ analyst consensus rating and $48.42 price target. Over the last three months, 5 analysts have published buy ratings on the stock with just 1 hold ratings. The PT translates into impressive upside potential of 20.3% from the current price levels.