Tracking changes in ownership in 13Fs can be a great way to gain insight into what hedge funds are keen on. It’s important to note though, that investors should take the filings with a grain of salt as context is key. A fund could be doing a pair trade or using stock as part of an options strategy that as a mere onlooker, you won’t have a full understanding of.
It is, however, a great way to get a sense of position sizing and overall sector preferences — where they’re overweight or underweight. And if you find a manager whose style of investing you like, it can be great to see what ideas they’ve executed on.
For me, that manager is Julian Roberston of Tiger Management lore. He’s spawned a number of Tiger funds and Tiger “cubs,” perhaps most notably Chase Coleman’s Tiger Global.
Looking over Tiger Global’s holdings and what bulge bracket banks are recommending, the following are seven stocks to buy that smart money is buying now.
Smart Money Stocks to Buy: Alibaba Group Holding Ltd (BABA)
Alibaba Group Holding Ltd (NYSE:BABA) is a hedge fund favorite. Third Point’s Dan Loeb is a fan as is Appaloosa’s David Tepper. Tiger Management has also been a buyer though it has, in absolute terms, a smaller stake in the BABA.
Alibaba is already dominant in the Chinese market, where other FANG companies have struggled to break in. News of the regulatory struggles that have effectively prevented Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) from entering the market is not new, nor is lackluster performance by Apple Inc. (NASDAQ:AAPL) where local brands with cheaper products (though no less sleek) have hampered growth.
A near-term catalyst for share prices to rise even higher lies in the much-anticipated IPO of Ant Financial. While Ant continues its global M&A shopping spree, increasing its footprint and earnings, no specific date has been firmly set. BABA is entitled to own up to a third of the company, and valuation last May in the private markets put the figure at $60 billion (meaning Alibaba’s stake is worth $20 billion). Unlocking that value would be a huge event for shareholders.
Smart Money Stocks to Buy: Facebook Inc (FB)
After an almost 50% run up year-to-date, some funds have been taking gains in popular tech stocks, but not all, including Tiger alumni, Andreas Halvorsen who runs Viking Global.
That said, Facebook Inc (NASDAQ:FB) still remains a crowded trade, popular among institutions, hedge, mutual or otherwise, alike.
The numbers show that there is is a lot to like in FB. The company continues to show strength in its underlying business. Second-quarter earnings showed that growth was to be found everywhere. Monthly active users (MAUs) crossed the 2-billion-mark, representing a 17% year-over-year increase, and total advertising revenue was up 47% with increased share in mobile.
Importantly, revenues from the U.S. and Canada recovered, and there was growth seen across all geographies after a tepid first quarter, which incidentally didn’t slow down the FB stock price much.
And at 38x trailing earnings, Facebook valuation doesn’t feel like a stretch so long as it keeps posting growth figures comparable to the most recent quarter.
Smart Money Stocks to Buy: Mastercard Inc (MA)
In the world of global payments, where growth increasingly hinges on digital, Mastercard Inc (NYSE:MA) doesn’t have the same kind of clout as a company like Paypal Holdings Inc (NASDAQ:PYPL). That said, they are quickly making up lost ground.
In the first half of the year, a number of partnerships struck with the likes of Suntrust, Qantas and Travelex have proven their value proposition to large clients that will drive gross dollar volume (GDV) growth. In prepaid and commercial, we’re talking 15% growth, and in consumer credit and consumer debit, the company delivered high single-digit growth.
As the line blurs between physical and digital, with the latter capturing a bigger percentage of retail payments year after year, MA is well-positioned to take their best-in-market digital payment service (Masterpass and Masterpass QR for international markets) to the next level by increasing reach and acceptance points.
In particular, I would highlight Mastercard Send™, the company’s global push payments platform for cross-border funds transfers as holding huge potential. In the Middle East and Africa (MEA), they are winning nine out of ten deals. If they can continue that momentum in other geographies, there’s no stopping MA.
Smart Money Stocks to Buy: Teladoc Inc (TDOC)
While this is a relatively small position in Tiger Global’s fund, it’s one of the more interesting picks, sitting at the intersection of healthcare and technology.
Teladoc Inc (NYSE:TDOC) is at the forefront of a very attractive $29 billion ambulatory care and behavioral health industry that is just begging for disruption. The company estimates that the industry is less than 1% penetrated, presenting a wide-open opportunity for long-term growth. Teladoc also happens to be the leader in its field with over 20 million members who value their convenience and affordability.
Everybody wins with TDOC. Clients see the return on investment that the platform provides as well as the value add from flexibility and providers benefit from a simple reimbursement process and a predictable income stream. It’s a compelling circle to be at the center of when everyone is left happier.
And Teladoc is just getting started. As it continues to iterate and mine data to better serve the end-user, the logical endgame is a fully integrated virtual healthcare delivery platform. The company owns the ecosystem and through select acquisitions, it is bolstering its product offerings. Thus, the value proposition is enhanced and a virtuous cycle ensues with more users and higher quality of service.
Smart Money Stocks to Buy: SAGE Therapeutics Inc (SAGE)
Given the numerous “value-inflecting clinical catalysts” in the remainder of the year, it’s no surprise that many analysts are overweight SAGE Therapeutics Inc (NASDAQ:SAGE). The third quarter holds the key to further increases in share price as clinical milestones are announced (for better or for worse).
Three Phase 3 readouts, four Phase 2 trials and one Phase 1 single-dose trial are still forthcoming, presenting near-term event-driven opportunities for the stock to spike higher. Most important is the result of the Brexanolone Phase 3 Status Trial. SAGE recently completed the first global, randomized, double-blind trial in super-refractory status epilepticus (SRSE).
Brexanolone already has Prime designation from the European Medicines Agency to treat postpartum depression (PPD). If Phase 3 results are positive, which many are betting they will be, this would allow a European Marketing Authorization Application to EMA and potentially be a big revenue driver.
Another key catalyst is the Phase 2 program of SAGE-217 in the treatment of Parkinson’s disease. Positive activity signals have been observed in the Part A open-label portion of the Phase 2 study. This led to the initiation of a Part B study as an adjunctive treatment in a smaller cohort of Parkinson’s disease patients. Top-line results are nigh.
Smart Money Stocks to Buy: Charter Communications, Inc. (CHTR)
Charter Communications, Inc. (NASDAQ:CHTR) is consistently a popular holding in Media & Telecom. Despite a dramatically shifting landscape, analysts see growth ahead for the $101 billion cable company.
One reason is the rollout of spectrum with new pricing earlier in the year. It’s a high-value product for Charter, and improvements in year-over-year customer connect volumes across the company’s geographies are evident.
The launch of Spectrum is indicative of Charter’s overall strategy of delivering higher customer satisfaction and thus, lower churn. Both mean better times ahead for CHTR stock.
Adjusting for the Legacy Bright House seasonal program changes, last quarter looked positive with total customer relationships increasing to 231,000. Residential revenue posted gains of 3.8% and commercial clocked in at 9.5%. Free cash flow numbers were also very healthy, having more than doubled year-over-year, supporting capital returns to shareholders.
Note that due to loss carryforwards, CHTR doesn’t expect to pay meaningful taxes until 2019.
Smart Money Stocks to Buy: Allergan plc Ordinary Shares (AGN)
Over the last couple years, Allergan plc Ordinary Shares (NYSE:AGN) has been punted around among hedge funds. The ride has been bumpy, but riding the healthcare rally this year, Allergan is now up 7.8% for the year. Even with decent performance, some on the sell-side now view it as a compelling value play.
It’s the largest holding in John Griffin’s Blue Ridge Capital’s portfolio, at over 6% of his portfolio. And he has no doubt been richly rewarded by being patient. While AGN is still running net GAAP losses, total revenues in the most recent quarter increased 9%. Legacy brands such as Botox and the Juvederm Collection in addition to new products like Namzaric and Viberzi helped achieve the improvement.
Guidance for the latter half of the year has been raised as things are looking up for the drugmaker. The R&D program is making significant progress, pushing ahead in targeted areas like cenicriviroc (CVC), which has a Phase 3 study underway now. AGN expects its top performing brands to continue driving topline growth in the remainder of the year and with a strong showing from newly launched products, I think their revised guidance could prove to be conservative.
As of this writing, Luce Emerson did not hold a position in any of the aforementioned securities.