Investing

Tiger Global Cuts Cybersecurity and China Exposure While Rotating Into LargeCap Tech. Find Out Why.

Internet and growth focused hedge fund manager Tiger Global has grabbed headlines over 2022 as the fund was hit with hefty losses from high growth and valuation companies.

The asset manager headed by Chase Coleman became one of the most successful hedge funds across the globe with successful bets on high growth technology names over the last 20 years.

The fund has suffered high losses over 2022 losing more than half its capital with high growth stocks re-rating lower as rising rates shifted market valuation dynamics in the market.

Coleman originally set up his firm in 2001 in New York during a time when equity markets were experiencing the crash of the technology ‘dot com bubble’, bursting from excessive valuations.

At the end of the third quarter, according to Tiger Global’s most recent 13F filing, the fund held a total of 64 positions worth approximately $10.89 billion.

The Fintel platform’s hedge fund data unveils the most significant positions and recent trades that have been reported to the SEC.

Top purchases:

The fund’s largest purchase during the quarter was in data monitoring services firm Datadog (US:DDOG) with a 3.26% increase in the portfolio allocation to 4.71%. Tiger now holds 5.78 million shares worth $513 million. The stock is trading -54% lower over 2022 but has moved sideways since May. In early November DDOG reported Q3 results that beat consensus forecasts and included a full year upgrade to revenue and profit guidance above expectations.

The second largest purchase was a 2.85% weight increase in human resources software firm Workday (US:WDAY) to a 4.43% allocation worth $483 million. The stock is trading -43.5% lower over the year and is scheduled to report Q3 results this week. During September the company reiterated its full year guidance for 20%+ subscription growth with over $10 billion in revenue.

Alphabet (US:GOOGL) was the third largest increase with the firm almost doubling its allocation by 2.85% to a 4.43% portfolio weight worth $523 million. The stock has not been immune to broader equity market weakness tracking -32.8% lower over 2022. At Alphabet’s last result in October, the company missed revenue and profit estimates as they were negatively affected by currency headwinds.

The fund tipped in a 2.3% portfolio weight increase in ridesharing group Uber Technologies (US:UBER), bringing the total weight to 2.41%. Uber’s stock has recovered more than 30% from calendar year lows in July but remains down -35.1% for the year. While the last result was ahead of consensus forecasts, investors remain concerned about inflationary headwinds that may further impact growth.

The fifth largest increase was in the fund’s second largest position in Microsoft (US:MSFT) adding an additional 1.73% allocation and bringing the total weight to 12.84%. The position size is worth about $1.4 billion. The tech giant remains affected by broader market weakness but continues to outpace analyst forecasts as seen during the Q1 result in late October.

Other purchases during the quarter included a top up in data share centre Snowflake (US:SNOW) by 1.58%, a new 1.47% position in Hubspot (US:HUBS), a 1.43% increase in Block Inc (US:SQ) and a 1.42% increase in ServiceNow (US:NOW).

Top Sales:

The largest decrease during the quarter was a -7.89% portfolio weight reduction in cybersecurity giant CrowdStrike (US:CRWD) to 1.36% The remaining position at the end of the quarter had a market value of around $148 million. The stock has experienced a choppy year over 2022 with the stock moving higher and lower several times. Overall the stock remains down -29.4% over the year. The stock is scheduled to report Q3 results this week with guidance for EPS of 30 to 32 cents and sales between $569 to $576 million.

The second largest sale was in Brazilian fintech Nu Holdings (US:NU) with a -4.49% portfolio weight reduction to 1.87% worth ~$204 million. The stock materially outperformed analyst profit and sales expectations during the Q3 result in mid November but continues to trade in its sideways pattern that began in early May.

Tiger reduced its largest position in Chinese e-commerce giant JD.com (US:JD) by -2.64% to a 13.79% allocation worth $1.5 billion. Since reporting Q3 results in mid-November the stock has sharply recovered recent losses accumulated during the previous quarter and is now down -27.6% for 2022.

Tiger also halved its exposure in cybersecurity firm SentinelOne Inc (US:S) by -0.98% to 0.97% worth $106 million, cutting its losses in the position. The stock has traded significantly lower over 2022 losing -66% of its value. The stock is scheduled to report Q3 earnings on the 6th of December with management expected to report $111 million in revenue.

The fund trimmed its position in cloud-based communications provider RingCentral (US:RNG) by -0.48% to a 0.91% portfolio weight worth $99 million. The stock has experienced heavy losses of more than -80% over 2022 due to valuation concerns. At the most recent result in November, management told investors it would be firing 10% of the workforce to reduce expenses.

The fund completed positions in Procore Technologies (US:PCOR), Xpeng Inc (US:XPEV), 1life Healthcare Inc (US:ONEM) and monday.com (US:MNDY).

This article originally appeared on Fintel

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