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Tiger Global Management, LLC, is a fundamentally oriented global investment firm. The firm deploys capital in two businesses—private equity partnerships and public equity funds. Tiger Global’s private equity partnerships have ten-year horizons and invest in growth companies in the global Internet and technology sectors. The firm’s public equity funds focus on long-term trends in the technology, telecom, media, retail, and consumer sectors. For public and private equity investments, the firm invests across the globe with a focus on the United States, China, India, Southeast Asia, Latin America, and Eastern Europe. The New York–based Tiger Global was founded in 2001, and it has about $6 billion in assets under management.
Abbreviated financial summaries and metrics for these securities are included below. Detailed analysis and recommendations require a subscription (more information at the bottom of the article).
In this six-part series, we’ll go through some of the main positions Tiger Global Management traded this past quarter.
Tiger Global started new positions in Yahoo Inc. (YHOO), Liberty Ventures (LINTA), SodaStream International Ltd. (SODA), and TripAdvisor Inc. (TRIP) and it sold Sinclair Broadcast Group (SBGI) and QUALCOMM Inc. (QCOM).
Why buy SodaStream International Ltd. (SODA)?
Sodastream’s 3Q revenue increased 28.5%, to $144.6 million, from $112.5 million in the third quarter 2012, but it was below analyst estimates. Diluted earnings per share beat analyst estimates at $0.76, compared to $0.80 in 3Q 2012. The U.S., which represents 32% of the company’s total sales, continued to generate solid growth during the third quarter, with revenues up 36% versus a year ago. Western Europe also saw a 44% increase in revenue. CEMEA posted a 4% revenue increase in the third quarter, while revenue was down 21% in Asia-Pacific due to continued struggles in Japan. The company said its Japanese distributor isn’t properly supporting the brand with marketing investments and retail expansion.
It said it’s expanding its line of innovative soda makers and flavors and continues to focus on its largest markets, which provide significant untapped penetration opportunity. It has over 60 flavors in the U.S., including 15 co-branded SKUs following the launch this month of three Ocean Spray flavors. This figure will continue to grow with the introduction of SODA’s new Happy Hour Cocktail Mixers in 4Q as well as ten new co-branded SKUs with the launch of Diet Ocean Spray, V8 Splash, EBOOST, and Cooking Light early next year.
The company has a positive outlook for the full year and expects an increase of 30% in both revenue and adjusted net income. On an IFRS basis, net income is projected to increase approximately 23% over 2012 levels, while adjusted EBITDA is projected to grow 38% in 2013 from last year. SODA expects to benefit from the holiday season in 4Q and has also targeted online marketing by launching its range of products on Amazon. Despite positive earnings, the company’s saw shares fall following its earnings announcement.
SodaStream is a large manufacturer, distributor, and marketer of Home Carbonation Systems. Its brands sell in over 60,000 retail stores in 45 countries, including home and electrical appliance stores, hypermarkets, supermarkets, department stores, convenience stores, DIY stores, specialty stores, and “green” stores, water specialists and dealers, as well as online and in catalogs. The SodaStream system enables consumers to carbonate water and flavor carbonated beverages at home as an alternative to purchasing pre-packed bottles or cans. This has many important benefits to the consumer, including cost savings and no hassle with bottles. SODA’s headquarters are located in Israel, and it has 22 manufacturing facilities around the world, including in Israel, the West Bank, Germany, Sweden, the U.S., Australia, South Africa, and China. The SodaStream group has an intellectual property portfolio that includes 65 patents and 198 trademark registrations worldwide.
Tiger Management Corp., also known as “The Tiger Fund,” was a hedge fund founded by Julian Robertson. The fund began investing in 1980 and closed in March 2000. After closing his Tiger Fund in 2000, Robertson used his own capital to support and finance upcoming hedge fund managers. One of the seeded funds is Tiger Global Management LLC, which was set up with managing partner Charles “Chase” Payson Coleman III. The fund is co-managed by Feroz Dewan.
According to a Bloomberg article, “Tiger cub” Chase Coleman is a descendent of Peter Stuyvesant, the last Dutch governor of New York. He graduated from Williams College and worked as a technology analyst for Robertson at Tiger Management LLC. Coleman initially named his fund “Tiger Technology Management,” later changed to Tiger Global.