Tiger Global Management starts positions 3Q 2013

Part 4

Tiger Global Management starts positions in YHOO, LINTA, SODA, TRIP and sells SBGI, QCOM—13F Flash D

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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 TripAdvisor Inc. (TRIP)?

TripAdvisor posted revenues of $255.1 million in 3Q 2013, a 19.9% increase from the same period last year, driven by continued strong hotel shopper growth in its click-based business as well as notable strength in display and continued strong subscription, transaction, and other revenue. The company saw growth across all segments, including click-based advertising, display-based advertising, and the subscription, transaction, and other category. Adjusted EBITDA growth slowed to -2% versus 15% in the same quarter last year.

The company said international revenue growth continues to outpace domestic revenue growth, with Q3 international revenue up 25%. This growth is driven primarily by rapid hotel shopper growth globally and strong performance of its display and business listings products overseas. International hotel shoppers were up 41%, with Latin America representing TripAdvisor’s fastest-growing region, at 54% of hotel shopper growth.

In terms of the company’s meta-search feature rolled out in early June, TripAdvisor said the transition impacted 9% to 12% of its click-based advertising revenue due to low conversion rates. It said despite prices being choppy, it has seen a modest uptick in meta revenue per session. Tablet and phone revenue contributed nearly 15% of total click-based revenue, with unique users on phones up more than 200% year-to-date. For combined mobile devices, TripAdvisor has had more than 108 million average monthly users on tablets and phones, approaching 40% of its total traffic and reaching more than 69 million cumulative app downloads. The company said it sees an opportunity for better smartphone monetization.

During the quarter, TripAdvisor repurchased 1.4 million common shares for an aggregate purchase price of $100.0 million.

It reiterated its total revenue growth expectation of low-20s for the full year. For click-based revenue, the cost-per-click (CPC) bidding landscape continues to mature. TripAdvisor said it faced increasingly tough traffic competition due to improvements in SEO in the later half of 2012 and early 2013. As a result, it has lowered its full-year 2013 expectation for click-based revenue growth to mid- to high-teens. Based on the strong results through the nine months, it increased its display-based revenue outlook to high-teens to low-20s growth for the full year, but it doesn’t expect the fourth quarter to have a strong growth rate. For subscription, transaction, and other business lines, it expects high-50s growth for the full year and sees more upside opportunity than downside risk to that forecast.

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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.

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