Altimeter Capital Management’s 21 Stock Portfolio: Top 10 Holdings Analyzed

Up to date on April twenty seventh, 2021 by Nikolaos Sismanis

Altimeter Capital Administration is a Boston-based multi-billion greenback technology-focused funding agency managing a protracted/quick public fairness fund and personal development fairness funds. The agency was initially based by Brad Gerstner in 2008, in Menlo Park, California, and at the moment has round $6.4 billion value of Belongings Underneath Administration (AUM).

Traders following the corporate’s 13F filings over the past 3 years (from mid-February 2018 by mid-February 2021) would have generated annualized whole returns of 30.9%. For comparability, the S&P 500 ETF (SPY) generated annualized whole returns of 12.50% over the identical time interval.

You’ll be able to obtain an Excel spreadsheet with metrics that matter of Altimeter Capital Administration’s present 13F fairness holdings beneath:

Be aware: 13F submitting efficiency is totally different than fund efficiency. See how we calculate 13F submitting efficiency right here.

Maintain studying this text to be taught extra about Altimeter Capital Administration.

Desk Of Contents

Altimeter Capital Administration’s Holdings

Altimeter has achieved spectacular annualized returns over the previous few years, considerably outperforming the S&P 500. The fund’s success has been attributed to administration’s superior expertise in figuring out and investing in corporations within the ever-growing tech sector. Its holdings are allotted in main public equities and extremely promising personal corporations earlier than they finally IPO.

General, whereas Altimeter is among the largest hedge funds now we have lined to this point, when it comes to property, its public-equities portfolio is very concentrated with a complete of 21 holdings, nearly solely targeted on expertise and client discretionary. Now we have beforehand mentioned different funds whose related philosophy of holding just a few, excessive conviction concepts, has been undertaking market-beating returns, reminiscent of our current Valley Forge Capital Administration article.

Supply: 13F filings, writer

Throughout the quarter, Altimeter initiated or offered its place within the following shares:

New Buys:

• Sq. (SQ)
• Coupa Software program Integrated (COUP)

New Sells:

• ANGI Homeservices Inc. (ANGI)
• Sew Repair, Inc. (SFIX)
• Trivago N.V. (TRVG)
• Ranpak Holdings Corp. (PACK)
• Vroom, Inc. (VRM)

Altimeter’s prime 10 holdings weigh round 88.9% of its whole portfolio and include the next equities:

Supply: 13F filings, writer

Pinduoduo (PDD):

Occupying round 21.4% of the overall holdings, Pinduoduo is the second China-based agency in Altimeter’s portfolio, together with a smaller stake in Alibaba (BABA). The corporate operates a cell platform that provides a spread of merchandise, together with attire, meals, beverage, digital home equipment, and any consumer-related product typically. The corporate continues to be rising its revenues at practically 100% (97.4% YoY) regardless of its extended development, which makes Pinduoduo probably the most quickly increasing long-term winners within the house.

Nonetheless, potential traders want to concentrate on the scrutiny surrounding Chinese language equities, with talks of them being delisted from the Nasdaq, together with the current delisting of Luckin Espresso attributable to fraud. The corporate didn’t make any adjustments in its place as of its newest submitting, regardless of having fun with large beneficial properties in its present fairness stake. Altimeter boasts a median buying worth level of round $25, whereas shares are at the moment buying and selling past $140. This isn’t solely one of many funds’ most profitable positions, but in addition one which administration believes will proceed to outperform going ahead.

The place was held regular throughout the quarter.

Uber (UBER):

Uber is Altimeter’s second-largest holding, occupying round 20.9% of the fund’s portfolio. The fund has been invested within the transportation disruptor earlier than the corporate went public in Might of 2019. Whereas shares proceed buying and selling close to their all-time excessive ranges, Uber’s financials deteriorate by the day. The continuing pandemic has lowered demand for fixed transportation, scrapping Uber’s plans for turning into worthwhile. Revenues took a big hit, whereas, Uber misplaced practically $1 billion within the final quarter alone. Regardless of that, the ahead P/S a number of has even grown over the previous yr, with traders valuing the corporate at 6.7 instances its ahead gross sales.

Altimeter trimmed its Uber place by round 1%, primarily based on its newest f13 submitting, pausing its steady shopping for.

Altimeter’s religion in Uber by such a big stake is outstanding, contemplating that the corporate is incessantly going through regulatory setbacks. On the similar time, administration has didn’t persuade the market of a transparent profitability roadmap. It’s additionally placing that Altimeter doesn’t maintain a single share in Uber’s rival Lyft (LYFT), in efforts to hedge its giant guess.

Fb (FB):

Altimeter Capital CEO Brad Gerstner has been lengthy on Fb for years, along with his fund doubling down on the inventory on occasional dips, together with the inventory’s plunge throughout 2018’s scandal involving Cambridge Analytica. The corporate has not offered a single of its 3,753,400 shares since, which has drastically paid off. It’s at the moment the fund’s third-largest place.

Fb is at the moment having fun with wonderful financials, with a web money place of $62 billion (7% of the market capitalization of the inventory). Fb is among the extraordinarily few corporations that haven’t any debt. It is a testomony to the power of its enterprise mannequin and its good execution. Furthermore, despite the fact that half of the globe makes use of not less than one in all its apps on a month-to-month foundation, its person base continues to be rising at double-digit charges. Fb delivered an all-time excessive prime & backside line of $28.07 billion and $11.2 billion, respectively. Fb stays probably the most cheaply valued development shares on the market, nonetheless retaining 20%+ income development, however buying and selling at a ahead P/E of simply 26.7.

Salesforce (CRM):

Salesforce’s shares have been snowballing, having doubled since March’s COVID-19 selloff. The corporate has been posting document revenues, with its most up-to-date quarter tuning over a document $5.82 billion. At round 9% of whole holdings, Salesforce has handled Altimeter properly, as the corporate is taking the enterprise cloud-computing options market by storm.

For context, the corporate has incrementally grown its quarterly revenues for 72 consecutive quarters. Whereas the inventory’s ahead P/E of round 63.6 could also be seemingly hefty, the corporate has confirmed its capacity to develop into its valuations. On the present charge of speedy profitability development, the a number of is well-deserved.

The corporate lately introduced its acquisition of Slack (WORK) for $27.7 billion, which ought to assist the corporate’s profitability to speed up amid cost-cuttings and synergy efficiencies. Salesforce ought to have the ability to combine Slack in all of its shoppers’ endpoints, which will increase the probabilities of shopper conversion.

Altimeter held its Salesforce place regular throughout the quarter. It’s Altimeter’s fourth-largest holding.

Expedia Group (EXPE) & Reserving Holdings (BKNG):

The web journey, restaurant, and associated reserving companies duo collectively occupy round 10.8% of Altimeter’s portfolio. Whereas each shares skilled a nosedive amid COVID-19’s journey restrictions, shares have largely recovered, as traders hope that the sector will return to normality over time. Altimeter took the prospect to strengthen its place in Expedia, within the first half of 2020, benefiting drastically from the continuing rebound.

Nonetheless, we are able to’t ignore that the financials of each corporations took a big hit and that traders’ confidence seen by the sturdy rebound is merely primarily based on hypothesis round a fast restoration within the tourism trade.

Throughout This autumn, Altimeter held its Reserving place fixed however trimmed its Expedia stake by round 24.5%.

Microsoft (MSFT):

Present in nearly each single non-specialized fund that now we have lined, traders can’t get sufficient of Microsoft, as the corporate’s diversified portfolio of tech services has been ruling the sector’s digital infrastructure. The corporate’s CEO Satya Nadella has been reworking the corporate right into a cloud powerhouse, posing recording prime and backside strains quarter after quarter.

Its newest quarter marked one other profitability document, reaching a web earnings of $15.46 billion. The continuing pandemic continues to be a optimistic catalyst for Microsoft’s development, which, together with its comparatively honest P/E of 32.2, makes it nonetheless a lovely decide regardless of the inventory’s extended rally.

Altimeter has been including shares continuous, as the most recent f13 submitting revealed one other 16.9% stake enhance, after a beforehand 19% stake growth. Shares make up round 4.2% of the fund’s whole holdings, making Microsoft the fund’s sixth-largest holding.

Alibaba Group Holdings (BABA):

Occupying round 3.6% of the fund’s whole holdings, Alibaba is the one different Chinese language-based agency in Altimeter’s portfolio together with its largest fairness stake, Pinduoduo (PDD). The corporate lately reported its This autumn outcomes, smashing estimates by delivering revenues of $33.88 billion, a 37.0% development year-over-year. Whereas Alibaba stays a extremely worthwhile firm, displaying web earnings margins that usually surpass the 30%+ ranges, its shares have been lately lagging as a result of ongoing issues surrounding Chinese language equities.

The current incident of Jack Ma’s extended and mysterious disappearance is an unacceptable occasion for one of many largest publicly traded corporations on the planet, whereas the Chinese language authorities’s involvement in steering the corporate’s route has additionally been elevating questions amongst traders. The inventory is at the moment buying and selling at round 20.5 instances its ahead web earnings, to replicate these dangers.

Altimeter greater than tripled its stake throughout the quarter, now holding 1.1 million shares, vs. 294,000 shares throughout its earlier submitting.

Farfetch (FTCH):

The U.Okay.-based on-line market for luxurious items is an organization Altimeter has been holding since its early IPO. Over the previous yr, the fund has tripled its place, however shares have but to occupy greater than 3.2% of the overall holdings.

Whereas the corporate is technology-focused, contemplating its revolutionary on-line market, its funding into Virgil Abloh’s Off-White has given it direct publicity to the style world, working precise retail places. Farfetch has but to show a revenue, however its gross sales are strengthening, as Off-White is turning into a cultural phenomenon, exploding in recognition.

Regardless of the speedy income development (practically 64% YoY), and the inventory’s extended rally, the inventory’s valuation is just not totally loopy at 8.5 instances its ahead gross sales. That’s, assuming the present development charge doesn’t take a nosedive transferring ahead.

Altimeter held its place regular quarter-over-quarter.

Closing Ideas

Altimeter has been delivering a few of the most spectacular returns now we have seen in hedge funds, outperforming the general market indices by an enormous margin. Its concentrated portfolio of excessive conviction equities has been drastically paying off and confirmed to be a viable technique. That stated, traders trying to faucet into Altimeter’s holdings needs to be cautious of the fund’s lack of diversification and the tech sector’s sky-high valuations.

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