Tiger Consumer's Top 10 Grew 18% This Year
Founded in 2006, Tiger Consumer does not change its net exposure based on a market or economic view. Instead, it concentrates on two governing factors to its growth -- liquidity and research capacity -- according to McMormack's letter to investors in 2010.
In late January, we found that McCormack's top 10 positions at the end of September returned 19% since then. The large positions in McMormack's portfolio continue similarly decent performance this year. Since the beginning of 2012, the top 10 positions at the end of December returned 18%, vs. 11% for the S&P 500 index in the same period.
The top three positions in McCormack's portfolio were Kraft
The best performing among the stocks in McMormack's portfolio is Priceline.com
At the end of last year, Tiger Consumer reported to own $58 million worth of Priceline shares. Many other Tiger Cubs were bullish about Priceline. Stephen Mandel, Chase Coleman, Andreas Halvorsen and John Griffin were all among the top five hedge fund managers most bullish about Priceline. Coleman had $570 million invested in this position.
We like Express Scripts. In early April, the company acquired Medco Health Solutions for about $29.1 billion in cash and stock. Last year, Medco generated revenue of over $70 billion and earned about $1.5 billion. As a result, Express Scripts' revenue is expected to increase significantly in 2012. The acquisition is also expected to generate at least $1 billion operating synergies and more than $4 billion cash flow.
In addition to acquisition, Express Scripts has also been buying back its common shares. The company repurchased about 46.4 million of its shares over the past year, boosting its EPS. Analysts expect the company to make $3.60 per share in 2012 and $4.46 per share in 2013, vs. $2.98 per share for the trailing 12-month. The company's forward P/E ratio is about 16, on par with the industry average of 15.10. But, considering its strong growth potential (analysts expect the company's earnings to grow at an average of 16.4% in the next few years), we recommend investors buy this stock.
We like Herbalife too. We think the company will benefit from its expansion and the strong growth in Asia Pacific, South and Central America, and Mexico. We are bullish about the stock for the long term. Billionaire Jim Simons' Renaissance also had a large position in Herbalife. The only two other funds with large positions are East Side Capital and Ken Heebner's Capital Growth Management (see Ken Heebner's stock picks).