Philippe Laffont’s Top 3rd-Qua – GuruFocus.com

Coatue Management recently disclosed its 13F portfolio updates for the third quarter of 2021, which ended on Sept. 30.

Founded in 1999 and headquartered in New York, Coatue Management is an employee-owned private hedge fund sponsor. It launches and manages various hedge funds for clients and is perhaps best known for its tech-focused hedge fund. The firm mainly invests in U.S. and international publicly traded equity securities, but it also has short positions and investments in private equity and hedging markets. The firm’s chief investment officer is
Philippe Laffont (Trades, Portfolio), who founded the firm after leaving Tiger Management. Laffont takes a top-down approach to stock picking and focuses on the information technology sector.

Based on its investing criteria, the firm’s top buys for the third quarter (according to its latest 13F filing) were Kanzhun Ltd. (BZ, Financial), Marqeta Inc. (MQ, Financial) and JD.com Inc. (JD, Financial).

Notably, Coatue has also made two significant buys since the third quarter ended, according to GuruFocus Real-Time Picks. The firm added to Toast Inc. (TOST, Financial) on Oct. 27 and Agora Inc. (API, Financial) on Oct. 31.

Kanzhun

The firm added 22,034,955 shares to its Kanzhun (BZ, Financial) investment to end the third quarter with 23,063,530 shares. The stock traded at an average price of $35.41 during the quarter, and the trade added 3.16% to the equity portfolio.

Kanzhun is a Chinese provider of online recruitment services, connecting job seekers with businesses through its interactive “BOSS Zhipin” mobile application.

The company has a financial strength rating of 7 out of 10, driven by a cash-debt ratio of 46.24 and an Altman Z-Score of 20.41. In terms of profitability, the company has been burning cash in most quarters, but it switched to a positive operating margin of 25.68% and a positive net margin of 23.62% in the most recent quarter.

On Nov. 29, shares of Kanzhun traded around $34.49 for a market cap of $14.11 billion. The stock is down 7% since it went public in June.

Marqeta

Laffont’s firm upped its stake in Marqeta (MQ, Financial) by 25,444,638 shares during the quarter for a total of 28,449,054 shares, adding 2.23% to the equity portfolio at the average share price of $26.79.

Headquartered in Oakland, California, Marqeta is an IT service management company that provides an open API platform where companies can create, issue and deploy virtual and physical payment cards.

The company has a financial strength rating of 7 out of 10, with a cash-debt ratio of 103.34 and an Altman Z-Score of 34.81 following its successful public listing. Profitability has been trending down, with the operating margin and net margin falling to -34.70% and -34.77%, respectively, in the most recent quarter.

On Nov. 29, shares of Marqeta traded around $20.51 for a market cap of $11.08 billion. The stock is down 32% since it went public in June.

JD.com

Coatue Management purchased another 7,277,722 shares of JD.com (JD, Financial) in the third quarter for a total holding worth 8,148,654 shares. The trade marked a 2.13% addition to the equity portfolio at the quarter’s average share price of $73.86.

JD.com, which is also known as Jingdong and formerly called 360buy, is one of the two largest business-to-consumer e-commerce companies in China in terms of transaction volume and revenue, the other being Alibaba’s (BABA, Financial) Tmall. The majority of its revenue is derived from online direct sales.

The company has a financial strength rating of 7 out of 10, with an Altman Z-Score of 4.52 and Piotroski F-Score of 6 out of 9 indicating a healthy financial situation. The profitability rating is 4 out of 10; although the operating margin is low at 0.64%, the company has a three-year revenue per share growth rate of 24.8% and a three-year Ebitda per share growth rate of 118.1%.

On Nov. 29, shares of JD.com traded around $87.91 for a market cap of $136.55 billion. The stock is modestly overvalued according to the GF Value chart.

Toast

According to GuruFocus Real-Time Picks, Coatue Management added 1,491,774 shares to its investment in Toast Inc. (TOST, Financial) on Oct. 27, impacting the equity portfolio by 0.32% and bringing the total number of shares owned to 1,843,774. The stock averaged a price of $52.76 on the day of the trade. The firm first initiated the position in the third quarter with a nominal stake of 352,000 shares.

Toast is a cloud-based restaurant software company headquartered in Boston. Its restaurant point of sale and management system aims to help restaurants improve operations and increase sales.

The company has a financial strength rating of 6 out of 10. Its recent public offering ensured that it no longer has any debt on its balance sheet. However, it might not stay that way for long, since the company is not yet profitable; for the most recent quarter, the company had an operating margin of -11.04% and a net margin of -51.91%.

On Nov. 29, shares of Toast traded around $43.68 for a market cap of $22.25 billion. The stock is down 30% since it went public in September.

Agora

GuruFocus Real-Time Picks show that Laffont’s firm acquired another 3,597,426 shares of Agora Inc. (API, Financial) on Oct. 31, which had a 0.32% impact on the equity portfolio and brought the position to 13,160,020 shares. Shares were changing for an average price of $21.80 on the day of the trade. The firm first established an investment in Agora in the fourth quarter of 2020.

Agora is a real-time engagement API company with dual headquarters in the U.S. and China. It offers video, voice, live interactive streaming platforms and more to help clients interact and engage with people online.

The company has a financial strength rating of 7 out of 10, with strong fundraising during its public offering ensuring that it has a cash-debt ratio of 104.24 and an Altman Z-Score of 18.17. While the company’s top line has been increasing, its bottom line has been decreasing as it prioritizes growth over profits.

On Nov. 29, shares of Agora traded around $20.63 for a market cap of $2.39 billion. The stock is down 59% since it went public in the third quarter of 2020.

Portfolio overview

As per the most recent SEC filings, the firm held shares of 77 common stocks valued at a total of $24.58 billion. The turnover for the third quarter was 15%.

The top holding was Moderna Inc. (MRNA, Financial) with 9.47% of the equity portfolio, followed by DoorDash Inc. (DASH, Financial) with 7.92% and Snowflake Inc. (SNOW, Financial) with 4.81%.

In terms of sector weighting, the firm was most invested in technology, communication services and consumer cyclical.