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(KFT) , Dollar General (DG) and McKesson(MCK) . Dollar General returned 13% and McKesson delivered an 18% return since the beginning of this year. Kraft is the third-worst-performing position in our list, gaining only 4%.
The best performing among the stocks in McMormack's portfolio is Priceline.com(PCLN) . The stock is up 53% since the beginning of this year, beating the market by 42 percentage points. McCormack increased his Priceline stakes by 16% during the fourth quarter of 2011 -- a rather well-timed bet by the looks of it.
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 .
Express Scripts (ESRX) is also generating a strong return this year. To date, the stock is up 32%, outperforming the market by over 20 percentage points. Express Scripts is a new position in McMormack's portfolio. During the fourth quarter, Tiger Consumer initiated a brand new $53 million investment in Express Scripts. Stephen Mandel was in favor of Express Scripts as well. His Lone Pine Capital had over $600 million invested in this position at the end of 2011. Christopher James' Partner Fund Management also had nearly $600 million invested in Express Scripts.
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.