Priceline.com Inc.’s 17 percent stock market swoon today may fall particularly hard on money managers who got their start with the help of billionaire Julian Robertson, the founder of Tiger Management LLC.
These managers, known as Tiger “cubs” and “seeds,” held a combined 4.1 million Priceline shares as of March 31, according to the most recent data they’ve filed with the U.S. Securities and Exchange Commission. That equated to an 8.3 percent stake in Priceline.com, a Norwalk, Connecticut-based company that ranks as the largest U.S. online travel agency.
Several former Robertson protégés, such as Stephen Mandel of Lone Pine Capital LLC and John Griffin at Blue Ridge Capital LLC, may have bought Priceline shares as part of a bet on consumer-discretionary stocks, according to SEC data compiled by Bloomberg. Buffeted by Europe’s declining economies, the sector has been the second-worst performer in the benchmark Standard & Poor’s 500 Index since June 1, besting only utilities, said Howard Silverblatt, a senior index analyst at S&P in New York.
“You are not sure where the consumer is going to be spending,” Silverblatt said in a telephone interview today. “Those things change very quickly because the consumer has the ability to change very quickly.”
Robertson, 80, was both a pioneer and mentor in the hedge-fund industry, having employed at least 40 portfolio managers and analysts who subsequently formed their own firms and became known as Tiger cubs. After returning capital to outside investors in 2000, Robertson began seeding a newer generation of mangers with his own capital, helping 38 firms get started. Many of these Tiger seeds, also known as “grandcubs,” work out of Robertson’s office at 101 Park Ave. in Manhattan.
At least 12 managers with ties to Robertson reported owning Priceline shares at the end of March, according to SEC data compiled by Bloomberg. Lone Pine ranked as the largest investor in this group, holding 1.08 million of the shares with a market value of about $776 million as of March 31. That equaled 4.8 percent of the firm’s $16.1 billion in U.S. stocks. The firm had scaled back its position by selling almost 386,000 shares during the first quarter.
Blue Ridge owned 554,000 Priceline shares, and Lee Ainslie’s Maverick Capital Ltd. and Andreas Halvorsen’s Viking Global Investors LP held 176,900 and 663,466 shares, respectively. Tiger Global Management LLC, run by Chase Coleman, had 785,000 shares, after selling 433,200 in the first quarter.
T. Rowe Price Associates Inc., the Baltimore-based mutual-fund company, was the largest Priceline holder at the end of the first quarter, with 4.78 million shares.
Money managers who oversee more than $100 million must disclose their holdings in stocks that trade on U.S. exchanges by filing Form 13Fs within 45 days of the end of each quarter. The next set of filings, which will report holdings as of June 30, are due next week.
Priceline shares fell $117.50 to $562.32 in New York after the company revised its sales forecasts to account for a slowdown in European travel. The decline knocked $5.8 billion off the stock market value of Priceline, whose shares averaged annual increases of 60 percent in the five years through yesterday.
“Priceline has had a very strong growth trajectory, and that is the reason it is so far off today,” said Daniel Kurnos, an e-commerce analyst at Benchmark Co. in Boca Raton, Florida. “There are fears that Priceline is returning to a more modest growth trajectory as opposed to the hyper-growth the company has experienced over the past couple years.”
Spokesmen for Mandel, a former retail analyst at Tiger; Maverick; Blue Ridge; Tiger Global; and T. Rowe Price either declined to comment or didn’t immediately return telephone calls.
Among the Tiger cubs and seeds that held Priceline stock as of March 31, eight had plowed at least 30 percent of their U.S. stock portfolios into consumer-discretionary stocks. The stocks comprised about 11.2 percent of the S&P 500 Index at the end of March and 10.9 percent as of yesterday, Silverblatt said.
Robertson’s Tiger Management reported that consumer-discretionary companies equaled about 14 percent of its $353 million in U.S. stock holdings at the end of March. He didn’t own any Priceline shares.
Robertson built Tiger Management into one of the world’s largest hedge funds by generating average annual returns of 32 percent, lifting his assets under management to $22 billion by mid-1998. After customer defections and losses cut Tiger’s assets under management to $6 billion two years later, Robertson decided to return money to clients and employ Tiger Management to invest his own fortune in hedge-fund managers, taking a share of profits in exchange.
During the next decade, Tiger invested more than $230 million in 38 managers who had about $21 billion in assets under management as of Jan. 30, 2011, according to a presentation prepared by the firm. Last year, Robertson decided to market this expertise to outside investors by raising money through Tiger Accelerator Partners LP, which in turn would invest the capital with six hedge funds it seeded, including Tiger Veda LP and Long Oar Global Investors LLC.
Fraser Seitel, a spokesman for Robertson, declined to comment.