Altimeter Capital Management Stock Holdings & Investment Analysis

Published on September 9th, 2020 by Nikolaos Sismanis

Altimeter Capital Management is a Boston-based multi-billion dollar technology-focused investment firm managing a long/short public equity fund and private growth equity funds. The firm was initially founded by Brad Gerstner in 2008, in Menlo Park, California, and currently has around $6.4 billion worth of Assets Under Management (AUM).

You can download an Excel spreadsheet with metrics that matter of Altimeter Capital Management’s current 13F equity holdings below:
 

Note:  13F filing performance is different than fund performance.  See how we calculate 13F filing performance here.

Keep reading this article to learn more about Altimeter Capital Management.

Table Of Contents

Altimeter Capital Management’s Holdings

Altimeter has achieved spectacular annualized returns over the past few years, significantly outperforming the S&P500. The fund’s success has been attributed to management’s superior skills in identifying and investing in companies in the ever-growing tech sector. Its holdings are allocated in major public equities and highly promising private companies before they eventually IPO.

Overall, while Altimeter is one of the largest hedge funds we have covered so far, in terms of assets, its public-equities portfolio is highly concentrated with a total of 23 holdings, almost exclusively focused on technology.  We have previously discussed other funds whose similar philosophy of holding a few, high conviction ideas, has been accomplishing market-beating returns, such as our recent Valley Forge Capital Management coverage.

Altimeter’s top 10 holdings weight around 92% of its total portfolio and consist of the following equities:

Facebook (FB):

Altimeter Capital CEO Brad Gerstner has been long on Facebook for years, with his fund doubling down on the stock on occasional dips, including the stock’s plunge during 2018’s scandal involving Cambridge Analytica. The company has not sold a single of its 3,753,400 shares since, which has greatly paid off. Facebook has finally rewarded investors’ patience, with its recent rally causing shares to break through the $300 threshold.

The company is currently enjoying excellent financials, with nearly $60 billion of cash in the bank, and virtually no long-term debt. Its user base is still miraculously seeing double-digit growth rates, despite around half of the globe using at least one of its apps on a monthly basis.

Further, as its rival social media company Tik Tok is recently facing scrutiny in the U.S., with talks of the app getting banned across the nation, Facebook’s monopolistic nature is looking more attractive than ever. Altimeter’s conviction on Facebook is so potent that the stock makes up nearly 20% of its public-equities portfolio.

Uber (UBER):

Similarly, taking up around 20% of Altimeter’s portfolio is Uber. The fund has been invested in the transportation disruptor before the company went public in May of 2019. In an interview with CNBC, Brad Gerstner urged retail investors to hold Uber shares only if they believe in the long-term growth story, as he was expecting great volatility.

Since that interview, shares have gone nowhere, while Uber has lost billions attempting to scale its platform. While Altimeter trimmed its Uber position by around 7%, based on its latest f13 filing, its position is still greater than last year, amid continuous buying. Altimeter’s faith in Uber through such a large stake is remarkable, considering that the company is frequently facing regulatory setbacks.

At the same time, management has failed to convince the market of a clear profitability roadmap. It’s also striking that Altimeter does not hold a single share in Uber’s rival Lyft (LYFT), in efforts to hedge its large bet.

Pinduoduo (PDD):

At around 16% of Altimeter’s total holdings, Pinduoduo is the only Chinese-based firm, along with a smaller stake in Alibaba (BABA). The company operates a mobile platform that offers a range of products, including apparel, food, beverage, electronic appliances, and any consumer-related product in general.

Having grown its revenues by around 250% year-over-year despite its already huge market cap of $105 billion, Pinduoduo is one of the most promising long-term winners in the space. Still, potential investors need to be aware of the scrutiny surrounding Chinese equities, with talks of them being delisted from the Nasdaq, including the recent delisting of Luckin Coffee, amid fraud.

Salesforce (CRM):

Salesforce’s shares have been snowballing, having doubled since March’s COVID-19 selloff. The company has been posting record revenues, with its most recent quarter tuning over a record  $5.15 billion. Further, the recent announcement of its inclusion in the Dow 30 has boosted the stock higher. The news shocked investors, as the replacement of a legacy stock like Exxon Mobil (XOM) by a borderline-profitable tech company came by surprise.

We believe that this is a testament to the technology sector becoming increasingly more important to the overall economy, pointing towards where the future lies, despite current valuations being ludicrous. At a little over 12% of total holdings, Salesforce has treated Altimeter well, as the company is taking the enterprise cloud-computing solutions market by storm.

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

The online travel, restaurant, and related booking services duo collectively occupy around 15% of Altimeter’s portfolio. While both stocks experienced a nosedive amid COVID-19’s travel restrictions, shares have mostly recovered, as investors hope that the sector will return to normality over time. Altimeter took the chance to strengthen its position in Expedia, both during Q1 and Q2. More specifically, the most recent quarter recorded a 35% increase, already scoring a profitable trade.

Microsoft (MSFT):

Found in almost every single non-specialized fund that we have covered, investors cannot get enough of Microsoft, as the company’s diversified portfolio of tech products and services has been ruling the sector’s digital infrastructure. The company’s CEO Satya Nadella has been marvelously transforming the company into a cloud powerhouse, posing recording top and bottom lines quarter after quarter.

Despite the stock’s ongoing rally and relatively high valuation, Altimeter has been adding shares non-stop, as the latest f13 filing revealed a 108% stake expansion. Shares fill around 5% of total holdings.

United Airlines Holdings (UAL):

Unlike most of Alitmeter’s holdings, which have historically turned into a great success, United Airlines has not been one of those. Around a year ago, the stock was the fund’s largest holding. However, as COVID-19 decimated airlines, shares have yet to recover. Instead of adding to its position similarly to sector-related Expedia, Altimeter’s outlook for Airlines is less favorable, cutting its stake by a whopping 55%. Booking some losses to protect its portfolio from additional damage is one of the rare cases Altimeter has reduced a stake in the past by that much.

Farfetch (FTCH):

The U.K.-based online marketplace for luxury goods is a company Altimeter has been holding since its early IPO. Over the past year, the fund has tripled its position, but shares have yet to occupy more than 1.5% of the total holdings. While the company is technology-focused, considering its innovative online marketplace, its investment into Virgil Abloh’s Off-White has given it direct exposure to the fashion world, operating actual retail locations. While the company has yet to turn a profit, its sales are strengthening, as Off-White is becoming a cultural phenomenon, exploding in popularity.

MongoDB (MDB):

Altimeter has been an investor in subscription-based database provider MongoDB, long before its IPO, operating as a private company. Despite its valuation levels getting increasingly uncomfortable, the fund has almost quadrupled its stake in the company over the past year, currently holding around 452,000 shares. Management keeps on beating on Wall St. expectations, increasing Brad Gerstner’s team interest for the stock even further. While Altimeter boosted its stake by 50% during the quarter, shares take up only around 2% of its portfolio.

Final Thoughts

Altimeter has delivered some of the most impressive returns we have seen in hedge funds, outperforming the overall market indices by a vast margin. Its concentrated portfolio of high-conviction picks has greatly paid off and proved to be a viable strategy. That said, investors looking to tap into Altimeter’s holdings should be wary of the fund’s lack of diversification and the tech sector’s sky-high valuation.