The Morning Brief: Deutsche Knocks Tiger Cub Fave Priceline

Hedge fund and Tiger Cub favorite The Priceline Group dropped nearly 1 percent Monday on an otherwise strong day for stocks after Deutsche Bank cut its rating on the stock to Hold from Buy and reduced its price target on the stock to $1,325 from $1,425. In a note to clients, the bank said it sees limited upside potential for the stock “given it is operating from peak efficiency.” It also thinks it could be hurt by competition from Airbnb. At the end of the first quarter, Priceline was tied for seventh place in the ranking of the most popular stocks held by hedge funds with roots to Julian Robertson, Jr.’s Tiger Management, according to New York–based Novus, a portfolio intelligence platform. Many shareholders of the company are old-time Cubs. Priceline is the largest single stock holding of Stephen Mandel, Jr.’s Greenwich, Connecticut-based Lone Pine Capital and Lee Ainslie, III’s Dallas-based Maverick Capital, the sixth-largest holding of New York-based Blue Ridge Capital Management and the seventh-largest holding of New York-based Tiger Global Management. Other major holders include Short Hills, New Jersey-based Appaloosa Management.


Paul Tudor Jones II has come up with an innovative way to identify the next generation of macro traders. The founder of Greenwich, Connecticut-based Tudor Investment Corp. has launched LaunchPad Trading that will train 20 young traders, who won’t be managing client money, according to Bloomberg. Funding is coming from Jones and other Tudor partners as well as quantitative trading shop HC Technologies, headed by Joseph Niciforo, a former Tudor managing director of U.S. fixed income and partner. “There are fewer options open to traders who want to learn trading skills and manage capital at the start of their career,” Jones said in a statement, according to Bloomberg. “We want to provide an environment where they can get that experience.” According to the report, Jones laments the dearth of young traders due to the closing of proprietary trading desks by banks.

As long ago as 2008 Jones addressed the difficulty of finding the next generation of traders, telling Alpha in an interview: “Many of the successful macro guys today, they’re all kind of in my age range. They came from that period of crazy volatility of the late ’70s and early ’80s, when the amount of fundamental information available on assets was so limited and the volatility so extreme that one had to be a technician. It’s very hard to find a pure fundamentalist who’s also a very successful macro trader because it is so hard to have a hit rate north of 50 percent.” Jones’ fund, Tudor BVI Global Fund, is up about 2 percent this year through June 12 after posting single-digit returns in two of the three previous years.


Kenneth Griffin’s Citadel is making a bigger bet on the equities business. The Chicago firm is launching San Francisco-based Steuart Tower, described as a standalone stock-picking division that hopes to eventually oversee $1 billion, according to Bloomberg. Leverage could swell this unit to as much as $10 billion. Citadel is best known for its multistrategy funds, Kensington and Wellington. However, Citadel Global Equities, a separate standalone fund, has been very successful in its own right. It was up 0.85 percent in May and 8.70 percent for the year-to-date and 23.4 percent in 2014.


BarclayHedge points out what we thematically reported earlier: Managed futures traders lost 0.17 percent in May, trimming their gains for the year to 1.83 percent. “Global interest rates pushed higher and created losses for managers that were positioned for lower rates, particularly in the European and Japanese markets,” says Sol Waksman, founder and president of BarclayHedge, in a press release. Drilling down, the firm found that agricultural traders rose 0.81 percent in May, discretionary traders and financial/metals traders each gained 0.2 percent while currency traders rose 0.15 percent.

For the first five months of the years, financial/metals traders gained 3.26 percent, currency traders rose 2.89 percent, systematic traders climbed 1.23 percent, diversified traders gained 0.72 percent and discretionary traders rose 0.7 percent.