Investing
Billionaire Chase Coleman III Completely Sells Out of DexCom and Gambles the Proceeds on This Stock
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Chase Coleman III is the founder of Tiger Global Management. Coleman’s hedge fund is a whale with nearly $56 billion in assets under management gathered from 42 wealthy clients.
As 24/7 Wall St. contributor Rich Duprey wrote recently, Coleman is a Tiger Cub, mentored by Tiger Management founder and investing legend Julian Robertson. Robertson’s firm seeded Coleman with $25 million in capital to start his own firm in 2001 when he was just 24 years old.
Now worth an estimated $6 billion, investors follow his every move. As my colleague pointed out, his three biggest holdings are Meta Platforms (NASDAQ:META), Microsoft (NASDAQ:MSFT), and Alphabet (NASDAQ:GOOG)(NASDAQ:GOOGL), which account for 35% of Tiger Global’s $23 billion 13F holdings.
While AI is Coleman’s biggest bet, the billionaire wholly sold out of the hedge fund’s DexCom (NASDAQ:DXCM) position in Q3 2024 and moved the proceeds into Flutter Entertainment (NYSE:FLUT), one of the world’s largest sports betting and gambling operations.
Here’s why the billionaire likely made the moves.
Key Points About This Article:
- Chase Coleman’s Tiger Global Management hedge fund filed a Q3 2024 13F holdings report with $23 billion invested in just 45 stocks.
- The billionaire sold out of two stocks in the third quarter, one of which, DexCom (NASDAQ:DXCM), likely generated a slight loss.
- Tiger turned around and invested some of the proceeds in gambling powerhouse Flutter Entertainment (NYSE:FLUT). That gamble paid off handsomely.
- Sit back and let dividends do the heavy lifting for a simple, steady path to serious wealth creation over time. Grab a free copy of “2 Legendary High-Yield Dividend Stocks” now.
DexCom Wasn’t a Top 10 Holding, But It Wasn’t a Tiny Position Either
As of June 30, 2024, the continuous glucose monitoring device company’s stock was the 28th-largest position out of 44 holdings. Its 1.15 million shares in Dexcom were worth $130.7 million at the end of the second quarter.
Sometime in the third quarter, Tiger Global unloaded 100% of its DexCom shares. More than likely, it was sometime shortly before or after it reported miserable Q2 2024 results on July 25.
Its shares fell nearly 41% the following day after investors gave its operational decisions a thumbs down. They’ve clawed back about $16 of the losses in the half-year since.
The problem for DexCom: It decided to move its sales force away from its existing doctor relationships to win new Type 2 patients from physicians it hadn’t dealt with before. That affected the service it provided existing customers, leading to a loss in market share to Abbott Laboratories (NYSE:ABT).
According to Barron’s reporting, it ultimately will be able to attract a significant number of new patients–as many as 125 million according to DexCom–through its new Stelo CGM for noninsulin Type 2 diabetics and prediabetics.
However, the uncertainty caused Chase Coleman to move on. It’s hard to pin down how much Tiger Global lost on its DexCom bet.
It first acquired shares in Q4 2023. Based on the average of the high ($126.37) and low ($74.75) during the final three months of 2023, it paid around $100.56 a share. Based on the average of the high ($117.19) and low ($62.34) in Q3 2024, it sold for around $89.77 a share.
If it lost $10.79 a share on its bet, the total dollars lost would have been about $12.4 million. That’s table scraps for a hedge fund that large.
From One Gamble to Another
Based on a DexCom sale price of $89.77, the outright sale would have generated $103.5 million in proceeds. In Q3 2024, it picked up 3.38 million shares of Flutter Entertainment, instantly making the gambling stock its 11th-largest holding as of Sept. 30.
How much did Tiger Global pay? According to WhaleWisdom.com, approximately $202.60 a share or $684.3 million. In a little over three months, the shares have appreciated by 26%, or $176 million, about 15 times what it lost from DexCom.
Why did Coleman’s firm take such a prominent position? I doubt it’s because of the Detroit Lions.
On Jan. 8, Flutter lowered its 2924 U.S. revenue to $5.80 billion, $370 million lower than its previous guidance, due to NFL betting at FanDuel this past regular season. According to Flutter, more favorites won than in the past 20 years. As a result, its adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) will fall by $205 million.
“This is the name of the gaming game: You win some and you lose some. Yet over the log run, you are better off being on the house side than on the gambler side,” MarketWatch reported comments from analysts at Alphavalue.
There’s no question that online sports betting revenues will continue to grow as more states jump on the bandwagon. Currently, 38 states, Washington, D.C., and Puerto Rico allow some sports betting, while 30 offer online sports betting.
Three large states don’t offer any sports betting: California, Georgia, and Texas, which provide all online sports betting businesses, not just Flutter, with tremendous growth opportunities in the future.
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