David Ott's Viking Global: Long Visa, Invesco, Mastercard & Express Scripts: 13F Filing ~ market folly

Wednesday, February 24, 2010

David Ott's Viking Global: Long Visa, Invesco, Mastercard & Express Scripts: 13F Filing

(This post is part of our series on tracking hedge fund portfolios. If you're unfamiliar with tracking investments they disclose via SEC filings, check out our series preface on hedge fund 13F filings.)

Next up is hedge fund Viking Global Investors. Previously, we've only referenced Andreas Halvorsen with the fund, but that's not been fair since it was co-founded by Brian Olson and David Ott (pictured left) in 1999. All three had considered starting their own hedge funds when Halvorsen suggested they try a team approach. However, Olson left in 2005 while Ott and Halvorsen still remain.

Prior to Viking, Ott was a Managing Director at Tiger Management where he was focused on consumer companies. Ott received his MBA from Harvard Business School (a Baker Scholar) and previously graduated from the Wharton School at the University of Pennsylvania. Doesn't sound like a hedge fund guy at all, does he? Halvorsen attended Williams College and then received his MBA from Stanford.

Viking employs bottom-up fundamental stockpicking, like most all other 'Tiger Cub' hedge funds. They can analyze businesses with the best of them and that's why we track them. In Alpha's 2008 hedge fund rankings, Viking was ranked #70 in the world. We haven't seen many of their letters as of late, but when we did, we learned in Viking's commentary that they (like many other hedge funds) had trouble on the short side of the portfolio in 2009. Viking is part of the Tiger Cub Portfolio created with Alphaclone where you can replicate the portfolios of some of the top hedge funds around.

The positions listed below were Viking Global's long equity, note, and options holdings as of December 31st, 2009 as filed with the SEC. All holdings are common stock unless otherwise denoted.

Brand New Positions
Wellpoint (WLP)
Danaher (DHR)
Capital One (COF)
Aetna (AET)
News Corp (NWSA)
Oracle (ORCL)
Hess (HES)
CME Group (CME)
Lincare (LNCR)
Wells Fargo (WFC)
Manulife (MFC)
Rockwell Collins (COL)
Devon Energy (DVN)
Dollar General (DG)
Host Hotels (HST)
Banco Santander (BSBR)
Health Management (HMA)
Biovail (BVF)
The rest of their brand new stakes were all less than 0.5% of the portfolio each: Pall (PLL), Illumina (ILMN), Brocade (BRCD), Qwest Communications (Q), Pfizer (PFE), Manitowoc (MTW), Metlife (MET), & Pharmaceutical Prod (PPDI)

Increased Positions
Universal Health (UHS): Increased by 227%
Autodesk (ADSK): Increased by 183.3%
Hewlett Packard (HPQ): Increased by 153%
Atlas Energy (ATLS): Increased by 99.5%
Tyco (TYC): Increased by 59%
CVS Caremark (CVS): Increased by 55.9%
Qualcomm (QCOM): Increased by 53.4%
Mastercard (MA): Increased by 50.2%
Beckman Coulter (BEC): Increased by 48%
Halliburton (HAL): Increased by 47.8%
Ace (ACE): Increased by 26.6%
Citigroup (C): Increased by 20.8%
Flowserve (FLS): Increased by 17%

Reduced Positions
Apollo Group (APOL): Reduced by 84%
Franklin Resources (BEN): Reduced by 77.5%
Owens Illinois (OI): Reduced by 74%
DirecTV (DTV): Reduced by 51.6%
Google (GOOG): Reduced by 48.7%
Allegheny Energy (AYE): Reduced by 40.5%
Davita (DVA): Reduced by 37%
Visa (V): Reduced by 36.6%
Virgin Media (VMED): Reduced by 36.3%
Ingersoll Rand (IR): Reduced by 35.8%
JPMorgan Chase (JPM): Reduced by 21.9%

Removed Positions (Sold out completely):
Bank of America (BAC)
Goldman Sachs (GS)
Marsh & Mclennan (MMC)
AmerisourceBergen (ABC)
XTO Energy (XTO)
Pepsico (PEP)
Owens & Minor (OMI)
Priceline (PCLN)
RenaissanceRe (RNR)
Medco Health (MHS)
Rovi (ROVI)
Ralcorp (RAH)
Terex (TEX)
Lender Processing (LPS)
St Jude Medical (STJ)
Hospitality Properties (HPT)
Thoratec (THOR)

Top 15 Holdings by percentage of assets reported on 13F filing

  1. Visa (V): 8.3%
  2. Invesco (IVZ): 7.6%
  3. Mastercard (MA): 6.3%
  4. Express Scripts (ESRX): 4.2%
  5. JPMorgan Chase (JPM): 4.0%
  6. CSX (CSX): 3.9%
  7. Goodrich (GR): 3.3%
  8. Wellpoint (WLP): 3.3%
  9. Beckman Coulter (BEC): 2.7%
  10. Hewlett Packard (HPQ): 2.7%
  11. Autodesk (ADSK): 2.7%
  12. Danaher (DHR): 2.6%
  13. Cigna (CI): 2.6%
  14. Capital One (COF): 2.4%
  15. CVS Caremark (CVS): 2.4%

Of their top holdings, three of them were brand new stakes in Wellpoint, Danaher, and Capital One. Viking Global also added significantly to their pre-existing stakes in Autodesk and Hewlett Packard. Visa, JPMorgan Chase, Invesco, CSX and Express Scripts have been towards the top of their portfolio for a few quarters now. They ramped up their Mastercard stake to bring it to the top tier of holdings and Viking owns sizable chunks of both payment processors now (MA & Visa). These are by far some of the most widely held stocks amongst hedge funds.

Their JPMorgan position sticks with the long 'too big to fail' banks and short regional banks meme that we've seen so many hedgies employ. Their CSX stake is intriguing because as you know, Warren Buffett's Berkshire Hathaway acquired rail competitor Burlington Northern. CSX had previously been owned by tons of hedge funds, but not as many as of late. We'll have to see if other hedge funds start to pile into other rail names now.

Probably one of the most notable portfolio changes was Viking's massive reduction in their Apollo Group (APOL) stake. This had previously been a very large position for the hedge fund and it seems that they agree with Conatus Capital, who also sold out of education plays. More hedge funds seem to be concerned about regulatory risk, etc. In the quarter prior, Franklin Resources was Viking's fourth largest US equity long, and this time around they sold off a ton of shares. It was also interesting to see Ott's hedge fund sell completely out of financial stakes in Bank of America and Goldman Sachs. Additionally, they dumped high-flyer Priceline.com (PCLN), a company we've seen many Tiger Cub hedge funds own previously.

All data used for this article comes from Alphaclone. We use it for backtesting strategies and sorting through hedge fund portfolio maneuvers. Assets reported on the 13F filing were $8.7 billion this quarter compared to $7.6 billion last quarter, so $1 billion added in long US equity exposure. Remember that these filings are not representative of the hedge fund's entire base of AUM.

We'll be tracking 40+ prominent funds in our fourth quarter 2009 hedge fund portfolio tracking series. We've already covered Seth Klarman's Baupost Group, Mohnish Pabrai's Investment Fund, Carl Icahn's hedge fund Icahn Partners, David Einhorn's Greenlight Capital, Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, David Tepper's Appaloosa Management, Warren Buffett's portfolio, John Paulson's hedge fund Paulson & Co, Lee Ainslie's Maverick Capital, Dan Loeb's Third Point and Eddie Lampert's RBS Partners. Check back daily for our new updates.

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