Payments industry overview: Analysis of Visa, Mastercard, American Express [Value Seeker]
Brexit in reverse? [George Soros]
If you can't explain something in simple terms, you don't understand it [Kottke]
On the popular 'FANG' stocks [AQR]
How to survive the retail crisis: a master class from T.J. Maxx [WSJ]
Starbucks' Howard Schultz has something left to prove [Fortune]
Blockchain 101 [CFA Institute]
How a 36-year old Wall Street prodigy saved Burger King [Business Insider]
Why grocery retail is the 'holy grail' [Bloomberg]
A look at subprime auto debt [NYTimes]
Profile of Citron's Andrew Left [NYTimes]
Mary Meeker's 2017 internet trends report [KPCB]
Essilor's CEO on an eyewear megamerger with Luxottica [FT]
Why is Trump causing chaos in Washington but not in the stock market? [Five Thirty Eight]
Thursday, June 22, 2017
What We're Reading ~ 6/22/17
Wednesday, April 5, 2017
Chuck Akre's Talk at Google: Three-Legged Stool Investment Construct
Chuck Akre of Akre Capital Management recently had a talk at Google about investing entitled "The Peregrinations of an English Major Trying to Solve the Investment Puzzle."
If you're unfamiliar with Akre, he focuses on finding long-term compounders and runs a somewhat concentrated portfolio. Here's notes from his talk:
Chuck Akre's Talk at Google
- Reads voraciously to this day. Cited one of the very first books he liked: The Money Masters. Also noted that 100:1 in the Stock Market is the book he took the idea of compounding from. Said he read The Intelligent Investor as well as business biographies.
- What makes a great investment? "Rate of return is the bottom line of all investing."
- Looks at free cashflow return and focuses on valuation as the key to compounding; buy it right.
- How do they identify investments that will generate above average returns? "We like to fish in the pond of high return businesses." Asks: what kind of returns on capital? What are the net margins? Thinks an 'average' business returns high single digits. Cites Mastercard (MA) and Visa (V) with 30% margins. "What is it about the essence of that business that allows them to earn returns that cause them to have a big bullseye on their back?"
- Three-legged stool: Their investment construct that lets them think in simple terms. First leg is the quality of a business: a high return business. Second leg is operations: want management to have skill and integrity (a demonstrated record) and treat investors as partners. Third leg is reinvestment: would love the company to put cash back into the business if there's great opportunity. Cited the book Dear Chairman (which we've reviewed here).
- "I have never been able to learn from other people's mistakes. I have to make my own."
- Wants to be an investor in a business rather than a speculator in shares.
- His goal is to compound capital at an above average rate while incurring a below average level of risk. Volatility is only a risk in the short run.
- Akre's separately managed accounts over 27 years have compounded at 12.7% versus S&P at 9.4%. Also has a partnership that's done 15.25% versus S&P 9.2% and mutual funds that have done 13.2% annual.
- Mastercard: originally purchased in 2010 at around $22 with regulatory worries around Durbin amendment. Business has fantastic returns, had a low valuation (13-14x at the time). "Their returns are so high they can't possibly find a place to reinvest their money, so our compounding is diminished modestly because of that."
- Moody's (MCO): Bought in January 2012 at $39. Any company that wants debt has to get a rating on it and it's basically an oligopoly: MCO, S&P (SPGI), and Fitch.
- Enstar (ESGR): Been involved for 10 years. They buy insurance that's in run-off. Paid 3 times book when he bought shares.
- Quotes Einstein: "You should make everything simple as possible but no simpler." "We cannot solve our problems with the same thinking we use to create them." "The only source of knowledge is experience." "Imagination is more important than knowledge." That last quote is what's on the front of Akre's book:
- Two of his best investments (100 baggers): Berkshire Hathaway (BRK.A) and American Tower (AMT). "Most of the time you can buy these businesses at reasonable valuations... sometimes you can buy them at a steal."
- On selling: "The most difficult thing to do in our business is not sell, if you're a long-term investor."
- Bought Visa (V) because they have concentration limits in their funds and were bumping into that with their stake in MA. Did the same with SBA Communications (SBAC) as it relates to their AMT position. Gaining more exposure to the themes via competitors since individual position limits kicked in.
Embedded below is video of Chuck Akre's talk at Google:
We've covered many other investor talks at Google, including:
- Howard Marks' talk at Google
- Michael Mauboussin's talk at Google
- Jim Grant's talk at Google
Wednesday, November 30, 2016
What We're Reading ~ 11/30/16
Warren Buffett's meeting with University of Maryland students [UMD]
Is the next financial crisis on its way? [Steve Eisman]
A write-up on the impending Hilton (HLT) spinoff [Clark Street Value]
CBRE (CBG): industry deep dive to detect an emerging moat [Punch Card]
A look at Discovery Communications (DISCA/K) [Contrarian Edge]
Sustainable sources of competitive advantage [Collaborative Fund]
Why deep learning matters and what's next for AI [Algorithmia]
The unexpected genius of Facebook's Mark Zuckerberg [Fortune]
Google's online travel adventure upsets its biggest advertisers [Bloomberg]
A billionaire's dreams of creating a guns empire [NYMag]
If oil refiners crash, so will the economy [WSJ]
Mastercard, Visa set to reap spoils of India's war on cash [Bloomberg]
How Best Buy (BBY) fought Amazon [WSJ]
The evolution of media & entertainment: conversation with CEOs [YouTube]
How to get comfortable with being umcomfortable [Inc]
Why gut feelings may really help you make risky decisions [Washington Post]
Why stoicism is one of the best mind-hacks ever devised [Aeon]
Wednesday, March 16, 2016
What We're Reading ~ 3/16/2016
Dear Chairman: Boardroom Battles and the Rise of Shareholder Activism [Jeff Gramm]
Two powerful mental models: network effects and critical mass [Andreessen Horowitz]
How to be wrong as an investor [A Wealth of Common Sense]
A look at the concept of moats in investing [Intrinsic Investing]
The great race: e-commerce in India [The Economist]
A look inside Google's DeepMind [The Verge]
Amazon's Echo brims with groundbreaking promise [NYTimes]
In-depth analysis of Moody's (MCO) [Value Seeker]
A look at Visa & Mastercard [JanaV]
American Express, Synchrony Financial & the changing credit card landscape [PunchCard]
Amex: cheap blue chip or value trap? [Value & Opportunity]
How credit cards tax America [Priceonomics]
After TV: Video's future will be bigger, more diverse & precarious than its past [Redef]
John Malone 'cable cowboy' faces test in rounding up the right mix of assets [Variety]
The television has a business model problem and it's killing good TV [Redef]
The craft beer bubble [VinePair]
The rise and final hours of Chesapeake's Aubrey McClendon [Bloomberg]
Wednesday, March 2, 2016
What We're Reading ~ 3/2/16
Quality Investing: Owning the best companies for the long term [Lawrence Cunningham]
How to learn from market mistakes [WSJ]
In-depth interview with JPMorgan's Jamie Dimon [Bloomberg]
Key checklist items [Value Investing World]
The great investment advice hidden in Warren Buffett's annual letter [Fortune]
Hard truths for investors to wrap their heads around [Morgan Housel]
Software is the new oil [AVC]
A pitch on Broadridge Financial Solutions [Intrinsic Investing]
Thoughts on industrial gases [Dislocated Value]
Why restaurants hate GrubHub Seamless [Tribeca Citizen]
Why the economy isn't about labor productivity anymore [Bloomberg]
What I learned from losing $200 million [Nautil.us]
Visa moves at the speed of money [Forbes]
How mobile payments reshape lifestyles [WSJ]
The robots are coming for Wall Street [NYTimes]
Why media titans would be wise not to overlook Netflix [NYTimes]
Expedia thinks it can help you find the dream vacation you didn't know you wanted [Bberg]
Top tips from China's richest man [CNN Money]
Wednesday, September 17, 2014
What We're Reading ~ Analytical Links 9/17/14
Edge, time arbitrage and the shame of short-term thinking [Lux Capital]
A fireside chat with Charlie Munger [WSJ]
Buffett on market valuation [Brooklyn Investor]
Bears at their lowest level since 1987, now what? [Yahoo]
8 lessons from the first year of a registered investment advisory firm [Reformed Broker]
Competition is for losers [Peter Thiel]
An independent Scotland could become an energy powerhouse [Fortune]
Britain needs greater unity not a messy break-up [George Soros]
The tollbooth businesses of Visa & Mastercard [Scuttlebutt Investor]
A discussion on Apple Pay [Twitter]
Why banks are buying into Apple Pay [American Banker]
Thoughts on what the Apple Watch means [Daring Fireball]
Hermes takes the long view in China [FT]
Inflection point for Western Union? [YGC]
Alibaba's coming out party & valuation [Aswath Damodaran]
Alibaba IPO is a bonanza for select firms [WSJ]
On the rise of NY regulator Benjamin Lawsky [Bloomberg]
There is no bond bubble [Barrons]
Wednesday, July 30, 2014
What We're Reading ~ Analytical Links 7/30/14
Bill Gates calls this "the best business book I've ever read" [John Brooks]
6 signs of a good investment process [Clear Eyes Investing]
Rethinking buybacks [CFO]
On Demand Media and Rightside [Buyside Notes]
Why media mergers limit more than competition [NYTimes]
Interview with Liberty Global's Mike Fries & John Malone [WSJ]
On the Liberty Broadband spinoff [Glenn Chan]
Online corporate finance and valuation classes [Aswath Damodaran]
Presentation on Visa: great company at fair price [ValueWalk]
A pitch on Future Bright Holdings [Red Corner]
Investors rush into student loans [CNN Money]
Thursday, May 24, 2012
Goldman Sachs VIP List: Most Important Stocks To Hedge Funds: Q1 2012
Goldman Sachs is out with its Q1 2012 Hedge Fund Trend Monitor report. In it, they reveal the latest VIP list of 50 stocks that are most important to hedge funds. These are the positions that appear most frequently in the top 10 holdings of fundamental focused hedge funds.
This quarter, they've also released a new list of very important short positions to hedge funds which we've posted up as well.
Goldman's VIP list of the most important holdings is accessible on Bloomberg via < GSTHHVIP >. It has "outperformed the S&P 500 by 55 bp on a quarterly basis since 2001."
Goldman Sachs VIP List (Q1 2012)
Stock: Number of funds with stock as top 10 holding
1. Apple (AAPL): 106
2. Google (GOOG): 73
3. Express Scripts (ESRX): 56
4. Microsoft (MSFT): 46
5. Qualcomm (QCOM): 38
6. Citigroup (C): 31
7. General Motors (GM): 29
8. Priceline.com (PCLN): 29
9. JPMorgan Chase (JPM): 27
10. Liberty Media (LMCA): 26
11. Delphi Automotive (DLPH): 24
12. BP (BP): 23
13. Pfizer (PFE): 23
14. Tyco (TYC): 22
15. Visa (V): 21
16. Yahoo (YHOO): 21
17. LyondellBasell (LYB): 20
18. Anadarko Petroleum (APC): 19
19. Bank of America (BAC): 17
20. Ford Motor (F): 17
21. WellPoint (WLP): 17
22. American International Group (AIG): 16
23. Charter Communications (CHTR): 16
24. eBay (EBAY): 16
25. Rock-Tenn (RKT): 16
It's no surprise that Apple (AAPL) is the most widely owned top position amongst fundamental hedge funds. But despite that, Greenlight Capital's David Einhorn argued hedge funds actually have less than 2% of assets in his Ira Sohn conference presentation. We've also posted Dan Loeb's thesis on AAPL as he was a big buyer of shares.
Both Tyco and Priceline were featured in the equity analysis section of our Q4 2011 Hedge Fund Wisdom newsletter due to heavy ownership by top funds. TYC is an event-driven play while PCLN is a huge growth and international play.
Here's the rest of Goldman's VIP list:
26. Seagate Technology (STX): 16
27. Berkshire Hathaway (BRK.B): 15
28. Cisco Systems (CSCO): 15
29. Equinix (EQIX): 15
30. Hertz Global (HTZ): 15
31. Liberty Interactive (LINTA): 15
32. Pioneer Natural Resources (PXD): 15
33. Visteon (VC): 15
34. Valeant Pharmaceuticals (VRX): 15
35. Wells Fargo (WFC): 15
36. Baidu (BIDU): 14
37. Dollar Thrifty (DTG): 14
38. Hess (HES): 14
39. Mastercard (MA): 14
40. News Corp (NWSA): 14
41. Williams Companies (WMB): 14
42. Barrick Gold (ABX): 13
43. CIT Group (CIT): 13
44. Capital One (COF): 13
45. Calpine (CPN): 13
46. Devon Energy (DVN): 13
47. EMC (EMC): 13
48. Hewlett Packard (HPQ): 13
49. Illumina (ILMN): 13
50. Salesforce.com (CRM): 12
Of the above, we've previously highlighted why Passport Capital likes LINTA. And in the brand new issue of our Hedge Fund Wisdom newsletter, we've analyzed Equinix (EQIX), a big new position by Philippe Laffont's Coatue Management and John Thaler's JAT Capital.
Some of the stocks on the list are brand new additions as enough hedge funds boosted their positions in Q1: ABX, AIG, BRK.B, COF, CPN, CRM, DVN, EBAY, EMC, EQIX, F, HES, HTZ, ILMN, RKT, WLP.
Be sure to also check out Goldman's brand new list of hedge fund very important short positions.
Wednesday, September 14, 2011
Julian Robertson Bullish on Apple, Google, Mastercard & Visa
Legendary hedge fund manager Julian Robertson of Tiger Management recently sat down with CNBC's Maria Bartiromo to give his latest thoughts on the market. Tiger saw nearly 32% annual returns between 1980 and 1998.
Equities
He likes the tech sector and thinks the technology boom is far from over and he thinks these stocks can rally further. In particular, he likes Apple (AAPL), even without Steve Jobs, noting that the company would be trading "at 3 or 4 times" what it is now if this were 1980. He calls the multiple it's trading at now "ridiculous." Also, he likes Google (GOOG).
Robertson is also fond of the payment processors such as Visa (V) and Mastercard (MA). He likes these names as they don't bear credit risk (the banks do). We've long detailed Robertson's bullishness on these names in our Hedge Fund Wisdom newsletter as he's owned all the above stocks for some time now.
Currencies
In currencies, Robertson says he's finding opportunities in Europe by going long the Norwegian Krone. Around the rest of the world, he also fancies the Singapore dollar and Canadian dollar. Conversely, he likes shorting the Hungarian forint.
Interest Rates
Robertson also goes on to highlight that while interest rates continue to slide down, it wouldn't be hard for them to skyrocket higher. He points out that if a large seller were to sell US bonds quickly, rates could fly higher. A few years ago, we detailed Robertson's constant maturity swap (CMS) trade as he got hammered with his "short bonds" bet.
Lastly, Robertson expects Greece to default.
Julian's interview is embedded below (email readers come to the site to watch Robertson's interview):
To see the rest of Tiger's equity investments, head to our newsletter. For more on this legendary manager, head to our profile on Julian Robertson.
Wednesday, June 9, 2010
Julian Robertson's Tiger Management Bets on Intel, Wal-Mart & Monsanto: 13F Q1 2010
(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 filings.)
Next up is investment guru and legend Julian Robertson who founded one of the lauded hedge funds of the era, Tiger Management. He grew the fund from $8 million at inception to over $22 billion at its peak. Between 1980 and 2000, Tiger compounded a gross rate of 31.5%, but after losses of 4% in 1998 and 19% in 1999, Tiger shut down. For more information on Julian, check out Daniel Strackman's book entitled, Julian Robertson: A Tiger in the Land Of Bulls And Bears.
Since Tiger's dissolution, Robertson's former employees have started successful funds of their own, deemed the 'Tiger Cubs'. Additionally, Robertson has himself seeded some other managers with vast potential, dubbed the 'Tiger Seeds'. This vast and expansive network of hedge fund managers is almost akin to a farm system for stockpickers and we track the majority of these funds. To learn more about Tiger Management, head to our in-depth profile of Julian Robertson.
While his hedge fund Tiger Management closed down years ago, Julian Robertson still makes investments via the Tiger Management LLC vehicle as evidenced by SEC filings. As such, we will continue to track Robertson's holdings via this vehicle's public disclosures. In the past, we've gotten a tiny glimpse at Robertson's portfolio when in late 2009 we saw he had placed a bet that interest rates would rise in the future via constant maturity swaps. We haven't heard too much from him as of late but we'll of course post anything of interest in the future. If you want to jump back in time, we've posted an interview with Robertson from back in 1998 around Tiger's peak.
The positions listed below were Tiger Management's long equity, note, and options holdings as of March 31st, 2010 as filed with the SEC. All holdings are common stock unless otherwise denoted:
Brand New Positions
Priceline.com (PCLN)
Apollo Group (APOL)
Hologic (HOLX)
LCA Vision (LCAV)
Madison Square Garden (MSG) ~ due to a spin-off from Cablevision
Sensata Technologies (ST)
Increased Positions
Verisk Analytics (VRSK): Increased position size by 30.3%
Intel (INTC): Increased by 20.6%
EMC (EMC): Increased by 17.5%
Reduced Positions
Solutia (SOA): Reduced position size by 31.9%
Mastercard (MA): Reduced by 24.5%
Lamar Advertising (LAMR): Reduced by 19.7%
Fidelity National Information (FIS): Reduced by 19.6%
DirecTV (DTV): Reduced by 18.6%
Talisman Energy (TLM): Reduced by 15.1%
Visa (V): Reduced by 14.8%
Skyworks Solutions (SWKS): Reduced by 13.6%
Positions They Sold Out of Completely
Google (GOOG)
Walmart (WMT)
Thermo Fisher Scientific (TMO)
SBA Communications (SBAC)
Teradata (TDC)
Maxim Integrated (MXIM)
Genoptix (GXDX)
IAC Interactive (IACI)
Top 15 Holdings (by percentage of assets reported on 13F filing)
1. Wal-Mart Stores (WMT) Calls: 8.22%
2. Monsanto (MON) Calls: 5.96%
3. Intel (INTC): 4.58%
4. Wuxi Pharmatech (WX): 3.68%
5. Apple (AAPL): 3.48%
6. CVS Caremark (CVS): 3.47%
7. DigitalGlobe (DGI): 3.45%
8. Visa (V): 3.44%
9. Solutia (SOA): 3.35%
10. Mastercard (MA): 3.26%
11. Skyworks (SWKS): 3.15%
12. Dick Sporting Goods (DKS): 3.13%
13. Verisk Analytics (VRSK): 3.13%
14. DirecTV (DTV): 3.09%
15. EMC (EMC): 3.08%
It should come as no surprise that the Tiger Management founder himself has a portfolio reminiscent of other 'Tiger Cub' hedge funds. After all, since Robertson often gets to listen in on meetings and chat with these managers, he can cherry pick their best ideas as well as add his own into the mix. Julian has a large position in CVS Caremark, just like Lee Ainslie and Maverick Capital which is probably hurting performance after the recent plunge in shares. Additionally, Robertson owns DirecTV which we've seen Chase Coleman's Tiger Global is bullish on. Lastly, Tiger holds perennial favorites like Apple, Mastercard, Visa, and Verisk Analytics.
On a sector level, Robertson severely decreased technology exposure and ramped up positions in services. In terms of sales, Robertson liquidated his Google (GOOG) position which is intriguing because many other managers own this name as it's one of the most important stocks to hedge funds. Since Robertson exited in the first quarter, it seems to have been the right decision as GOOG shares have spiraled down. He also sold off Wal-Mart (WMT) common stock but maintains a very hefty position in WMT call options. Tiger Management's portfolio overall saw more selling than buying as assets reported decreased. The 13F filing shows Tiger had $574 million in reported assets this quarter, down from over $600 million in the quarter prior (remember that these filings are not representative of the hedge fund's entire base of AUM).
To see the latest hedge fund portfolios, we recommend using Alphaclone as Market Folly readers receive a special free 14 day trial. It's our source for hedge fund data, replication, backtesting and more. This post is part of our daily hedge fund portfolio tracking series. We've already detailed activity from numerous managers so click the links below to be taken to the respective portfolio updates. We've covered investment gurus such as: Seth Klarman's Baupost Group and Warren Buffett's Berkshire Hathaway, and George Soros.
Additionally, value and activist funds such as: Bill Ackman's Pershing Square, David Einhorn's Greenlight Capital, Eddie Lampert's RBS Partners, David Tepper's Appaloosa Management, Mohnish Pabrai's Investment Fund, Bruce Berkowitz's Fairholme Capital Management, Dan Loeb's Third Point.
'Tiger Cub' funds like: Stephen Mandel's Lone Pine Capital, John Griffin's Blue Ridge Capital, Lee Ainslie's Maverick Capital, Andreas Halvorsen's Viking Global, Roberto Mignone's Bridger Management, and Shumway Capital Partners.
'Tiger Seed' funds that were seeded by Julian Robertson, including: Chase Coleman's Tiger Global.
Our latest addition, hedge funds started by former employees of various Tiger Cub/Tiger Seed funds: David Stemerman's Conatus Capital.
And lastly, other hedge funds employing various other strategies ranging from risk arbitrage to distressed to global macro: John Paulson's hedge fund Paulson & Co, Phil Falcone's Harbinger Capital Partners,
Be sure to check back daily for new hedge fund updates.
Monday, May 24, 2010
Andreas Halvorsen's Viking Global Doubles Down on Google, CME Group, News Corp: 13F Filing Q1 2010
(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 filings.)
Next up is Andreas Halvorsen's hedge fund Viking Global. Viking employs bottom-up fundamental stockpicking, like most all other 'Tiger Cub' hedge funds. Halvorsen attended Williams College and received his MBA from Stanford and he has previously worked at Morgan Stanley and Julian Robertson's legendary hedge fund Tiger Management. In Alpha's 2008 hedge fund rankings, Viking was ranked #70 in the world. We recently got some insight as to Viking's rationale behind some of their positions in their first quarter letter.
The positions listed below were their long equity, note, and options holdings as of March 31st, 2010 as filed with the SEC. All holdings are common stock unless otherwise denoted:
Brand New Positions
Bank of America (BAC)
Baker Hughes (BHI)
Colgate Palmolive (CL)
Comcast (CMCSA)
PNC Financial (PNC)
Agrium (AGU)
Mednax (MD)
Frontline (FRO)
Psychiatric Solutions (PSYS)
United Technologies (UTX)
Lennar (LEN.B)
Family Dollar Stores (FDO)
NVR (NVR)
McKesson (MCK)
Intermune (ITMN)
Owens Corning (OC)
Increased Positions
Metlife (MET.B): Increased position by 926%
Universal Health (UHS): Increased by 658%
Sherwin Williams (SHW): Increased by 277%
Ingersoll Rand (IR): Increased by 160%
Smithfield Foods (SFD): Increased by 148.5%
Rockwell Collins (COL): Increased by 132.6%
Devon Energy (DVN): Increased by 130.8%
News Corp (NWSA): Increased by 124%
CME Group (CME): Increased by 120%
Google (GOOG): Increased by 106%
Tyco International (TYC): Increased by 99.5%
Pfizer (PFE): Increased by 70.5%
Hess (HES): Increased by 68.4%
Pall (PLL): Increased by 50.9%
Davita (DVA): Increased by 49.7%
Oracle (ORCL): Increased by 47.6%
Health Management (HMA): Increased by 34%
Halliburton): Increased by 31.6%
Visa (V): Increased by 21.4%
Invesco (IVZ): Increased by 16.2%
Reduced Positions
Capital One (COF): Reduced position size by 97.6%
Lincare (LNCR): Reduced by 54.4%
Beckman Coulter (BEC): Reduced by 85.2%
CVS Caremark (CVS): Reduced by 46.1%
Illumina (ILMN): Reduced by 44.8%
Autodesk (ADSK): Reduced by 38.9%
Disney (DIS): Reduced by 27.8%
Wellpoint (WLP): Reduced by 27.7%
Qwest Communication (Q): Reduced by 27%
JPMorgan Chase (JPM): Reduced by 27%
Virgin Media (VMED): Reduced by 26.4%
Biovail (BVF): Reduced by 25%
Cigna (CI): Reduced by 24.8%
Danaher (DHR): Reduced by 22.5%
Goodrich (GR): Reduced by 17.4%
Positions They Sold Out of Completely
Bank of America preferred (BAC-S)
Mastercard (MA)
CSX (CSX)
Aetna (AET)
AON (AON)
DirecTV (DTV)
NRG Energy (NRG)
Franklin Resources (BEN)
Citigroup (C)
Wells Fargo (WFC)
Qualcomm (QCOM)
Manulife Financial (MFC)
Host Hotel & Resort (HST)
Owen Illinois (OI)
Brocade Communications (BRCD)
Allegheny Energy (AYE)
Manitowoc (MTW)
Atlas Energy (ATLS)
Apollo Group (APOL)
Pharmaceutical Products (PPDI)
Top 15 Holdings (by percentage of assets reported on 13F filing)
1. Visa (V): 9.8%
2. Invesco (IVZ): 7.7%
3. Express Scripts (ESRX): 4.5%
4. Tyco (TYC): 4.4%
5. Bank of America (BAC): 4.3%
6. Metlife (MET.B): 4%
7. News Corp (NWSA): 3.2%
8. JPMorgan Chase (JPM): 2.9%
9. Goodrich (GR): 2.8%
10. Hewlett Packard (HPQ): 2.7%
11. Google (GOOG): 2.7%
12. Wellpoint (WLP): 2.4%
13. CME Group (CME): 2.4%
14. ACE (ACE): 2.4%
15. Sherwin Williams (SHW): 2.3%
Many of Viking's portfolio moves were previously telegraphed in their first quarter letter. In it, we saw that they dumped Mastercard (MA) and clearly now favor Visa (V) in the payment processing space. They maintain their very large position in Invesco as well. Their letter also revealed that they are quite bullish on shares of Express Scripts (ESRX) in the pharmacy benefit management space. At the end of the first quarter it was their third largest US equity long. We also see that they chopped their CVS Caremark (CVS) position nearly in half, a competitor to ESRX in the PBM space. As we detailed last week, Lee Ainslie's Maverick Capital is bullish on CVS.
We take note of Viking's position in CME Group because a few other hedgies were adding shares in the first quarter. We just learned that John Griffin's Blue Ridge Capital also has a sizable stake. Halvorsen's hedge fund also nearly doubled down on their Tyco (TYC) position and brought it up to their fourth largest holding. And while we're on the subject of positions they added to, take a look at Metlife B shares (MET.B) as Viking really added to their stake there. Lastly, we highlight they doubled down on their position in Google (GOOG) as well. We're starting to see lots of hedgies accumulating this technology & internet giant, so that might be worth looking into further considering GOOG is trading below levels where these hedge funds added to their position. Blue Ridge Capital has assembled a large GOOG stake as well.
In terms of positions they sold completely out of, we wanted to highlight Apollo Group (APOL) for a few reasons. Firstly, Viking had this as a 'core' position for a few quarters and so we note their exit. Secondly, we mention this because we're starting to see a divergence of opinion amongst Tiger Cub hedge funds regarding for-profit education stocks. David Stemerman's Conatus Capital had sold out of APOL and other educational plays back in the fourth quarter for a myriad of reasons.
Assets reported on the 13F filing were $9 billion this quarter. Data from the SEC is aggregated and sorted automatically by Alphaclone, our source for hedge fund tracking, replicating, and performance backtesting (Market Folly readers can receive a special free 30 day trial). Remember that these filings are not representative of the hedge fund's entire base of AUM.
This post is part of our daily hedge fund portfolio tracking series. We've already detailed activity from numerous managers so click the links below to be taken to the respective portfolio updates: Seth Klarman's Baupost Group, Warren Buffett's Berkshire Hathaway, Stephen Mandel's Lone Pine Capital, and Bill Ackman's Pershing Square, David Einhorn's Greenlight Capital, Eddie Lampert's RBS Partners, David Tepper's Appaloosa Management, Mohnish Pabrai's Investment Fund, John Griffin's Blue Ridge Capital, Lee Ainslie's Maverick Capital, and Bruce Berkowitz's Fairholme Capital Management. Be sure to check back daily for new hedge fund updates.
Thursday, April 15, 2010
Andreas Halvorsen & Viking Global Betting On Visa (V): Portfolio Update
Dealbreaker recently posted up the latest letter from Andreas Halvorsen's hedge fund Viking Global. In it, we learn that Chief Investment Officer David Ott will be stepping down to spend more time with family. We also get a glimpse as to what Viking's portfolio looked like at the end of the first quarter and what their next 13F filing will likely look like. Here are their top 10 positions:
1. Visa (V)
2. Invesco (IVZ)
3. Unilever (UN)
4. Express Scripts (ESRX)
5. Tyco International (TYC)
6. Bank of America (BAC)
7. Metlife (MET)
8. News Corp (NWSA)
9. JPMorgan Chase (JPM)
10. Barclays (BCS)
Right away you'll notice that these positions are slightly different from Viking's prior portfolio that we examined. Four of their top ten longs are either new or re-entered positions, including: Tyco, Metlife, News Corp, and Barclays.
Their largest position, Visa, represents 7.0% of capital in their Viking Global Equities fund. We finally get some color as to the investment thesis for each payment processor in particular via Halvorsen's letter. Viking previously owned Mastercard (MA) as well, but they did not own it at the end of the first quarter. Halvorsen writes,
"Our largest loss in the quarter was in Mastercard (MA.N) which cost us 0.7% in VGE and 0.9% in VLF. We have owned Mastercard at various points since its IPO and continue to believe in the long-term strength of its business model. Mastercard was our largest profit contributor in 2007, second-largest in 2008 and third-largest in 2009. Although we continue to believe in strong secular revenue growth for transaction processors, Mastercard relies heavily on credit card spending (which offers slower secular growth than debit cards) and has suffered a few key customer losses that will weigh on results in the short-to-medium term. Visa, which was our largest position as of March 31, was the beneficiary of this share shift."
This is intriguing to note because some hedge funds have owned both payment processors while some managers have favored one over the other. While Viking is monitoring Mastercard for potential re-entry points, it's clear that for now they'll stick with Visa as they expect its strong debit card exposure to bolster performance. You can see which hedge funds own Mastercard here and which hedge funds own Visa here.
The letter also provides some color on their Express Scripts (ESRX) stake as they expect this big pharmacy benefit manager (PBM) to benefit from the impending brand-t0-generic drug conversion. Viking sees significant upside and thinks ESRX commands a multiple of 20x earnings versus the current 16.5x 2011 numbers. Lastly, we just want to highlight Viking's large position in News Corp (NWSA). That stock of course is one of Seth Klarman's big holdings at Baupost Group.
Results wise, Viking has struggled recently. In the first quarter, they were down 0.1% as noted in our recent hedge fund performance numbers post. Halvorsen mentioned that their poor performance this time around was attributed to a few large long positions. This is a shift from the losses they suffered on the short side of the portfolio in 2009 as covered in a previous Viking investor letter. Viking Global Equities' ten largest single name short positions accounted for 15.9% of capital as of March 31st, 2010.
In terms of a pure long/short trade, Viking, like many other hedge funds, had on a long moneycenter banks, short regional banks trade. Halvorsen writes, "Bank longs contributed 0.2% while Bank shorts cost us 1.3%. The longs represented large, well-capitalized banks that, in our opinion, have adequately provided for losses in their loan portfolios. We were short a collection of smaller, regional banks with significant commercial real-estate related loan exposures that we believe have not yet been fully marked-to-market leading to a need for additional capital over time."
Below is an excerpt Viking's first quarter commentary where Halvorsen addresses the notion of hedge fund herding:
"We are often asked by investors how we think about owning stocks that are widely held by other hedge funds. There is no categorical answer to this question, but I would like to discuss some of the factors we consider when establishing and maintaining positions in companies known to be popular with our peers. First and foremost, the critical issue is whether we are ultimately proven right in our analysis. Every single position we take has been independently researched by a Viking analyst and each investment decision has been thoughtfully deliberated by one or more of our portfolio managers. We do not borrow conviction from another firm or individual, although we frequently find it informative to talk to other investors to understand the attributes they value. These conversations can help us better assess what has already been reflected in the prevailing stock price. Incidentally, we often find the greatest success in investments where we have a differentiated view from the Street, but we do not shy away from high conviction ideas just because other hedge funds are involved. Although we thrive on standing alone, we do not take positions opposite other firms just to be contrarian. We recognize that all the shares of a given company must be owned by someone and it can be comforting to know that the other shareholders represent firms that we respect rather than not. There is obviously some risk associated with being in an investment alongside likeminded investors who may have been trained in the stock-picking trade in similar ways in that we may decide to sell at the same time. To limit the consequences of crowded exits, we pay attention to the liquidity of the stocks we trade and take large positions only in the most liquid stocks in the world. The problem of crowding is most acute in our shorts due to the risk of unlimited loss and the potential for cancelled borrow arrangements. Here we do tread carefully. As you are aware, we are guarded in disclosing our shorts to anyone and we do on occasion limit the size of our positions, or eliminate them altogether, when we perceive a position to be tight in the borrow market or crowded by equity long-short investors. Ultimately, we live and die by our analysis, portfolio management skills and efforts to contain risk – managing crowded trades is merely another challenge we face in delivering attractive returns at reasonable risk."
One last thing we found interesting in Halvorsen's commentary is that he essentially confirmed that all the Tiger Cubs talk and bounce investment ideas off each other. Let's face it, we already knew this. But it's still intriguing to see his response to investor concern over holding stocks that many other hedge funds also own.
Keep in mind that you can replicate Viking's long US equity holdings via the Tiger Cub Portfolio created with Alphaclone, the hedge fund backtesting and replication software we use. Alphaclone gave our readers a special free 30 day trial for those interested, so take advantage of it. While Viking Global was originally founded by three Tiger Management veterans (Brian Olson, David Ott, & Andreas Halvorsen), only one of those founders now remains (Halvorsen).
Tuesday, March 2, 2010
Brett Barakett's Tremblant Capital Bets Big On Research In Motion (RIMM): 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 Brett Barakett's hedge fund Tremblant Capital Group. Before founding his own firm, Brett previously was a portfolio manager for Louis Bacon's global macro hedge fund Moore Capital. Taken from their site, Tremblant Capital Group's objective is "to achieve superior risk adjust returns for our investors through our focused and disciplined investment process." The name Barakett might ring a bell because his brother Timothy used to run fellow hedge fund Atticus Capital (who previously announced they'd be shutting down). So while Timothy may have stepped away from the hedge fund game, Brett is still going at it. And, in his spare time he enjoys ice hockey.
The positions listed below were their 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
Mastercard (MA) Calls
Macys (M) Calls
Chipotle Mexican Grill (CMG)
Macys (M)
Liberty Media Starz (LSTZA)
CVS Caremark (CVS)
Citigroup (C)
The rest of their new stakes were less than 0.5% of reported assets each: Apollo Group (APOL) Calls, Lowe Companies (LOW), AGA Medical (AGAM), DirecTV (DTV), Symmetry Medical (SMA), Union Pacific (UNP) Calls, Greatbatch (GB), Liberty Media (LINTA) Calls, America Movil (AMX), Apollo Group (APOL) Puts, Cypress Semiconductor (CY), Gannett (GCI) Calls, & Liz Claiborne (LIZ)
Increased Positions
Research in Motion (RIMM) Calls: Increased by 312%
Procter & Gamble (PG) Calls: Increased by 107%
Charles Schwab (SCHW): Increased by 37.9%
Hologic (HOLX): Increased by 20.5%
Green Mountain Coffee Roasters (GMCR): Increased by 13.6%
Integra Lifesciences (IART): Increased by 13%
Reduced Positions
Walmart (WMT): Reduced by 33%
Visa (V): Reduced by 32%
Apple (AAPL): Reduced by 26%
Mastercard (MA): Reduced by 25%
Procter & Gamble (PF): Reduced by 20%
Redhat (RHT): Reduced by 11.3%
Removed Positions (Sold out completely):
Qualcomm (QCOM) Calls
Chipotle (CMG-B)
DirecTV (DTV) Calls
Redhat (RHT) Calls
Liberty Media (LMDIA)
CBS (CBS) Puts
Viacom (VIA-B) Puts
Palm (PALM) Puts
The rest of their sold positions were less than 0.5% of assets reported on previous filings each: iShares HongKong (EWH) Puts, Intuitive Surgical (ISRG) Calls, iShares FTSE (FXI) Puts, Werner (WERN) Calls, Baidu (BIDU) Puts, Lamar Advertising (LAMR) Calls, Corporate Executive Board (EXBD) Calls, Burlington Northern (BNI), Peet Coffee (PEET), & China Biotics (CHBT)
Top 15 Holdings by percentage of assets reported on 13F filing
- Research in Motion (RIMM) Calls: 28%
- Procter & Gamble (PG) Calls: 8.37%
- Procter & Gamble (PG): 3.34%
- Visa (V): 2.15%
- Mastercard (MA): 2.13%
- Mastercard (MA) Puts: 2.09%
- Research in Motion (RIMM): 1.98%
- Mastercard (MA) Calls: 1.97%
- Green Mountain Coffee Roasters (GMCR): 1.91%
- Hologic (HOLX): 1.91%
- Macys (M) Calls: 1.86%
- Baidu (BIDU): 1.67%
- Walmart (WMT): 1.65%
- Apple (AAPL): 1.64%
- Charles Schwab (SCHW): 1.63%
Tremblant Capital uses options to express a lot of their positions so keep in mind that this can get tricky when trying to assess their net exposure to a specific stock. For instance, they own Mastercard (MA) common stock, but also own both calls and puts on the name. Since we don't know the strike prices or expiration dates, it's nearly impossible for us to know what their overall bet is on the name. At the same time though, we know they are bullish on Research in Motion (RIMM) because they own both the common stock and and calls. Not to mention, they added massively to their call position over the past quarter.
In terms of other additions, they doubled their stake in Procter & Gamble (PG) calls and started new call positions in both Macys and Mastercard. Of the positions they completely sold out of, Qualcomm was notable because it had previously been a sizable stake for Barakett's hedge fund. Overall though, their portfolio looks pretty similar to last quarter and they've certainly retained (and even expanded) their large exposure to Research in Motion.
There are also a few transactions we need to clarify. In regards to their Chipotle positions, you'll notice they "sold out" of Chipotle's B shares and added a 'new' stake in Chipotle's A shares. In actuality, Chipotle converted into a single shareclass of common stock in the fourth quarter. As such, Tremblant owns the regular CMG shares. In addition, Barakett's hedge fund 'sold out' of LMDIA and started 'new' stakes in DTV and LSTZA. In reality, this was just a result of a merger transaction.
Assets reported on the 13F filing were $3.8 billion this quarter compared to $3.0 billion last quarter, an increase of 28% in exposure to equities and options. 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, Eddie Lampert's RBS Partners, David Ott's Viking Global, and Chris Shumway's hedge fund Shumway Capital Partners, Chase Coleman's Tiger Global, Philip Falcone's Harbinger Capital Partners, Roberto Mignone's Bridger Management, Thomas Steyer's Farallon Capital, and John Burbank's Passport Capital. Check back daily for our new updates.
Monday, March 1, 2010
Thomas Steyer's Farallon Capital Focused On Risk Arbitrage: 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 Thomas Steyer's hedge fund Farallon Capital. Steyer founded Farallon in 1986 and today it is a multi-billion dollar hedge fund that invests in equities, private investments, debt, and real estate. Typically though, they're focused on risk arbitrage strategies and you'll find a lot of evidence of this in their portfolio below. In terms of other recent activity, we saw that Farallon disclosed their large position in FreightCar America (RAIL) and have been selling shares of Knology (KNOL).
The positions listed below were Farallon'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
Sun Microsystems (JAVA) ~ inactive
Affiliated Comp Services (ACS) ~ inactive
Home Depot (HD) ~ inactive
Wells Fargo (WFC)
XTO Energy (XTO)
Dollar General (DG)
Encore Acquisition (EAC)
Sherwin Williams (SHW)
Verisk Analytics (VRSK)
Covidien (COV)
Energy Partners (EPL) ~ this was a result of a debt to equity conversion
Expedia (EXPE) Puts
Delta Airlines (DAL)
Increased Positions
Charles Schwab (SCHW): Increased by 309%
Beacon Roofing (BECN): Increased by 167% ~ we also detailed this increase
Burlington Northern (BNI): Increased by 137% ~ now inactive after the Berkshire Hathaway purchase
Old Dominion (ODFL): Increased by 103%
BMC Software (BMC): Increased by 98%
China Housing & Land (CHLN): Increased by 88%
Crown Castle (CCI): Increased by 75.5%
Monsanto (MON): Increased by 62.5%
SBA Communications (SBAC): Increased by 44.8%
Oracle (ORCL): Increased by 43%
Jones Lang Lasalle (JLL): Increased by 33.5%
Express Scripts (ESRX): Increased by 30.8%
Reduced Positions
Visa (V): Reduced by 53.8%
MSCI (MXB): Reduced by 47%
Hurray Holdings (HRAY): Reduced by 43.5%
GeoEye (GEOY): Reduced by 33.2%
JB Hunt (JBHT): Reduced by 22.4%
Discovery Communications (DISCA): Reduced by 20.4%
Knology (KNOL): Reduced by 14.8% ~ we already knew of these sales
Removed Positions (Sold out completely):
Aetna (AET) Calls
Capitalsource (CSE)
Apollo Group (APOL)
iShares Russell 2000 (IWM) Puts
Focus Media (FMCN)
Mastercard (MA)
America Movil (AMX)
Rockwell Collins (COL)
Eastman Kodak Bonds
Priceline.com (PCLN)
Marvel Entertainment (MVL)
Google (GOOG)
Top 15 Holdings by percentage of assets reported on 13F filing
- Sun Microsystems (JAVA): 12.97%
- Burlington Northern Santa Fe (BNI): 7.63%
- Affiliated Comp Services (ACS): 6.99%
- Visa (V): 3.88%
- Home Depot (HD): 3.69%
- Wells Fargo (WFC): 3.59%
- XTO Energy (XTO): 3.50%
- Oracle (ORCL): 3.41%
- Jones Lang Lasalle (JLL): 3.08%
- Crown Castle (CCI): 3.06%
- Dollar General (DG): 2.85%
- Charles Schwab (SCHW): 2.80%
- BMC Software (BMC): 2.77%
- Monsanto (MON): 2.40%
- Yingli Green Energy Bonds: 2.40%
As you can see, a lot of Farallon's holdings were arbitrage related. Their top three holdings are no longer active stocks as they've all completed their merger processes: Sun Micro, Burlington Northern, and Affiliated Comp. A lot of their top holdings were also brand new holdings including Wells Fargo, Home Depot and Dollar General. This is directly in line with what we've seen out of hedge fund land lately. In fact, Wells Fargo was one of the most added stocks by hedge funds in the fourth quarter. Overall, Farallon reduced exposure to services and increased technology exposure.
Steyer's hedge fund firm completely sold out of a number of notable stakes (including Capitalsource which we previously detailed). They also dumped shares of Apollo Group (APOL) which is interesting as we've started to see hedge funds take divergent paths on this name. Some funds like Farallon have sold out, while others like Chase Coleman's Tiger Global have taken large stakes. Another interesting choice Steyer's hedge fund made was to sell completely out of Mastercard (MA) while still holding shares of Visa. Previously, hedgies had owned both of the payment processors. Nowadays it seems many funds are choosing one or the other. Farallon has chosen Visa, but note that they did sell some shares of V as well.
Data used for this article comes from Alphaclone, our source for backtesting strategies and sorting through all the hedge fund portfolio maneuvers with ease. Assets reported on the 13F filing were $2.0 billion this quarter compared to $1.4 billion last quarter. 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, Eddie Lampert's RBS Partners, David Ott's Viking Global, and Chris Shumway's hedge fund Shumway Capital Partners, Chase Coleman's Tiger Global, Philip Falcone's Harbinger Capital Partners, and Roberto Mignone's Bridger Management. Check back daily for our new updates.
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)
CBS (CBS)
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
- Visa (V): 8.3%
- Invesco (IVZ): 7.6%
- Mastercard (MA): 6.3%
- Express Scripts (ESRX): 4.2%
- JPMorgan Chase (JPM): 4.0%
- CSX (CSX): 3.9%
- Goodrich (GR): 3.3%
- Wellpoint (WLP): 3.3%
- Beckman Coulter (BEC): 2.7%
- Hewlett Packard (HPQ): 2.7%
- Autodesk (ADSK): 2.7%
- Danaher (DHR): 2.6%
- Cigna (CI): 2.6%
- Capital One (COF): 2.4%
- 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.
Wednesday, February 17, 2010
Stephen Mandel's Lone Pine Capital Dumps Mastercard & Priceline: 13F Filing Analysis
(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 notable stockpicker Stephen Mandel and his hedge fund Lone Pine Capital. Mandel's firm is named after a historical lone pine tree at his alma mater, Dartmouth College. Before founding his own firm, Mandel worked at Julian Robertson's legendary Tiger Management. Lone Pine seeks to identify companies with good management teams that are trading below intrinsic value. Lone Pine's main fund, Lone Cypress, was up 17.7% for 2009 as noted in our 2009 hedge fund performance numbers post. Additionally, their Lone Kauri was up 12.1%, Lone Cascade up 44.4%, and Lone Dragon Pine up 72.9%
In terms of recent coverage, we got a glimpse that Lone Pine is bullish on education plays. Additionally, Mandel's hedge fund is focused on investments in outsourcing, smartphones, emerging market consumer-driven companies, national and global financial service leaders and internet-enabled business disrupters. Conversely, they are shorting companies that have been hurt by technological obsolescence and companies in industries with global overcapacity. In the past, we've also taken a brief look at Lone Pine's UK positions too.
The positions listed below were Lone Pine's long equity, note, and options holdings as of December 31st, 2009 as filed with the SEC. Note that we are only covering the major portfolio maneuvers. All holdings are common stock unless otherwise denoted.
Brand New Positions
Baxter International (BAX)
HSBC Holdings (HBC)
Accenture (ACN)
Wells Fargo (WFC)
Walt Disney (DIS)
YUM Brands (YUM)
Bank of America (BAC)
eBay (EBAY)
CVS Caremark (CVS)
Staples (SPLS)
Autodesk (ADSK)
Mead Johnson (MJN)
Marvel Entertainment (MVL)
Cninsure (CISG)
Increased Positions
Dr. Pepper Snapple (DPS): Increased by 335.6%
Estee Lauder (EL): Increased by 310%
Citrix (CTXS): Increased by 176%
Goodrich (GR): Increased by 96.1%
Walgreen (WAG): Increased by 88.4%
Popular (BPOP): Increased by 80.6%
New Oriental Education (EDU): Increased by 66.37% ~ we previously noted Lone Pine's addition to EDU shares
FLIR Systems (FLIR): Increased by 32.9%
Visa (V): Increased by 23.9%
McDonald's (MCD): Increased by 19.8%
Discovery Communications (DISCA): Increased by 11.7%
Reduced Positions
Vistaprint (VPRT): Reduced by 64.8%
Southwestern Energy (SWN): Reduced by 60.6%
Melco Crown (MPEL): Reduced by 48.9%
Mindray Medical (MR): Reduced by 34.6%
Smithfield Foods (SFD): Reduced by 32.8%
Apple (AAPL): Reduced by 18.3%
Hewlett-Packard (HPQ): Reduced by 13.4%
Removed Positions (Sold out completely):
Priceline.com (PCLN)
Mastercard (MA)
America Movil (AMX)
Coca Cola (KO)
Cmex (CX)
Liberty Media (LMDIA)
Walter Energy (WLT)
Coach (COH)
Philip Morris International (PM)
Fomento Economico Mexicano (FMX)
Huntington Bancshares (HBAN)
Top 15 Holdings by percentage of assets reported on 13F filing
- JPMorgan Chase (JPM): 7.43%
- Monsanto (MON): 6.82%
- Baxter International (BX): 6.25%
- Qualcomm (QCOM): 5.78%
- Apple (AAPL): 5.43%
- Visa (V): 4.88%
- McDonald's (MCD): 4.85%
- Hewlett-Packard (HPQ): 4.48%
- HSBC Holdings (HBC): 3.89%
- Accenture (ACN): 3.69%
- Green Mountain Coffee Roasters (GMCR): 3.16%
- Wells Fargo (WFC): 3.02%
- Strayer Education (STRA): 2.93%
- Walgreens (WAG): 2.88%
- Goodrich (GR): 2.70%
Lone Pine started new positions in HSBC, Accenture, Baxter, and Wells Fargo and they are all now top fifteen holdings. One of the biggest moves in Lone Pine's portfolio from a core holding standpoint was their sale of longstanding position America Movil (AMX). In previous quarters we had noted other hedge funds were selling this name while Lone Pine held. That is not the case anymore as they have finally sound completely out of AMX.
We also make strong note that they dumped Mastercard (MA) from their portfolio, normally a perennial hedge fund favorite holding. Instead, it seems they prefer Visa in the payment processing space. Typically, we've seen hedge funds hold both of the payment giants, but now it seems more managers select one or the other. Lastly, Lone Pine sold out of Priceline, also a previously large position for them. Overall though, Lone Pine still holds many of the most popular stocks held by hedge funds.
Remember that Stephen Mandel's hedge fund is a part of the Tiger Cub portfolio that was created with Alphaclone where you can easily replicate a portfolio of top hedge fund holdings. Assets from the collective holdings reported to the SEC via 13F filing were $9.8 billion this quarter compared to $8 billion last quarter, so they invested almost $2 billion more on the long side in US equities. Remember that these filings are not representative of the hedge fund's entire base of assets under management. Therefore, the figures above represent the percentage of their reported 13F assets, not their entire portfolio.
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, and David Einhorn's Greenlight Capital. Check back daily for our new updates.
