Andreas Halvorsen co-founded Viking Global in 1999 with two other former members of Tiger Management, the hedge fund run by legendary Julian Robertson. His partners have since left the firm. Viking filed its 13F for the fourth quarter of 2012 in February, disclosing many of its long equity positions as of the end of December. We use 13F filings to research investment strategies- for example, we have found that the most popular small cap stocks among hedge funds outperform the S&P 500 by 18 percentage points per year on average- as well as to analyze fund managers’ top picks. Read on for our thoughts on Halvorsen’s five largest holdings by market value and compare them to previous filings.
Viking increased its stake in Time Warner Inc (NYSE:TWX) by 45% and owned nearly 20 million shares at the end of 2012. The entertainment company managed a large percentage increase in earnings last quarter compared to the fourth quarter of 2011, despite revenue being flat. While a continued discrepancy between the two would not be sustainable, Time Warner carries earnings multiples in the teens and might offer “growth at a reasonable price.” Coatue Management, managed by fellow Tiger Cub Philippe Laffont, more than tripled the size of its own position in Time Warner (see Laffont’s stock picks).
Halvorsen and his team were also buying News Corp (NASDAQ:NWSA), likely due to the special situation offered by the breakup of the company. It’s well accepted that spinouts allow management of the newly independent company to better focus on operations, and the breakup of News Corp could create a similar situation. This is why the stock was the most popular consumer services stock among hedge funds (find more consumer services stocks hedge funds loved). We’ve noticed that at a trailing P/E of 17 News Corp is actually about fairly valued as things stand, meaning that not much post-breakup improvement would be required to make it a good value.
See three more stocks Halvorsen was buying, including a popular tech stock:
Danaher Corporation (NYSE:DHR), a $42 billion market cap industrial and medical instruments company, was another of Viking’s favorite stocks as the fund owned over 14 million shares according to its 13F. It’s another stock competing for GARP status, given the fact that it trades at 18 times trailing earnings and that the combination of 6% revenue growth and improved margins pushed net income up 11% in Q4 2012 versus a year earlier. Billionaire Steve Cohen’s SAC Capital Advisors was also bullish on Danaher, increasing its position to a total of 2.1 million shares (check out more stocks SAC was buying).
The fund added shares of Capital One Financial Corp. (NYSE:COF) and closed December with nearly 14 million shares in its portfolio. Capital One’s stock price hasn’t performed as well in the last year as those of other credit card companies have, though at this point it looks like a good value: the stock posts trailing and forward P/Es of 8. Market leader Visa Inc (NYSE:V), for purposes of comparison, is up 36% from its levels at this point in 2012 but trades at 19 times consensus earnings for the fiscal year ending in September 2014. Lone Pine Capital initiated a position of 4.4 million shares in Capital One; Stephen Mandel, the manager of Lone Pine, is another billionaire Tiger Cub. See what else Mandel was buying.
Rounding out Viking’s top five picks is Qualcomm, Inc. (NASDAQ:QCOM), which was also one of the names on our list of the most popular tech stocks among hedge funds for the fourth quarter (see the full top ten list). The fund owned over 11 million shares of Qualcomm, up 12% from the beginning of October. At a market capitalization of over $110 billion, Qualcomm is valued at 14 times forward earnings estimates with a five-year PEG ratio of 1. With results from its most recent fiscal quarter looking good, it’s another stock that could be worth further research.
Disclosure: I own no shares of any stocks mentioned in this article.