Viking Global is a force to reckon with on the Street. Not only is it among the world’s largest hedge funds in terms of assets under management, but it has also made a name for itself as one of the best performing funds over the years. The fund was started by one of hedge fund legend Julian Robertson‘s protégés, or, as they are informally called, ‘Tiger Cubs’, Ole Andreas Halvorsen at the end of 1999 together with former Tiger Management employees David Ott and Brian Olson. While Mr. Ott left down the firm in 2005 and Mr. Olson stepped down as its CIO in 2010, Viking Global has continued to make great strides in the asset management space even after their departure. Viking Global is headquartered in Greenwich, Connecticut and also has its offices in New York, Honk Kong and London.
According to Viking Global’s last 13F filing, the fund’s US equity portfolio at the end of the third quarter was worth nearly $26.1 billion. However, despite having so much capital in its equity portfolio, the fund held long positions in only 63 stocks and its top 10 equity holdings accounted for almost half of the value of its equity portfolio at the end of September. Taking these statistics into account, it is clear that Viking Global runs a fairly concentrated portfolio for a fund of its size and only those stocks that meet the fund’s stringent qualifying criteria are able to get a spot in its equity portfolio. Since Viking Global makes large bets on the stocks it has a high conviction in, we keep a close eye on the large moves made by the fund every quarter. In this article we are going to analyze the performance of the fund’s five largest equity holdings during the final quarter of 2015 and figure out if the fund made the right decision by betting big on those companies.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here).
#5 Broadcom Corporation (NASDAQ:BRCM)
– Shares Owned by Viking Global (as of September 30): 23.57 million
– Value of Holding (as of September 30): $1.2 billion
Broadcom Corporation (NASDAQ:BRCM) was a new addition to Viking Global’s portfolio in the third quarter and the firm made the right bet as during the final two months of 2015, shares of the semiconductor major witnessed a strong rally and ended the fourth quarter up by 12.42%. However, due to the selloff in equity markets since the start of 2016 Broadcom Corporation (NASDAQ:BRCM) has given up most of those gains and currently trades down almost 8% year-to-date.
In May 2015, Avago Technologies Limited (NASDAQ:AVGO) announced that it would be acquiring Broadcom Corporation for $37 billion. After spending most of the second-half of last year in getting approvals from regulators across several countries, both the companies now expect that the merger will get completed by the previously announced date of February 1, 2016. Ahead of the merger, shares of Broadcom Corporation are currently trading at a forward price-to-earnings multiple of 17.92 and a price-to-book multiple of 3.60.
On January 7, analysts at Sanford C. Bernstein downgraded the stock to ‘Market Perform’ from ‘Outperform’, but kept their price target at $60. Apart from Viking Global, Eric W. Mandelblatt‘s Soroban Capital Partners also initiated a stake in Broadcom Corporation during the third quarter; it acquired nearly 12.58 million shares of the company.