McKinley Capital Management LLC is an Alaska-based investment management firm founded by Robert B. Gillam in 1990. The investment firm specializes in global and international growth equity strategies, so retail investors may find the fund’s equity portfolio to be relatively informative considering the outperformance of growth stocks compared to their value counterparts in recent years. The Alaska-based specialist in systematic growth style investing had an equity portfolio valued at $2.07 billion at the end of March, down from $2.16 billion on December 31. Given that McKinley’s top-10 equity positions were dominated by big names in the technology industry, the following article will discuss the fund’s top-5 tech stocks as of the end of the March quarter.
At Insider Monkey, we track around 785 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).
#5. Alibaba Group Holding Ltd (NYSE:BABA)
– Number of shares held by McKinley (as of March 31): 618,620
– Value of McKinley’s holding (as of March 31): $48.89 Million
McKinley Capital Management was exceptionally bullish on Alibaba Group Holding Ltd (NYSE:BABA) during the first quarter of 2016, as the firm boosted its Alibaba stake by 598,006 American Depositary Shares (ADSs) in the quarter, to 618,620 ADSs. The upped stake was valued at $48.89 million on March 31 and accounted for nearly 2.4% of McKinley’s equity portfolio. The world’s largest online and mobile commerce company has seen its market value gain 31% in the past three months, though it remains down by nearly 2% year-to-date. Soon after the e-commerce giant released its financial results for the fourth quarter and full 2016 fiscal year, analysts at Merrill Lynch reiterated their ‘Buy’ rating on the company’s stock and lifted their price target on it to $99 from $96. Merrill Lynch believes “there should be room for marketing revenue to grow” at Alibaba, as the company has “leading investment in R&D to facilitate cross-selling and targeted advertising”. Ken Fisher’s Fisher Asset Management has 3.08 million ADSs of Alibaba Group Holding Ltd (NYSE:BABA) in its portfolio as of March 31.
#4. Microsoft Corporation (NASDAQ:MSFT)
– Number of shares held by McKinley (as of March 31): 914,066
– Value of McKinley’s holding (as of March 31): $50.48 Million
The growth-oriented investment firm was also bullish on Microsoft Corporation (NASDAQ:MSFT) in the March quarter, during which its upped its stake in the company by 24% to 914,066 shares worth $50.48 million. The software maker plans to discontinue its Windows 10 free upgrade offer at the end of July, so existing users of Windows 7 and Windows 8.1 still have a chance to upgrade to Windows 10 for free. Microsoft is reportedly set to charge $119 for the home version of the software and $199 for its Pro iteration once the free upgrade period expires. According to fresh reports, there are around 300 million Windows 10 users at the moment, so the 1.00 billion mark that it hopes to reach by 2018 seems overly ambitious. Microsoft shares are down by 8% since the start of 2016. Donald Yacktman’s Yacktman Asset Management owns 12.54 million shares of Microsoft Corporation (NASDAQ:MSFT) as of March 31.
Three more tech stocks, including two of the vaunted FANG growth stocks, are discussed on the next page.