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Microsoft Corporation (MSFT), Tyco International Ltd. (TYC), & QUALCOMM, Inc. (QCOM): Edinburgh Partners Yet Again Trimming its Exposure in US Equities

Cutting exposure to US equity has become a sort of trend for Scotland based hedge fund Edinburg Partners. The third quarter of fiscal year 2014 was no different, in which the fund yet again shrunk its 13F filing portfolio value to $933 million from almost a $1.0 billion in the previous quarter. The drop in the portfolio value is not due to any significant losses, but due to the fund reducing its exposure in its top holdings. Edinburgh Partners prides itself in being a hedge fund solely focused on long-term value creation and continuous selling small chunks of its major holdings can just be Sandy Narin’s (founder of the fund) idea of routine profit taking rather than anything else. Edinburgh Partners declared a revenue return per ordinary share of 31.1% in 2013. The fund’s major investments are in Europe and Japan, each accounting for just over 30% of the total investments of the fund. In terms of industry sectors, the fund’s major investments is in Industrials at 23.3% of total investments, followed by Consumer Goods, which accounts for  22.3% of total investments.

The top holding of Edinburg Partners continues to be Microsoft Corporation (NASDAQ:MSFT), even though the firm sold over 400,000 shares of the company in the third quarter of 2014, bringing its holding to just over 3.5 million shares from over 3.95 million shares that it held in second quarter of 2014. During second quarter of 2014 also the fund trimmed its exposure in Microsoft by 12%. When the trend of continuous rise in Microsoft Corporation (NASDAQ:MSFT)’s share is combined with the trend of Edinburg Partners consistently selling the shares of the company, along with no major bad news surrounding Microsoft, one thing becomes clear, the fund must be just booking its profits on its long-held position rather than cutting its exposure fearing any negative consequences. Jeffrey Ubben’s ValueAct Capital is one of the largest shareholders of Microsoft. As of June 30, 2014, ValueAct Capital owns over 74 million shares of Microsoft Corporation (NASDAQ:MSFT).

microsoft msft

Swiss security systems company Tyco International Ltd. (NYSE:TYC) continues to be the second-largest holding of Edinburgh Partners. Here too the fund reduced its exposure by 4% to 3.16 million shares. Edinburgh Partners’ current stake in Tyco  is valued at around $140 million. Like Microsoft Corporation (NASDAQ:MSFT), Tyco International Ltd. (NYSE:TYC) didn’t witness any negative news surrounding the company in the third quarter of 2014. David Shaw’s firm D.E. Shaw is another hedge fund that is bullish on the company and as of June 30, 2014 held over 4.4 million shares of Tyco International Ltd. (NYSE:TYC). According to the last reported quarterly results, Tyco International Ltd. (NYSE:TYC) has an EPS of $4.46 and trades at 9.43 times price versus earnings.

Mobile chip maker QUALCOMM, Inc. (NASDAQ:QCOM) is on the third spot in Edinburgh Partners holdings list, beating Johnson Controls Inc (NYSE:JCI) by a thin margin in terms market value of the shares that the fund holds. Edinburgh Partners reduced its stake in QUALCOMM, Inc.  by 4% to 1.67 million shares. This stake is valued at around $123 million. Based on last declared quarterly results, QUALCOMM, Inc. (NASDAQ:QCOM) has an EPS of $4.40, while it trades at 16.82 times price versus earnings. Ken Fisher’s Fisher Asset Management is one of the largest shareholders in QUALCOMM, Inc. (NASDAQ:QCOM) and as of June 30, 2014 owns over 9.2 million shares of the company.

Disclosure: None

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