We track quarterly 13F filings from hundreds of hedge funds, including Tiger Cub John Griffin’s Blue Ridge Capital, as part of our work developing investment strategies (for example, according to our research the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year). The most recent round of 13Fs is a bit old- they disclose many of a fund’s long equity positions from the end of Q1 2013- but we can still make use of them be looking for long term picks in a fund’s portfolio (the idea being that the investment team probably still owns a large amount of these stocks). Read on for our quick take on the five largest holdings in Blue Ridge’s portfolio which it owned at least $100 million of at the end of March 2011 or see the full list of the fund’s stock picks over time.
Griffin and his team owned a little more than 5 million shares of Thermo Fisher Scientific Inc. (NYSE:TMO) according to the most recent filing. The $32 billion market cap medical instruments and equipment company has been growing its earnings (net income was up over 20% in the first quarter of 2013 versus a year earlier) but revenue growth has been more modest. As a result we’d be concerned as to how sustainable earnings growth primarily through expanded margins might be. The trailing P/E is 26 and so it should probably be avoided on valuation.
Blue Ridge maintained a position of 6.5 million shares in Dollar Tree, Inc. (NASDAQ:DLTR) throughout the quarter. The dollar store has managed to continue its history of improved financials, with revenue rising 8% in its most recent quarter compared to the same period in the previous year and net income up 15%. It also offers considerable protection from economic conditions with a beta of 0.1. However, investors attracted by its defensive characteristics and historical growth have bid Dollar Tree up to a trailing P/E of 19.
The fund has also been a long term owner of LIBERTY GLOBAL PLC (NASDAQ:LBTYA), the $21 billion market cap provider of TV, broadband, and phone access. The company recently purchased Virgin Media as part of its growth strategy, and reports from even before that acquisition had shown rising sales. At current prices Liberty Global’s enterprise value is more than 10 times trailing EBITDA, but partly due to overall strength in the industry Wall Street analysts are bullish. High EPS growth expectations going forward result in a five-year PEG ratio below 1.