UK-based Edinburgh Partners Further Cuts Exposure to its Top Holdings

Edinburgh Partners is a Scottish hedge fund with an office in New York City. Managed by Sandy Nairn, it has a strong focus on long-term investments. According to the fund’s website, the investment team of Edinburgh Partners believes that the company analysis should not be oriented towards short-term data, such as quarterly or annual performance, but should rather be concentrated for a five-year period. In its latest 13F filing with the Securities and Exchange Commission, Edinburgh Partners revealed its equity portfolio as at the end of the first quarter of 2013. In line with the fund’s strategy to orient towards long-term investments, most of the 39 positions have remained unchanged. However, the fund reduced its top 10 holdings, which account for approximately 99% of the total portfolio value, a trend that can be noticed throughout the past couple of years.

Overall, the value of the 13F portfolio went down to $1.17 billion, from $1.26 billion registered in the previous quarter, with around 2/3 of the portfolio being invested in the Technology sector. In this way, the fund’s two largest holdings in terms of value are Microsoft Corporation (NASDAQ:MSFT) and Google Inc (NASDAQ:GOOGL), in which the fund disclosed stakes worth $192.59 million and $166.27 million as at the end of March.

Microsoft Corporation (NASDAQ:MSFT)

Even though, the fund sold around 43,000 shares of Microsoft Corporation (NASDAQ:MSFT), the company climbed a couple of positions in the top list, with the value of the stake appreciating from $168.25 million reported for the end of 2013. Actually, Edinburgh Partners have been consistently trimming their position in Microsoft, currently owning slightly above 4.45 million shares, while two years ago, the fund held around 9.5 million shares. Microsoft Corporation (NASDAQ:MSFT) gained around 10% during the first quarter of 2014 and has an average recommendation of ‘Overweight.’ Microsoft managed to beat the EPS estimates by more than 10% for the first two quarters of its current fiscal year and trails a P/E of around 14.xx, below the industry average of 19.xx.

The next up is Google Inc (NASDAQ:GOOGL), in which Edinburgh holds 149,183 class A shares, down by some 10,600 shares over the quarter. Google recently conducted a 2-1 stock split, following which the price of its class A shares halved and an additional class C shares have been created that hold no voting rights and will be issued for compensations and acquisitions. Another UK based hedge fund with a much more significant stake in Google is Lansdowne Partners, led by Alex Snow, which held around 974,400 shares at the end of last year.

Another top holding in Edinburgh Partners’ latest 13F is Tyco International Ltd. (NYSE:TYC) with a $163.98 million stake, which contains around 3.87 million shares. The fund sliced the position by 244,800 shares since the end of 2013, which is the third reduction since the company has been added to the equity portfolio. Overall, the position has been cut from some 5.2 million shares reported as held at the end of June 2013. Switzerland-based Tyco International Ltd. (NYSE:TYC)  is a security and protection company with a market cap of around $18.7 billion, which is one of the largest in the industry. It sports a Price-to-Earnings Ratio of 29.xx, which is also one of the highest in the industry and has a Price/Earnings to Growth Ratio above 1.00.

QUALCOMM, Inc. (NASDAQ:QCOM) occupied the fourth spot in Edinburgh Partners’ latest 13F. The fund reported a $148.61 million position in the company, which amasses over 1.88 million shared, down by some 51,600 shares over the quarter. Stephen Mandel‘s Lone Pine Capital and Ken Fisher‘s Fisher Asset Management held major stakes in QUALCOMM, Inc. (NASDAQ:QCOM) at the end of last year, with Lone Pine owning some 10.89 million shares, and Fisher holding 9.07 million shares.

The fifth largest holding in terms of value is represented by Johnson Controls Inc (NYSE:JCI), in which Edinburgh held around 2.94 million shares at the end of March, with a reported value of $138.94 million. Johnson Controls is a $30 billion company that engages in manufacturing and installation of automatic temperature regulation systems in buildings. For the first quarter of its fiscal 2014,Johnson Controls Inc (NYSE:JCI) reported an annual 5% increase in sales to $10.9 billion, and EPS of $0.69, up by 33% on the year. For the second quarter the company expects net income between $0.64 and $0.66 per diluted share, and between $3.15 and $3.30 for the full year, according to a statement.

In addition, Sandy Nairn’s fund sold out its position in General Dynamics Corporation (NYSE:GD), in which it held around 503,500 shares previously, the company being one of the top 10 holdings in the equity portfolio. Edinburgh Partners also initiated stakes in Generac Holdings Inc. (NYSE:GNRC) and Baidu Inc (ADR) (NASDAQ:BIDU), which contain 54,500 and 300 shares respectively.

Disclosure: none

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