Andreas Halvorsen is among the most successful members of the “Tiger Cubs” society, a group of individuals who worked for hedge fund legend Julian Robertson‘s Tiger Management. Halvorsen together with David Ott and Brian Olson of Tiger Management founded Viking Global in 1999. Viking Global has assets worth $30 billion under its management, with its branch offices in Greenwich, New York, Hong Kong and London. The hedge fund employs fundamental analysis for choosing its equity investments. According to its latest 13F filing with the SEC, the investment firm reported an equity portfolio of $26.47 billion, with a major part invested in the healthcare sector, while its largest holdings are represented by Walgreens Boots Alliance Inc (NASDAQ:WBA), Allergan PLC (NYSE:AGN), Google Inc (NASDAQ:GOOGL).
Why are we interested in the 13F filings of a select group of hedge funds? We use these filings to determine the top 15 small-cap stocks held by these elite funds based on 16 years of research that showed their small-cap picks are much more profitable than both their large-cap picks and the broader market. These small-cap stocks beat the S&P 500 Total Return Index by an average of nearly one percentage point per month in our backtests conducted over the period from 1999 to 2012. Moreover, since the beginning of forward testing in August 2012, the strategy worked just as our research predicted, outperforming the market every year and returning 123% over the last 35 months, which is more than 65 percentage points higher than the returns of the S&P 500 ETF (SPY) (see more details).
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Walgreens Boots Alliance Inc (NASDAQ:WBA) is Viking Global’s top pick, as the hedge fund increased its stake in the company by 68% to 24.63 million shares valued at $2.08 billion during the second quarter. Walgreens Boots Alliance Inc (NASDAQ:WBA) reported better-than-expected earnings for the third quarter of fiscal 2015 with EPS of $0.72, versus estimates of $0.87. However, its revenue of $28.8 billion was slightly short of analysts’ expectations of $29.7 billion, although it grew by 48.4% on a year-over-year basis. In addition, Walgreens Boots Alliance Inc (NASDAQ:WBA) acquired skincare brand Liz Earle for $215.7 million during the second quarter. Walgreens Boots Alliance Inc (NASDAQ:WBA)’s stock is up by 20% year-to-date. Smart money held a positive outlook of the company with 81 hedge funds holding $9.13 billion worth of stock at the end of June. Among funds we track, Barry Rosenstein’s JANA Partners was the second-largest shareholder of Walgreens Boots Alliance Inc (NASDAQ:WBA) (after Viking Global) at the end of the second quarter, holding 13.75 million shares valued at $1.16 billion.
Viking Global’s stake in Allergan PLC (NYSE:AGN) contains 6.80 million shares worth $2.06 billion, with an increase of 12% over the quarter. The stock of the company has grown by 22.84% year-to-date as it changed its name from Actavis, which bought Allergan earlier this year. Recently, Allergan PLC (NYSE:AGN) announced the divestiture of its Global Generics Business to Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) for $40.5 billion, receiving $33.75 billion in cash and the rest in stock ownership. Smart money have a bullish outlook on Allergan PLC (NASDAQ:AGN), which is the most preferred stock pick among the funds we track. At the end of the second quarter, 150 investorshad positions in the pharmaceutical company worth $20.70 billion, slightly lower than previous quarter aggregate investments of $21.97 billion from 157 hedge funds. John Paulson’s Paulson & Co. is the largest shareholder of the company as of the end of the second quarter, holding 7.17 million shares.
Google Inc (NASDAQ:GOOGL) represents Viking Global’s third-largest holding, which contains 2.74 million Class A shares valued at $1.48 billion. The investor increased the position by 67% during the second quarter and added some 306,400 class C shares of Google, taking the class C stock holding to 1.15 million shares. Google has recently surprised the tech world by changing its management structure and turning into a holding company, “Alphabet.” Under the new structure, Larry Page, the current CEO of Google Inc (NASDAQ:GOOGL), will become the CEO of Alphabet, while Sundar Pichai will take over the company’s core operations under Google. Google’s stock has jumped 4.46% after the announcement and have advanced by 30% year-to-date. Google Inc (NASDAQ:GOOGL)’s popularity among the funds in our database decreased during the second quarter, as 113 investors disclosed holding $8.15 billion worth of Class A shares at the end of June, compared to 121 funds owning $7.36 billion worth of stock a quarter earlier. Harris Associates is another shareholder of the company, with 2.53 million shares valued at $1.27 billion at the end of the second quarter.
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