Billionaire Andreas Halvorsen founded $26 billion hedge fund Viking Global in 1999 and has become one of the most successful “Tiger Cubs” to have moved on from Julian Robertson’s Tiger Management ever since. That success has lead to his personal fortune growing to $3.7 billion, which ranks him 556th on Forbes’ list of the world’s wealthiest people.
After a disappointing 4% loss in 2016, Viking Global rebounded with 12% returns net of fees last year, which was impressive given that it was a period of transition for the fund, as CIO Daniel Sundheim left the firm to start his own hedge fund. Given that Sundheim, described by Halvorsen as being “in a league of his own as a stock picker and portfolio manager”, oversaw a large chunk of the fund’s portfolio, Viking Global returned about $6 billion to investors, though the fund’s 13F portfolio has not shown any indication of it.
The value of that portfolio rose for the fifth-straight quarter during Q3, to $18.06 billion, with the fund adding 19 holdings to it during the quarter while subtracting 15 from it. Viking’s sector allocations haven’t changed much over the past few quarters, with the fund showing a little more bullishness towards healthcare stocks (21.08% weighting) and energy stocks (12.69%) while trimming its exposure to finance stocks (6.84%).
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On the next page we’ll look at four stocks that Viking Global was buying a lot of shares of during Q3, and one stock that it sold off.
Stocks Bought in Q3
Berry Global Group, Inc. (NYSE:BERY)
– Shares Bought During Q3: 5.18 million
– Value of Holding (as of September 30): $310 million
– Q4 Return (through December 14): -0.29%
– Trailing P/E Ratio: 13.15
Viking Global opened a new position in Berry Global Group, Inc. (NYSE:BERY) during Q3 and had already raised the size of its holding by another 38% by October 12 according to a 13G filing, giving it a 5.5% stake in the company. The beverages market, which is the biggest end market for plastics companies like Berry Global, is expected to grow at a modest CAGR of 3% over the next five years.
Ferrari N.V. (NYSE:RACE)
– Shares Bought During Q3: 1.52 million
– Value of Holding (as of September 30): $208 million
– Q4 Return (through December 14): -25.87%
– Trailing P/E Ratio: 22.63
– Forward Dividend Yield: 0.87%
Viking Global revved up its 13F portfolio in Q3 with a new position in Ferrari N.V. (NYSE:RACE). Hedge fund ownership of Ferrari dipped slightly in Q3 after jumping by 50% in Q2. Ferrari pulls in an enviable $80,000 in profit per vehicle, which is why it trades at a much higher multiple than most other automakers, though it sold less than 8,400 of them in 2017.
The Walt Disney Company (NYSE:DIS)
– Shares Bought During Q3: 5.12 million
– Value of Holding (as of September 30): $1.27 billion
– Q4 Return (through December 14): -4.05%
– Forward P/E Ratio: 15.04
– Forward Dividend Yield: 1.57%
Viking nearly doubled the size of its The Walt Disney Company (NYSE:DIS) position during Q3, raising it by 88%. One of the 30 Stocks Billionaires Are Crazy About, Disney is still in the process of getting regulatory approval for its $71.3 billion purchase of Twenty-First Century Fox, Inc. (NASDAQ:FOX). The company has received approval in the U.S, European Union, and China, but has hit some snags in Latin America, where it would control 30% of the region’s sports channels.
General Electric Company (NYSE:GE)
– Shares Bought During Q3: 64.02 million
– Value of Holding (as of September 30): $1.50 billion
– Q4 Return (through December 14): -37.11%
– Forward P/E Ratio: 8.45
– Forward Dividend Yield: 0.56%
Viking Global continued building its General Electric Company (NYSE:GE) stake in Q3 and the stock has continued to fall in Q4. After a large drop in hedge fund ownership of GE during Q1, there has been little movement over the past two quarters, as money managers appear to be waiting out the shrinking pains a little longer before buying into the company’s exhaustive turnaround efforts, which will see it focus on its Aviation, Power and Renewable Energy businesses.
Stocks Sold in Q3
Anheuser-Busch InBev SA/NV (NYSE:BUD)
– Shares Sold During Q3: 2.77 million
– Value of Holding (as of September 30): $0
– Q4 Return (through December 14): -20.41%
– Trailing P/E Ratio: 20.24
– Forward Dividend Yield: 4.74%
Viking Global gave up on its Anheuser-Busch InBev SA/NV (NYSE:BUD) investment during Q3, which was pretty much a disaster for the fund, likely amounting to a 20%+ loss. The fund did well to let it go and take the loss, as not even the announcement that BUD will look into producing “bud”-infused beverages has spared it from further losses in Q4, as Trump’s Steel and Aluminum Tariffs have devastated the profitability of the beer maker.