Billionaire Halvorsen’s Picks Dominated S&P 500 Index in Q1: Alibaba Group Holding Ltd (BABA), Valeant and More

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Andreas Halvorsen’s long stock positions as disclosed in Viking Global’s latest 13F filing had a solid first quarter as they delivered an average return of 6.2% based on our calculations. S&P 500 ETF (SPY) on the other hand merely inched 0.9% during the same period. Unlike Halvorsen, some hedge fund managers had it really rough in Q1, the chief among them being Kyle Bass of Hayman Advisors whose long stock picks in his latest 13F filing lost 18.9%. Our methodology is based on long positions that these investment firms have in companies with over $1 billion in market cap. While for Viking Global this number stood at 62 holdings, Hayman’s 5 stock picks were taken into account. Since hedge funds hedge their holdings and invest in various other securities, their actual returns may be significantly different from the approximate returns we have been calculating for their long stock picks.

Andreas Halvorsen

After learning the tricks of the trade from the hedge fund legend, Julian Robertson, Halvorsen set up his own shop in 1999 with two fellow employees from Tiger Management, David Ott and Brian Olson. The former left the fund in 2010 while latter stepped down in 2005. The $32 billion hedge fund has delivered an impressive 18% annualized returns since its inception. In 2014 when the average hedge fund performance hovered around 3.5%, Viking Global (Stock Picks, Investor Letters) posted 13.4% returns. Market value of the fund’s portfolio stood at $21.78 billion towards the end of 2014 with the health care sector representing 31% of this value. Some of the fund’s best performing top picks included Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Actavis plc (NYSE:ACT) and Walgreens Boots Alliance Inc (NASDAQ:WBA), while the new addition in the form of NXP Semiconductors NV (NASDAQ:NXPI) also delivered exceptional returns. That alone doesn’t quite provide a complete picture of Halvorsen’s investment foresight. He also sharply cut his stake in Alibaba Group Holding Ltd (NYSE:BABA) during the fourthquarter, whose downturn during the first quarter has been disastrous for some funds.

Moving on to Viking’s stake in Valeant Pharmaceuticals Intl Inc (NYSE:VRX), which comprised of 9.08 million shares valued at 1.44 billion. The fund’s third largest holding gained the most by 38.79% among the list of his picks under discussion. Besides posting an increase of 332% in quarterly earnings on a year over year basis, Valeant offers what very few other pharmaceuticals can. It has a well diversified portfolio with no drug accounting for more than 4% of revenues. On top of that the company has made very promising acquisitions recently, chiefly the purchase of the leading gastrointestinal drug maker, Salix for $14.5 billion. Another smaller but nevertheless important purchase was that of the cancer drug maker Dendreon for which Valeant Pharmaceuticals Intl Inc (NYSE:VRX) paid $495 million. Jeffrey Ubben‘s Valueact Capital is another significant investor in Valeant that profited from the massive gains that the company posted in the first quarter.

Actavis plc (NYSE:ACT)‘s rise of 15.62% over the quarter gave another bump to Viking’s portfolio value. The fund held 4.59 million shares valued at $1.18 billion of the healthcare company that recently completed its acquisition of the Botox-maker, Allergan. The $119.7 billion company recently sold off its generic drug business in Australia to a private company, Amneal Pharmaceuticals. Among the billionaires that we track 18 had an aggregate investment of $6.20 billion in Actavis plc (NYSE:ACT) towards the end of 2014. Third Point’s Dan Loeb was one of them as his fund held about 3.45 million shares valued at $888.06 million.

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