In August, billionaire Andreas Halvorsen’s Viking Global filed its 13F for the second quarter of 2013 with the SEC, disclosing many of its long equity positions as of the end of June, including Time Warner Inc (NYSE:TWX), Comcast Corporation (NASDAQ:CMCSA) and Intuitive Surgical, Inc. (NASDAQ:ISRG). Halvorsen is a Tiger Cub, having previously worked at legendary investor Julian Robertson’s Tiger Management. We track his filings alongside those of hundreds of other hedge funds as part of our work researching investment strategies; we have found that the most popular small cap stocks among hedge funds earn an average excess return of 18 percentage points per year (learn more about our small cap strategy). Our own portfolio based on these techniques outperformed the S&P 500 by 33 percentage points in the last 11 months.
This performance proves that there are at least some ways for investors to use 13F filings to help provide investment ideas. Another common use is to browse individual managers’ picks for any names which seem worthy of further research. Read on for our quick take on Halvorsen’s five largest holdings from the filing and compare these to his picks over time.
Viking Global owned more than $1.5 billion worth of Time Warner Inc (NYSE:TWX) at the beginning of July, making the media and entertainment company its largest holding. Time Warner Inc (NYSE:TWX), whose businesses include cable and premium networks as well as the production of TV and film entertainment, grew its revenue by 10% last quarter compared to the second quarter of 2012 with margins expanding as well. The trailing P/E of 16 is even with to slightly below the valuation of its peers. Coatue Management, which is managed by fellow Tiger Cub Philippe Laffont, has been another major shareholder in Time Warner (research more stocks Coatue owned).
The fund also increased the size of its position in Capital One Financial Corp. (NYSE:COF), to a total of about 15 million shares. The banking and credit services company is another name cheaper than many of its industry peers, valued at 10 times forward earnings estimates compared to about double that figure for companies such as Visa and Mastercard. We’d also note that business has been growing, going by recent reports, and the market price is about even with the book value of the equity. Maverick Capital, managed by Lee Ainslie- yet another Tiger Cub- had initiated a position in Capital One Financial Corp. (NYSE:COF) in the first quarter of 2013.
Comcast Corporation (NASDAQ:CMCSA) has been a big buy for Halvorsen during Q1, and he added more shares last quarter to make it one of his top five picks. Comcast Corporation (NASDAQ:CMCSA)’s net income rose quite a bit in the second quarter of 2013 versus a year earlier, and even sales were up 7%. With trailing and forward P/Es of 17 and 15, respectively, Comcast Corporation (NASDAQ:CMCSA) – which also includes NBC Universal and so has a decent entertainment business alongside its cable operations- could be a “growth at a reasonable price” stock. Billionaire Len Fisher’s Fisher Asset Management owned almost 12 million shares at the beginning of April (find Fisher’s favorite stocks).
According to the 13F, Viking Global had 1.7 million shares of Intuitive Surgical, Inc. (NASDAQ:ISRG) in its portfolio as of the end of June. The stock is priced for high growth at a trailing P/E of 22, even after the stock price has fallen 26% in the last year. Recent growth numbers have been low for the $15 billion market cap surgical systems company, and some analysts are concerned that sales of Intuitive Surgical, Inc. (NASDAQ:ISRG)’s products will continue to be slow. Billionaire and Tiger Cub Stephen Mandel’s Lone Pine Capital had been a buyer of the stock between January and March (see more stocks Mandel was buying).
Halvorsen and his team rounded out their top five picks by disclosing ownership of more than 13 million shares of Michael Kors Holdings Ltd (NYSE:KORS). Bulls explain the fact the stock trades at 31 times trailing earnings by pointing to some truly astounding growth rates: net income grew over 80% in the company’s most recent quarter compared to the same period in the previous fiscal year. Wall Street analysts are also bullish: based on their expectations for continued growth, Michael Kors Holdings Ltd (NYSE:KORS)’s forward earnings multiple is only 21 and the five-year PEG ratio is almost exactly 1.
Disclosure: I own no shares of any stocks mentioned in this article.
