In May, Generation Investment Management, a hedge fund co-managed by David Blood and former Vice President Al Gore, filed its 13F for the first quarter of 2013 with the SEC. These filings disclose many of a fund’s long equity positions in U.S. stocks as of the end of the quarter, and we’ve found that they can be used to help develop investment strategies; for example, the most popular small cap stocks among hedge funds outperform the S&P 500 by an average of 18 percentage points per year. We also like to go through individual filings in search of ideas which investors might find worthy of further research. Read on for our thoughts on Generation’s five largest holdings as of the end of March or see the full list of stocks the fund reported owning.
Blood, Gore, and their investment team maintained a position of 4.2 million shares in Henry Schein, Inc. (NASDAQ:HSIC), an $8.6 billion market cap medical equipment company with a focus on dental health equipment. In the first quarter of 2013, its revenue rose 9% versus a year earlier with net income growing at a slightly higher rate as margins improved. However, markets have already priced in quite a bit a future growth and as a result the trailing earnings multiple of 22. Billionaire Ken Fisher’s Fisher Asset Management reported owning about 590,000 shares in its own 13F (find Fisher’s favorite stocks).
Generation had 6.1 million shares of Danaher Corporation (NYSE:DHR) in their portfolio at the beginning of April. The scientific and environmental instruments company features earnings multiples in the upper teens- the trailing and forward P/Es are 19 and 18, respectively. While earnings have been up, going by recent reports, revenue growth has been quite modest and we’d worry that it will be difficult for Danaher to drive further improvements on the bottom line though higher margins alone. Viking Global, managed by billionaire Andreas Halvorsen, was another major shareholder in Danaher according to our database (check out Halvorsen’s stock picks).