Tiger Cub Lee Ainslie‘s $10 billion hedge fund Maverick Capital has beaten its peers for four years running, which includes healthy gains in 2015 when market volatility wreaked havoc with the returns of many funds’ portfolios. Mr. Ainslie put 39-year-old Andrew Warford in charge of stock picking at Maverick last year, and also gave a bigger role to Riad Abrahams, 37, who was named chief strategist in 2014. Analysts believe the pair to be exceptionally skilled stock pickers, especially in the consumer discretionary and technology sectors, each of which comprised 29% of the value of the fund’s $6.32 billion U.S equity portfolio at the end of March. In this article we will focus on five of Maverick Capital’s most prominent moves made during the first quarter.
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#5 Northrop Grumman Corporation (NYSE:NOC)
– Shares Owned by Maverick Capital (as of March 31): 658,600
– Value of Holding (as of March 31): $130.34 Million
Maverick Capital initiated a stake in Northrop Grumman during the first quarter, with it representing 2.06% of its portfolio on March 31. Drexel Hamilton recently raised its price target on Northrop Grumman Corporation (NYSE:NOC) to $235 from $207 and reiterated its ‘Buy’ rating on the stock. The analysts see 2016 as a transition year for the company as far as revenue is concerned, but see an acceleration of its top-line growth in 2017. Cliff Asness thought it was better to take some profits of the table after shares of the global security company gained about 6% in the first quarter, as he slashed his fund AQR Capital Management’s stake in Northrop Grumman Corporation (NYSE:NOC) by 27% during the quarter to 1.76 million shares.
#4 Facebook Inc (NASDAQ:FB)
– Shares Owned by Maverick Capital (as of March 31): 1.60 Million
– Value of Holding (as of March 31): $182.15 Million
Moving on, Maverick added about 1.59 million shares to its Facebook Inc (NASDAQ:FB) holding during the January-to-March period, with it also essentially representing a new position, as the holding consisted of just 2,500 shares on December 31. As the competition between Facebook and Google intensifies in the ad space, Mark Zuckerberg’s company recently announced that it will now sell video ads for other companies, for a cut of the revenue. Facebook Inc (NASDAQ:FB) managed to easily beat both top and bottom-line estimates with its financial results for the first quarter and its shares up by a healthy 12.7% this year. Another Tiger Cub that was also bullish on the company during the first quarter was Andreas Halvorsen of Viking Global, as his fund initiated a position in the social networking giant of 20.13 million shares.
We’ll discuss three more big moves made by Maverick Capital during the first quarter on the next page.
#3 Priceline Group Inc (NASDAQ:PCLN)
– Shares Owned by Maverick Capital (as of March 31): 262,600
– Value of Holding (as of March 31): $338.50 Million
A total of about 261,300 shares were added to Maverick’s Priceline Group Inc (NASDAQ:PCLN) holding during the first quarter, accounting for most of the holding. The stock is trading nearly sideways this year, and took a huge hit of over $100 on May 4, even though the company managed to beat both top and bottom-line estimates with its first quarter results announced that morning. The EPS outlook that the company’s management provided for the second quarter fell below the consensus estimates, which lead to the record tumble. The lower guidance could very well have to do with the fact that the company is still looking for a CEO and given its unique business model, the task isn’t particularly an easy one. John Armitage‘s Egerton Capital Limited boosted its Priceline Group Inc (NASDAQ:PCLN) holding by 47% to 376,600 shares during the first quarter.
#2 Allergan plc Ordinary Shares (NYSE:AGN)
– Shares Owned by Maverick Capital (as of March 31): 1.41 Million
– Value of Holding (as of March 31): $378.02 Million
Maverick more than doubled its stake in Allergan during the January-to-March period, to over 1.41 million shares. The move was perhaps motivated by the company’s impending (at the time) $160 billion merger deal with Pfizer Inc. (NYSE:PFE), which had many other hedgies betting on it, including John Paulson‘s Paulson & Co, which held about 5.42 million shares of Allergan plc Ordinary Shares (NYSE:AGN) at the end of March. However, the stock is down by over 27% this year largely due to the deal falling apart. In its financial results for the first quarter Allergan plc Ordinary Shares (NYSE:AGN) beat earnings expectations, delivering double-digit EPS growth on a year-over-year basis for the seventh-consecutive quarter.
#1 Adobe Systems Incorporated (NASDAQ:ADBE)
– Shares Owned by Maverick Capital (as of March 31): 4.41 Million
– Value of Holding (as of March 31): $413.72 Million
Following a 48% boost during the March quarter, Maverick’s Adobe Systems Incorporated (NASDAQ:ADBE) holding represented 6.55% of its portfolio and ranked as its second-largest position overall. The creative software and marketing analytics leader is in the midst of shifting its business model towards Software as a Service and cloud computing. It is also making acquisitions towards those ends, with the recent purchase of audience-engagement firm Livefyre as one such example, with Adobe planning to incorporate it across its Adobe Marketing Cloud. Aaron Cowen‘s Survetta Capital Management also hiked its Adobe Systems Incorporated (NASDAQ:ADBE) stake during the first quarter, by 89% to 1.86 million shares.