Las Vegas Sands Corp. (LVS), EMC Corporation (EMC)…$22.5 Billion Hedge Fund Bullish On These Stocks

Editor’s note: There were two errors in our original article: (1) Soliris is approved for both aHUS and PNH (Paroxysmal nocturnal hemoglobinuria). (2) Alexion holds the patent until 2021 in the US and until 2020 in most European countries. Insider Monkey regrets the errors, and they have been corrected.

Viking Global is a $22.5 billion hedge fund run by Norwegian native Andreas Halvorsen. The fund made an amazing 89% in its first year, and is global equity-focused with a bottom-up strategy, which explains the diverse sectors within its equity portfolio. According to the 4Q 13F, Viking Global added to their already plentiful positions.  Let’s see the top five new picks for Andreas Halvorsen and Viking Global, because it’s always important to track the wondrous potential of strategies like this; learn how your peers have beaten the market.

Viking bought over 4 million shares of Alexion Pharmaceuticals, Inc. (NASDAQ:ALXN), which is 2.6% of the entire 13F portfolio.  Alexion’s principal product is Soliris for the treatment of atypical hemolytic uremic syndrome (aHUS) and paroxysmal nocturnal hemoglobinuria (PNH).  Alexion is the only pharmaceutical company that developed a drug for its treatment, and holds the patent on Soliris in the US until 2021 and in Europe until 2020, in most countries.  In the meantime, Soliris is generating significant returns for Alexion and in the fourth quarter of 2012, the company’s revenues rose 45% from the prior year.  Keeping costs down helped push net income up 45%. At $96.20, the stock appears to be overpriced as its P/E ratio is 75x versus a sector average of 64x.  But we’re guessing that until at least 2020, Alexion won’t have too much trouble luring investors away from some of the other, less exclusive pharmaceuticals.

At number two is Las Vegas Sands Corp. (NYSE:LVS). Despite the name, Las Vegas Sands Corp. (NYSE:LVS) develops casinos throughout the world, including Singapore, Macao and Bethlehem Pennsylvania –its Asian properties generate 85% of the company’s total revenue.  Las Vegas Sands Corp. (NYSE:LVS) is one of only two gaming license holders in Singapore and one of six in Macao, giving the company a decidedly wide competitive advantage.   Given its dominance in this sector, the price/sales ratio of 4x compared to the sector average of 1.7x is understandable. However, over the past two years, Las Vegas Sands Corp. (NYSE:LVS)has seen total income remain relatively flat with a slight decline in their bottom line year over year.

Third on the list is Autozone, Inc. (NYSE:AZO) with a purchase of 582,800 shares. Autozone, Inc. (NYSE:AZO) and its closest competitor, Advanced Auto Parts, are both in the DIY auto-repair business, which has done very well during the recent economic slump, as auto owners hold onto their aging cars longer (and forego costly mechanic bills).  Although there is a wide gap in their sizes (Auto Zone has a market cap of $14 billion versus $6 billion for Advanced Auto), most of their metrics are roughly the same.  The only noticeable difference – and one most important to investors – is the growth ratio.  Autozone clearly has the advantage here over Advanced Auto Parts, as well as a negligible debt/equity ratio compared to Advanced Auto Parts.

At number four is Comcast Corporation (NASDAQ:CMCSA) in which Viking took a very sizeable 4.2 million share-position currently valued at $157 million. The acquisition of NBC Universal helped diversify Comcast Corporation (NASDAQ:CMCSA) from being just a cable company to a global media and technology company.  Recent earnings improved 12% and, with a reduction in the percentage of sales devoted to cost, Comcast’s bottom line improved 47% from 2011.  In addition, the stock is priced at 2.1x book value versus the rest of the sector at 4.3x.

Finally, there is EMC Corporation (NYSE:EMC) at number five.  EMC Corporation (NYSE:EMC) has had a tough year and is currently trading down by 11% since the start of 2013. Instead of paying dividends, EMC Corporation (NYSE:EMC) has been using its free cash to buy remaining shares in VMware, Inc. (NYSE:VMW) in order to capitalize on the demand for cloud computing.  It currently owns 80% of VMware, Inc. (NYSE:VMW). Equally important is EMC Corporation (NYSE:EMC)’s ability to contain costs in order to maintain consistent growth in its bottom line.  For the 4Q of 2012, the percentage of sales dedicated to costs fell 1.5% to 37.3%.

There is certainly no pattern to the selection of these five stocks as they come from sectors as diverse as technology, communications and healthcare.  And though some haven’t performed as well as can be hoped, their underlying fundamentals should translate into long-term growth potential. Out of this top five, Alexion, Las Vegas Sands Corp. (NYSE:LVS), Autozone, Comcast and EMC Corporation (NYSE:EMC) each offer a good play in one of the three “realms” of value, growth and income. Viking Global is certainly a hedge fund worth watching; continue to do so here.

Disclosure: none