Winton Capital Reduces Size of Several Top Holdings Entering Q2

Billionaire David Harding is a physicist by education, hence, it is no surprise that he trusts sophisticated computer models even when it comes to stock picking. Founded in 1997 with less than $2 million, Mr. Harding’s fund Winton Capital now has roughly $30 billion worth of assets under management. At the end of March, the firm was most-heavily invested in the consumer discretionary, finance, and technology sectors, with 26%, 22%, and 21% of the value of the fund’s public equity portfolio being allocated to those sectors, respectively. Out of the fund’s top-10 holdings, seven were downsized during the first quarter, while the value of its equity portfolio slid to $9.22 billion from $11.25 billion quarter-over-quarter. In this article we’ll take a look at the fund’s top-5 holdings as of March 31 and see how the investor is positioned in each stock.

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#5 Goodyear Tire & Rubber Co (NASDAQ:GT)

 – Shares Owned by Winton Capital (as of March 31): 3.2 Million

 – Value of Holding (as of March 31): $105.55 Million

Winton Capital upped its stake in the $7.6 billion tire manufacturer by 13% during the first quarter, with the holding being the only one in the firm’s top-5 which was increased in size during the first quarter. Analysts seem to be divided on the company’s future prospects, as KeyBanc Capital Markets recently upgraded the stock to ‘Overweight’ from ‘Sector Weight’, while Standpoint Research downgraded it to ‘Hold’ from ‘Buy’. Even though the company managed to deliver record first quarter segment operating income of $419 million, revenue fell short of expectations on account of foreign exchange headwinds and deconsolidation of the company’s Venezuelan subsidiary. Goodyear Tire & Rubber Co (NASDAQ:GT) shares have lost about 13.7% this year. Ray Carroll‘s Breton Hill Capital also inched up its stake in Goodyear Tire & Rubber Co (NASDAQ:GT) during the March quarter, by 1% to over 30,100 shares.

#4 eBay Inc (NASDAQ:EBAY)

 – Shares Owned by Winton Capital (as of March 31): 4.5 Million

 – Value of Holding (as of March 31): $107.36 Million

Winton Capital’s eBay Inc (NASDAQ:EBAY) holding represented 1.16% of the value of its equity portfolio on March 31, after it was slashed by 15% during the first quarter. The e-commerce company is undergoing a transformation in order to increase its footprint in the industry. These efforts include expansion of its inventory of products, as evidenced by the addition of 16 million unique products to its catalog in the first quarter, including the addition of products from the Vince Camuto and Samsonite brands to expand its clothing and accessories category, as well as the launch of eBay wine, so users can purchase collectible, rare, and everyday wines. So far this year, shares of eBay are down by about 12.6%, but that could change depending on how successful these efforts turn out to be in pulling traffic away from Amazon, the largest player in the industry. Jacob Rothschild‘s RIT Capital Partners also reduced its stake in eBay Inc (NASDAQ:EBAY) during the first quarter, by 46% to 686,000 shares.

We’ll analyze Winton Capital’s three largest holdings on the next page.

#3 Gilead Sciences, Inc. (NASDAQ:GILD)

 – Shares Owned by Winton Capital (as of March 31): 1.23 Million

 – Value of Holding (as of March 31): $112.78 Million

Mr. Harding’s firm trimmed its stake in $114 billion pharmaceutical giant Gilead by 2% during the first quarter. Shares of Gilead Sciences, Inc. (NASDAQ:GILD), known for its blockbuster hepatitis C drugs, have lost more than 15.3% of their value this year on the heels of disappointing first quarter financial results that missed both the top and bottom-line estimates. Even though Gilead still has 90% market share when it comes to its aforementioned hepatitis C drugs, it had to lower the price of its drugs to maintain that market share dominance in the face of stiff competition, thus impacting its bottom-line unfavorably. Clifford Fox‘s Columbus Circle Investors holds about 3.2 million shares of Gilead Sciences, Inc. (NASDAQ:GILD) valued at $293.75 million as of March 31.

#2 Apple Inc. (NASDAQ:AAPL)

 – Shares Owned by Winton Capital (as of March 31): 1.09 Million

 – Value of Holding (as of March 31): $118.65 Million

During the January-to-March period, the firm decreased its holding in the Cupertino-based tech giant, a position it has held since the second quarter of 2014, by 4%. Formerly one of Apple Inc. (NASDAQ:AAPL)’s largest shareholders and biggest bulls, activist investor Carl Icahn recently announced dumping his entire stake in the company, which had comprised 45.76 million shares on December 31. While sluggish demand for the iPhone has been cutting into Apple Inc. (NASDAQ:AAPL)’s top-line, promising growth was witnessed in Apple Watch sales in March, as they increased by 250% quarter-over-quarter following a $50 price cut to the basic model, which now costs $299. Apple is expected to release the Apple Watch 2 later this year, which should lead to further price cuts for all of the first edition’s models.

#1 International Business Machines Corp. (NYSE:IBM)

 – Shares Owned by Winton Capital (as of March 31): 1.13 Million

 – Value of Holding (as of March 31): $170.94 Million

Winton Capital’s IBM holding was slashed by 20% in the first quarter, though it remained the fund’s top stock pick. While shares of the struggling tech giant are down by nearly 15% in the last 12 months, they have risen by over 7% on a year-to-date basis, as the company managed to beat both the top and bottom-line estimates in its financial results for the first quarter. International Business Machines Corp. (NYSE:IBM) is harnessing new technologies in order to try and gain a competitive edge on its rivals, such as its IBM Quantum Experience platform, which has been made available to the general public through the IBM Cloud and employs Watson’s artificial intelligence to solve cyber-security issues. Ken Fisher‘s Fisher Asset Management also cut its International Business Machines Corp. (NYSE:IBM) stake during the first trimester, by 12% to about 22,300 shares.

Disclosure: None