Athanor Capital’s 13 Stock Portfolio: Top 10 Holdings Analyzed

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Athanor Capital’s 13 Stock Portfolio: Top 10 Holdings Analyzed


Updated on December 17th, 2021 by Nikolaos Sismanis

Athanor Capital is a macro-focused hedge fund founded in 2017 by Parvinder Thiara.

The firm is growing quickly – more than doubling its assets under management in 2019. Athanor Capital currently manages around $5.6 billion in discretionary funds according to its most recent form ADV.

Investors following the company’s 13F filings over the last few quarters (starting with the mid-November, 2018 filing through the mid-November, 2021 filing) would have generated annual total returns of 24.89%. This compares very favorably to the S&P 500 ETF’s (SPY) annual total returns of 18.51% over the same period.

Note: 13F filing performance is different than fund performance. See how we calculate 13F filing performance here.

You can download an Excel spreadsheet of Athanor Capital’s performance and current and historical common stock 13F holdings below:

 

Keep reading this article to learn more about Athanor Capital.

Table Of Contents

Athanor Capital’s Approach To Investing

Athanor Capital’s investment strategy is top-down. This means the firm starts with macro-economic factors to build its investment theses.

Athanor Capital does not stop at high-level macro analysis. The firm then ‘dives deeper’, performing relative valuation analysis between individual securities. This combination of ‘Top-down’ and ‘Bottom-up’ investing helps Athanor Capital to find compelling investments in compelling macro sectors. The image below gives a breakdown of the firm’s strategy.

 

Athanor Capital Investment Strategy

Source: Athanor Capital

The company’s investment strategy is also succinctly stated in its ADV brochure:

“The Investment Manager’s process usually starts with macroeconomic observations including market dislocations, capital flows, regulatory changes, secular shifts and other major macroeconomic events. The Investment Manager seeks to determine whether these events have caused relative value mispricings. Once a hypothesis that a macro event is causing a mispricing has been established, the Investment Manager seeks to validate or disprove it. The Investment Manager will generally take significant positions if it can understand both the mispricing and its cause. The Investment Manager may also exploit opportunities outside of this process and protocol.”

Of note is that Athanor Capital looks for ‘builders’ when hiring its investment research team. Over 75% of the company’s investment and risk teams actively code. And 70% of the company’s staff are either minorities and/or women as the firm values a variety of perspectives.

Culture is set initially by a company’s founder. Athanor Capital’s founder is Parvinder Thiara.

About Parvinder Thiara

Parvinder Thiara was born in August of 1985; he is 36. Thiara is a Harvard graduate and Rhodes Scholar. He worked for DE Shaw for 8 years before setting up Athanor Capital.

A disagreement over trades in late 2015 is what caused Thiara to leave DE Shaw. According to FT.com, executives at DE Shaw concluded that Thiara was not adhering to the funds risk guidelines:

“Executives concluded that he had not adhered to the hedge fund’s intraday risk guidelines and that he had not shared sufficient details of his trading with executives, according to the people, though Thiara ended most days with positions that were within DE Shaw’s protocols.

The firm confronted Thiara about his trading, and Thiara’s explanation was not sufficient for the DE Shaw executives, the people said. The parties could not resolve their differences, leading to his exit. Thiara has not been accused of violating any laws or regulations.”

Thiara likely has a different interpretation of events. The emphasis on risk controls at Athanor Capital speaks to Thiara’s clear focus and understanding of risk.

The legal battle and ‘bad blood’ surrounding another talented employee at DE Shaw – Daniel Michalow – unexpectedly leaving the company shows that this is not an isolated incident. Commenting on the Michalow situation, Parvender said:

“This seems like DE Shaw’s playbook when a talented former employee leaves and chooses to compete.”

Setting aside Thiara’s past with DE Shaw, it’s clear that investors are flocking to Athanor Capital based on the firm’s rapid asset growth.

Athanor’s Top 10 Holdings

Athanor’s portfolio of equities is quite concentrated, currently invested in just 13 companies, with its largest exposure in Information Technology. Athanor’s top five holdings comprise around 77.7% of the total portfolio.

Source: 13F filings, author

Microsoft (MSFT)

Found amongst the top holdings of the majority of the funds we have covered, Microsoft is Athanor’s largest holding, occupying ~26.2% of its portfolio.

Microsoft is a mega-cap stock with a market capitalization of $2.4 trillion.

Supported by the company’s strong profitability, management has been consistently raising buybacks over the past decade to further reward its shareholders. The amount allocated to stock repurchases has reached new all-time highs over the past four quarters, at nearly $28.3 billion.

Revenue growth remains in the double-digits, so it’s likely to see capital returns accelerating moving forward. The company is also growing the dividend at a double-digit rate. At the current yield below 1%, investors should expect the majority of their future returns in the form of capital gains.

Despite that, Microsoft’s cash position has grown to a massive $130.5 billion cash pile.

Further, while many companies have chosen to utilize the current ultra-low interest rates to raise cheap debt and buy back stock, Microsoft’s approach has been prudent and thoughtful. Current earnings extensively cover buybacks (59% buyback “payout ratio”). And, long-term debt has been substantially reduced from $76 billion in mid-2017 to around $50 billion as of its last report.

It is impressive that a stock with a market capitalization of $2.2 trillion still has such a strong growth momentum. Shares are also trading a P/E ratio of around 34.6, which may be rich. However, due to Microsoft’s robust growth and financials, it’s likely that investors will continue pricing shares at a premium going forward.

Alphabet (GOOGL)(GOOG)

Alphabet offers several well-known products, such as Google, Android, Chrome, Google Cloud, Google Maps, Google Play, YouTube, as well as technical infrastructure. While the company’s expansion has lasted for more than a decade and a half, it is still a high-growth stock.

Revenue growth has re-accelerated, with its most recent quarter posting growth of nearly 41%, despite the deceleration caused during the first couple of quarters during the initial pandemic outbreak. The company is one of the most attractively priced stocks in the sector as well, trading at around 27.3 times its forward earnings, despite its consistent growth, massive moat, and strong balance sheet.

With its robust profitability, Alphabet has accumulated a cash and equivalents position of $142 billion. As a result, the company can invest cash for its long-term bets such as Waymo, and return cash to its shareholders through buybacks. Alphabet has repurchased nearly $44.7 billion worth of stock over the past year, retiring shares at an all-time high rate.

The stock accounts for around 23% of Athanor’s portfolio.

Meta Platforms (FB)

The social media giant is Athanor’s third-largest holding, accounting for 12.0% of its portfolio. The fund’s long-term commitment to Facebook dates back to Q1-2018. Since then, Athanor has built its position gradually, showing great commitment to the investment. The company is one of the most reasonably valued in the tech/communications sector while still growing rapidly, with more than 2.89 billion people using its services monthly.

Meta is a tremendous cash cow. With strong financials, a healthy balance sheet, and the best social media platform for advertisers, Meta has dominated the social media industry. The company has reported an all-time high bottom line of $40.3 billion over the past four quarters amid great user growth.

For these reasons, it would not be a complete surprise if Meta paid a dividend at some point in the future.

On the other hand, the stock has failed to attract a higher valuation, as the scrutiny it has faced over the past few years have had an impact on the valuation. The stock is only trading at around 22.6 times its underlying earnings, despite its rapid growth.

With its ARPU (average revenue per user) still very strong, Meta’s financials are more than likely to continue expanding rapidly. Meta’s investment case today does not only include the potential for a significant upside but also comes with a great margin of safety.

If such a valuation expansion never appears, and Meta continues to trade at a forward P/E of around 22.6, at an EPS growth rate of 20%-30% in the medium term (which the current user and APRU growth trajectory could easily sustain), investors should achieve equally satisfactory returns with a constant valuation multiple.

Visa (V)

Visa is the world’s leader in digital payments, with activity in more than 200 countries. The stock went public in 2008 and its IPO has proven to be one of the most successful in U.S. history. The company’s global processing network provides secure and reliable payments around the world and is capable of handling more than 65,000 transactions a second. In the fiscal year 2021, the company generated nearly $13 billion in profit.

On October 22nd, 2021, Visa declared a $0.375 quarterly dividend, a 17.2% increase.

On October 26th, 2021, Visa reported Q4 and fiscal year 2021 results for the period ending September 30th, 2021. For the quarter, Visa generated revenue of $6.6 billion, adjusted net income of $3.5 billion, and adjusted earnings-per-share of $1.62, marking increases of 29%, 42%, and 44% respectively. These results were driven by a 17% gain in Payments Volume, a 38% gain in Cross-Border Volume, and a 21% gain in Processed Transactions.

Visa is Athanor’s fourth-largest position. It accounts for 8.4% of its total holdings.

Amazon.com Inc. (AMZN)

Amazon climbed swiftly to the fifth-largest position among Athanor’s largest holdings due to the fund hiking its equity stake aggressively last year.

Amazon delivered another solid quarter recently, with Q2 AWS net sales up 37% year-over-year (YoY) to $14.81 billion, topping the $14.1 billion consensus estimate. Revenues grew to $113.1 billion, a 27.2% increase YoY, contributing to all-time high LTM (last twelve months) sales of $443.3 billion.

Due to scaling its operations, the company’s net income margins have constantly been evolving, reaching 6.64% during this period, turning Amazon into an increasingly profitable growth monster. The stock is currently trading at a forward P/E of 59.2, but considering its EPS growth, it could be a reasonable valuation multiple.

The stock accounts for 8.0% of Athanor’s portfolio.

Mastercard (MA)

MasterCard is a world leader in electronic payments. The company partners with 25,000 financial institutions around the world to provide an electronic payment network. MasterCard has nearly 3 billion credit and debit cards in use.

MasterCard announced third-quarter earnings results on 10/28/2021. Revenue grew 30.2% to $5 billion, which was $50 million higher than expected. Adjusted earnings-per-share of $2.37 compared favorably to adjusted earnings-per-share of $1.60 in the prior year and was $0.18 above estimates.

Mastercard is Athanor’s sixth-largest holding, accounting for 7.5% of its total holdings.

CrowdStrike Holdings, Inc. (CRWD)

CrowdStrike offers cloud-delivered solutions for the next-generation endpoint and cloud workload protection globally. It also offers cloud workload protection that offers 19 cloud modules, as well as its Falcon platform via a software as a service (“SaaS”) subscription-based model.

The company has achieved tremendous growth over the past few years, though it remains unprofitable. All operating cash flows are reinvested back into the business.

CrowdStrike is now Athanor’s seventh-largest holding.

Coupa Software Incorporated (COUP)

Coupa Software Incorporated offers a cloud-based enterprise spend management platform. The company’s platform links organizations with suppliers globally to provide visibility into and control over how companies control spending, as well as optimizes supply chains to accomplish savings that boost profitability.

While the company has been growing revenues sequentially at a very consistent rate, investors should be wary of the fact that losses have also been widening.

Coupa Software is Athanor’s eighth-largest holding. The company boosted its position by 8% during the last quarter, and it now accounts for 3.2% of Viking’s portfolio.

Under Armour (UA)

Under Armour develops, markets, and distributes branded performance apparel, footwear, and accessories for men, women, and youth internationally. The company offers its apparel in compression, fitted, and loose types to be worn in hot and cold.

Under Armour’s revenues took a hit following the COVID-19 pandemic, primarily due to supply chain issues. However, the company has recovered significantly since, with net income margins actually expanding significantly driving profits to record levels.

Under Armour is Athanor’s ninth-largest holding. The stock comprises 3.1% of its total holdings.

Roku, Inc. (ROKU)

Roku operates a TV streaming platform. The company works in two divisions, Platform, and Player. Roku’s platform allows users to discover and watch numerous movies, TV episodes, and live sports, amongst other channels.

Roku has been growing its top line quarter-over-quarter for quite some time now. Following a successful scaling of its operations, the company has started realizing its first profits as well. Net income margins are likely to continue expanding as Roku acquires more users over time,

Roku is Athanor’s tenth-largest holding. The stock comprises 2.1% of the fund’s total holdings.

Final Thoughts

Athanor is holding 13 individual equities which means that its returns are dependent upon a concentrated portfolio of individual equities. The fund has been outperforming the S&P 500 index based on its 13F filings over the past few years, which shows that its investment strategy is truly beneficial and consistent.

You can download an Excel spreadsheet with metrics that matter of Athanor Capital’s current 13F holdings below:

 

Additional Resources

See the articles below for analysis on other major investment firms/asset managers:

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