Athanor Capital's 534 Stock Portfolio: Top 10 Holdings Analyzed - Sure Dividend

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Athanor Capital’s 534 Stock Portfolio: Top 10 Holdings Analyzed


Updated on March 23rd, 2021 by Nikolaos Sismanis

Athanaor 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 more than $4 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-February, 2018 filing through the mid-February, 2021 filing) would have generated annual total returns of 22.5%. This compares very favorably to the S&P 500 ETF’s (SPY) annual total returns of 12.5% 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 34. 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 massively diversified, currently invested in nearly 500 different companies, with no sector occupying more than 25% of its total holdings. However, the fund’s highest conviction picks still manage to stand out, with its top 10 holdings making around 34% of the total portfolio.

Source: 13F filings, author

Microsoft (MSFT):

Similar to most of the non-specialized hedge funds we have covered, Microsoft is at the top of Athanor’s holdings, occupying around 6.4% of its total holdings. It hardly comes as a surprise these days, as Microsoft currently operates arguably the most diversified and well-rounded portfolio of enterprise and cloud services in the tech sector. Microsoft is a mega-cap stock with a market cap of $1.8 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 $26.13B. Despite that, Microsoft’s cash position has been growing continually, with the company currently sitting on top of a massive $132B 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. Not only are current earnings extensively covering buybacks (50% buyback “payout ratio”), but also the company’s long-term debt position has been substantially dropping over the past few years from $76B in mid-2017 to around $55B, as of its last report.

Boasting some of the most attractive financials on Wall St., along with little to no signs of a slowdown in its operations, it’s quite easy to see why Athanor, alongside numerous other funds, can’t get enough of the company’s stock. The fund trimmed its position by 13% compared to its last 13F filing, likely to diversify due to the stock’s prolonged rally.

Finally, Microsoft is likely to serve dividend growth investors quite well. The company has raised its dividends annually for the past 19 years, with its latest increase at a quite satisfactory 10%, while still maintaining a comfortable payout ratio of 34%.

Alphabet (GOOGL):

Alphabet, Google’s parent company, occupies around 5.1% of Athanor’s holdings after the fund increased its stake by a significant 22% compared to its last f13 filing. The company has become increasingly more attractive to investors, amid fantastic financials and robust growth retention. Gross margins are robust at nearly 54%, while revenue has seen consistent growth.

As a result of steady net income margins in the low 20s%, robust organic growth, and recent kindling of stock buybacks, the company currently displays a 5-year EPS CAGR of 20%, which is quite impressive, considering its sheer size.

Additionally, by holding $136B of cash in its balance sheet, the company should never face any sort of liquidity problems.

Amazon (AMZN):

Being one of the four companies in the trillion-dollar-market-cap club, Jeff Bezos’s company is currently the second-largest in the world, worth around $1.56T. As the company’s continuous advancements keep on taking over the world both in terms of its commerce and digital infrastructure, Amazon has become an unstoppable force, causing its stock to maintain substantial investor demand.

However, investors should not expect a dividend from Amazon anytime soon.

While the company recently lost the Pentagon’s $10B decade-long JEDI contract to Microsoft, its AWS segment growth remains robust. At the same time, COVID-19 has further boosted the need for its rapid delivery services. Amazon posted record profits of $7.22 billion in its latest quarter, surprising investors and analysts alike.

Disney (DIS):

The fund increased its stake in the media behemoth by 33% during the quarter pushing the stock in its 4th largest-position, at $357 million. The company recently announced a $1/month price bump in its Disney Plus subscription service, projecting 230M-260M subs by 2024. Amid investor excitement, shares are currently trading at all-time highs, beyond $190 per share. Athanor has an average purchasing price of around $130, making its Disney position a quite successful one.

Despite the company’s excellent dividend growth history, Disney’s management decided to suspend the dividend and allocate those funds towards its streaming service.

 

NextEra (NEE):

NextEra Energy is a member of the Dividend Aristocrats, a group of 65 stocks in the S&P 500 Index, with 25+ consecutive years of dividend increases. You can see the full Dividend Aristocrats list here.

Athanor’s portfolio has little to no exposure to utility companies. Judging by the company’s pursuit of growth, it makes sense that the more conservatives cash flows derived from the sector are not enough to excite the fund’s management. Among its few utility stock holdings, NextEra has made it to its ten most substantial, since the fund increased its position by 65% in Q3 after preciously increasing it by 761% from its previous 13F filing stake. During Q4, the position was trimmed by around 10%.

NextEra’s revenues are pandemic-proof, offering great stability. Simultaneously, by being the largest wind farm operator in the world, the stock possesses the growth characteristics growth funds like Athanor find attractive. As a result, shares trade at a significant valuation multiple relative to the sector, currently at 30 times its forward earnings.

Considering that Athanor lacks diversification in its utility holdings, coupled with the lack of growth in the sector, we can easily see the fund increasing its position in NextEra, as management has been doing over the past year. The company has been increasing its dividends annually for the past 25 years, with its latest DPS increase by an exciting 12%. You can read a detailed company analysis on NextEra Energy stock here.

Slack Technologies, Inc. (WORK):

Slack is currently Athanor’s 6th largest holding. The position was initiated this quarter, with the fund picking up a little over 1.1 million shares. The reason for accumulating such a big position so quickly is that Athanor is likely taking advantage of Slack’s acquisition by Salesforce.com (CRM). Hence, this only a short-term, price-arbitrage play.

Netflix (NFLX):  

The streaming giant is Athanor’s 6th largest holding, with the fund increasing its stake by a whopping 82% according to its latest filings. The company recently breached the 200 million subscribers ceiling according to its Q4 results, continuing its impressive growth.

Considering that Athanor boosted both its Disney and Netflix positions, the fund is looking increasingly bullish in the future of video-on-demand streaming.

Fastly (FLSY):

Fastly is currently one of the hottest stocks in the cloud industry, operating an edge cloud platform for processing customers’ applications. In simpler terms, Fastly specializes in content delivery network (CDN) services, helping users view digital content more quickly. The company is currently enjoying annualized revenue growth of around 45%, implying a $300M+ sales run rate.

However, at a valuation of $8.6 billion, investors have been recently arguing whether the revolutionary Infrastructure-as-a-Service company comes out at an unreasonable price.

While the stock’s future remains highly speculative going forward, trading in the public markets for only around a year and a half, it’s noteworthy that Athanor trimmed its stake by 18% last quarter, currently owning a little under 0.5% of the company’s total float.

Visa (V):

Alike Microsoft, it’s hard not to find Visa and Mastercard amongst various hedge funds’ top positions. Mastercard is in fact Athanor’s 11th largest holding.  Intuitions love the payment processing duo, as the two companies have effectively monopolized the sector, with every bank utilizing their networks for consumers across the globe to complete their everyday transactions.

While both companies were hit hard by COVID-19, as consumer spending drastically fell during the early months of the pandemic, their latest operating metrics during the months of summer indicate complete recovery, with signs of growth resuming, due to a massive shift towards e-commerce transactions.

This shift should also have substantial positive effects on their long-term cash flows, as both Visa and MasterCard charge merchants double the rates for CNP (Card-Not-Present) transactions, as online sales have higher risks involved.

While cross-border volumes remain depressed due to strict traveling restrictions, we believe that the long-term shift of consumer spending in e-commerce will more than compensate for the current challenges. Therefore, the duo’s long-term growth story remains intact. The fund kept its Visa position steady over the past quarter.

Despite its miniature yield, Visa is a rapid dividend grower, advancing its dividend payments at a double-digit rate.

ServiceNow, Inc. (NOW)

The enterprise cloud solutions giant is Athanor’s 10th largest holding or 2.1% of its total portfolio. The fund increased its position by 57% compared to its previous filing, with ServiceNow posting robust growth during the past year. Since the company’s IPO back in 2011, ServiceNow has not posted a single quarter whose revenues were lower than the one before it, showing off an incredibly consistent performance.

Despite such a prolonged period of non-stop expansion, revenue growth levels remain impressively high, at around 30% YoY. Considering that COVID-19 has increased the corporate world’s need for enterprise software solutions, it’s likely that ServiceNow’s growth will not slow down significantly anytime soon.

Final Thoughts

Athanor is holding over 500 individual equities which means that its returns should closely match those of the overall market. Yet, the fund has been significantly outperforming the S&P 500 index based on its 13f filings over the past few years, which shows that its investment strategy is truly unique and consistent. You are likely to find likable stock ideas in its diverse portfolio.

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

 

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