Viking Global's 84 Stock Portfolio List | Top 10 Holdings Analyzed

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Viking Global’s 84 Stock Portfolio List | Top 10 Holdings Analyzed


Updated on July 3rd, 2022 by Nikolaos Sismanis

Viking Global Investors is a Connecticut-based hedge fund, specializing both in early-stage companies and mature equities, with around $24.7 billion of Assets under Management (AUMs).

The company was founded by Norwegian-born Andreas Halverson, who became a billionaire growing the fund since its inception in 1999. Andreas still manages the fund as of today, with the majority of the funds being allocated in standard individual equities.

Investors following the company’s 13F filings over the last 3 years (from mid-May 2019 through mid-May 2022) would have generated annualized total returns of 4.7%. For comparison, the S&P 500 ETF (SPY) generated annualized total returns of 16.1% over the same time period.

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

You can download an Excel spreadsheet (with metrics that matter) of Viking Global Investors by clicking on the link below:

 

Keep reading this article to learn more about Viking Global Investors.

Table Of Contents

Viking Global Investors’ Investment Strategy

Throughout the years, Viking has stayed consistent in applying a research-intensive, long-term focused investment approach. At the core of its investment selection process is fundamental analysis to ensure that its equities are resilient and able to deliver robust long-term returns.

During this process, Viking will generally assess a business’s model and financials, its management caliber, and the overall industry trend of its sector.

Additionally, Viking’s investment research and decision-making processes are decentralized. However, risk management is centralized. In other words, Viking is able to capitalize on several unique ideas brought in by its analysts, while the fund’s top management is to ensure that said ideas remain balanced, risk-adjusted, and accountable.

This unique operational model allows the fund’s experienced managers to navigate Viking’s portfolio and capital allocation towards market-beating returns. At the same time, its investing professionals can solely focus on identifying unique investment ideas without worrying about dealing with issues such as hedging, risk management, and overall performance.

Considering the fund’s past 3-year performance, its investment strategy has been paying off decently, even if it has underperformed the overall market. Historically, Viking’s objective of delivering best-in-class performance for its investors has been mostly successful.

Viking’s Top 10 Most Significant Investments

Viking’s public-equity portfolio is comprised of a selection of 84 individual equities. While this is quite a diversified portfolio, its top 10 holdings make up just over 43.9% of its total weight. The fund’s largest holding is T-Mobile U.S. (TMUS), to which the company has allocated around 9.4% of its total capital.

Source: Viking’s 13F filing, Author

T-Mobile US, Inc. (TMUS)

T-Mobile has had a place in Maverick’s portfolio since early Q3-2017. With T-Mobile acquiring Sprint last year, the company should be able to actively compete with AT&T (T) and Verizon (VZ). As a result of the synergies to be unlocked, the company should undergo a growth phase over the next few quarters. Revenues rose by 1.6% to $20.1 billion in the most recent quarter, with service revenues growing to $15.1 billion.

Management raised its merger synergy forecasts following the ongoing integration progress. Around 50% of Sprint’s customer traffic is now carried on the T-Mobile network, while the company is on track to complete Sprint customer network migration mid-year and decommissioning by end of the year.

The company announced that the merger synergies amounted to $3.8 billion in full-year 2021, nearly 3x higher year-over-year, exceeding management’s guidance. In its latest results, T-Mobile raised its merger synergies guidance range to $5.2 billion to $5.4 billion for fiscal 2022, up from the previous range of $5.0 billion to $5.3 billion. Due to increased investor expectations, the stock’s valuation multiple has expanded, currently at a forward EV/EBITDA multiple of 10.2.

The stock currently occupies around 9.4% of Viking’s portfolio. The fund increased its position in the company by 2% during the previous quarter. T-Mobile is now the fund’s largest holding.

Microsoft (MSFT)

Found amongst the top holdings of the majority of the funds we have covered, Microsoft is Viking’s second-largest holding, occupying 4.8% of its portfolio. The fund boosted its position by 13% during the quarter.

Microsoft is a mega-cap stock with a market capitalization of $1.85 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 $31.1 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, though at the current yield, which stands below 1%, investors should expect the majority of their future returns in the form of capital gains.

Despite that, Microsoft’s cash position has been growing continually, with the company currently sitting on top of a massive $104.6 billion cash pile.

Further, while many companies had chosen to utilize the ultra-low interest rate environment over the past several years to raise cheap debt and buy back stock, Microsoft’s remained prudent and thoughtful. Not only are current earnings extensively covering buybacks (~60% buyback “payout ratio”), but long-term debt has been substantially reduced from $76 billion in mid-2017 to around $48.1 billion as of its last report.

It is impressive that a stock with a market capitalization of $1.85 trillion still has such a strong growth momentum. Shares are also trading at a forward P/E ratio of around 23.3, which could signal an opportunity against the company’s strong growth velocity, especially from Azure. Due to Microsoft’s robust growth and financials, it’s likely that investors won’t let shares trade at much of a discount going forward, despite the underlying shaky macroeconomic environment.

Parker-Hannifin Corporation (PH)

Parker-Hannifin is a diversified industrial manufacturer specializing in motion and control technologies. The company was founded in 1917 and has grown to a market capitalization of $31.9 billion with annual revenues of over $14 billion.

Parker-Hannifin has paid a dividend for 72 years and has increased that dividend for a remarkable 66 consecutive years.

The company is on the exclusive Dividend Kings list.

Since 2010, Parker-Hannifin has more than tripled its earnings-per-share. The growth trajectory of the company slowed last year due to the global pandemic. However, Parker-Hannifin has recovered rather swiftly.

Parker-Hannifin is Viking’s third-largest holding, comprising 4.6% of its public equity portfolio. The position was boosted by 3% during the previous quarter.

Brookfield Asset Management (BAM)

Brookfield Asset Management (BAM) is a leading global alternative asset manager and one of the largest global investors in real assets – which includes real estate, renewable power, infrastructure, and private equity. The company is headquartered in Toronto, Canada, and manages a portfolio of public and private investment products for both institutional and retail clients.

BAM also manages four publicly traded listed partnerships: Brookfield Property Partners (BPY), Brookfield Infrastructure Partners (BIP), Brookfield Renewable Partners (BEP), and Brookfield Business Partners (BBU). Brookfield becomes more valuable over time as it increases the earnings from its asset management activities and the value of its invested capital.

Brookfield’s long-term growth has been nothing short of remarkable, based on the following compounded growth metrics from 1999 to 2021: book value, 11%; FFO per share, 16%; assets under management, 18%; balance sheet assets, 15%; shareholders’ equity, 18%; fees and annualized carry, 24%. Importantly, this growth has been done with very little dilution.

Brookfield Asset Management is Viking’s fourth-largest holding, comprising 4.3% of its public equity portfolio. The position was trimmed by 7% during the previous quarter.

Fortive Corporation (FTV)

Fortive Corporation designs, and services professional and engineered products and software worldwide. The company’s Intelligent Operating Solutions division delivers connected reliability tools, including environment, health, safety, and quality enterprise software products. Other of its tools include asset lifecycle software, pre-construction planning, and construction procurement solutions, and ruggedized professional test tools.

The company’s financials have lagged over the past few years, but profitability has remained relatively solid. Only a modest chunk is being paid out nonetheless. The payout ratio stands close to 17.5% while shares yield close to 0.5%.

Fortive has had a place in Viking’s portfolio since Q3-2019 and is not the fund’s fifth-largest holding. Viking boosted its position in the stock by 41% during the previous quarter.

Chubb Ltd. (CB)

Chubb Ltd is a global provider of insurance and reinsurance services headquartered in Zurich, Switzerland. The company provides insurance services including property & casualty insurance, accident & health insurance, life insurance, and reinsurance. The current version of Chubb was created in 2016, when Ace Limited acquired the ‘old’ Chubb and adopted its name. American investors can initiate an ownership position in Chubb through shares listed on the New York Stock Exchange, where they are traded with the ticker symbol CB.

We believe that the more important metric to pay attention to is the company’s book value per share, due to the cyclicality of the insurance industry. Chubb has compounded its book value per share at more than 7% per year since 2009. In 2018, Chubb’s book value per share lagged due to mark-to-market losses, but book value started to rise again in 2019 and hit new record levels in both 2020 and 2021, despite the pandemic. We forecast a small book value increase for 2022.

Viking trimmed its position in Chubb by 13% during the previous quarter. It is now the fund’s sixth-largest holding.

Centene Corporation (CNC)

Centene Corporation serves as a global healthcare enterprise that primarily offers programs and services to under-insured and uninsured individuals in the United States. The company has managed to grow its top and bottom line notably over the years both organically and through acquisitions. This has resulted in a growing common equity value and thus in a higher share price. However, prospective investors should be wary of the company’s net income margins, which are extremely thing and usually hover in the very low single digits.

Centene has had a place in Viking’s portfolio since Q2-2018 and is now the fund’s seventh-largest holding. Viking trimmed its position in the company by 9% during the previous quarter.

MasterCard, Inc (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. The company is Viking’s eighth-largest holding, making up around 3.3% of the fund’s portfolio.

MasterCard’s latest results came in quite strong. Revenues rose 23.8% to $5.2 billion, which was $300 million better than expected. Adjusted earnings-per-share came in at $2.76 compared very favorably to $1.74 in the prior year and was $0.60 ahead of estimates. Gross dollar volumes improved 17% worldwide to $1.9 trillion, with the U.S. growing 14% while the rest of the world increased 19%. Cross-border volumes surged 53%, while switched transactions also rose by 22%.

Quarter-to-date, MasterCard repurchased an additional 1.7 million shares at an average price of $352. The company has $8.9 billion remaining on its share repurchase authorization. Analysts expect that the company will earn $10.51 per share in 2022.

MasterCard is an entirely new position in Viking’s portfolio, initiated by the fund in Q1-2022.

Comcast (CMCSA)

Comcast is a media, entertainment, and communications company. Its business units include Cable Communications (High-Speed Internet, Video, Business Services, Voice, Advertising, Wireless), NBCUniversal (Cable Networks, Theme Parks, Broadcast TV, Filmed Entertainment), and Sky, a leading entertainment company in Europe that provides Video, High-speed internet, Voice, and Wireless Phone Services directly to consumers. Comcast was founded in 1963, is headquartered in Philadelphia, PA.

Increasing competition may pressure on margins and rising interest rates can dampen growth as the company largely finances from debt with its debt-to-equity ratio at 1.9 times at the end of Q1 2022. Simultaneously, Comcast generates tons of cash flow. From 2018 to 2020, it allocated about 48% of its operating cash flow for capital spending for the long-term growth of the business, which left ample free cash flow to cover the dividend. Capital spending was 41% of operating cash flow last year.

Additionally, management sees organic growth opportunities across its businesses, including increasing the capacity of its U.S. broadband network, producing more premium content that can increase engagement at its Peacock streaming service, and building its new theme park, Epic Universe, which is scheduled to open in the summer of 2025 in Orlando. Comcast has had a compelling earnings-growth history that was helped by share repurchases. From 2012 to 2021, its EPS increased at a compound annual growth rate (CAGR) of 12.3%. Comcast resumed share buybacks in late Q2 2021 after normalizing from COVID impacts.

The fund’s position in Comcast remained relatively unchanged compared to the previous quarter. Comcast is now Viking’s ninth-largest holding accounting for 3.3% of its holdings.

APi Group Corporation (APG)

APi Group Corporation offers safety, specialty, and industrial services internationally. The company’s safety services segment provides safety solutions specializing in end-to-end integrated occupancy systems, such as fire protection solutions, and heating, ventilation, and air conditioning solutions. the Minnesota-based company was founded in 1926, yet went public just only two years ago. APi Group Corporation generates close to $4 billion in annual revenues.

While revenues have mostly recovered and even exceeded their pre-pandemic levels, the company has been unable to post sustainable profits during its lifetime as a public company. That said, gross margins grew from 21.9% to 24.6% year-over-year in its latest report, which is certainly a step in the right direction when it comes to the company’s future profitability prospects.

The fund has had a position in the stock probably since its pre-IPO stage. It still holds around 13.4% of its total shares outstanding. The equity stake was left mostly unchanged in the previous quarter. APi Group Corporation is Viking’s tenth-largest holding, accounting for 3.1% of its outstanding shares.

Final Thoughts

Viking’s 84-stock portfolio is well-diversified, with a strong capital allocation towards healthcare.

Source: Viking’s 13F filing, Author

The company’s research-intense philosophy and unique separation of its opportunity-identification and execution teams have been able to yield strong returns historically, despite the recent underperformance.

Because a large percentage of the company’s AUMs are allocated towards individual equities, Viking is one of the easier-to-replicate funds by retail investors. Still, Viking’s stock-picking requires additional due diligence, as the fund’s investments could represent hedging techniques or other non-profit-targeting positions.

Having said that, Viking’s top 10 investments are made of trustworthy, long-term investment businesses, most of which have demonstrated decades of shareholder value creation.

 

Additional Resources

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

If you are interested in finding more high-quality dividend growth stocks suitable for long-term investment, the following Sure Dividend databases will be useful:

The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly:

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