Viking Global's 75 Stock Portfolio: Top 10 Holdings Analyzed - Sure Dividend

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Viking Global’s 75 Stock Portfolio: Top 10 Holdings Analyzed


Updated on March 24th, 2021 by Nikolaos Sismanis

Viking Global Investors is a Connecticut-based hedge fund, specializing both in early-stage companies and mature equities, with around $36.3 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-February 2018 through mid-February 2021) would have generated annualized total returns of 21.9%. For comparison, the S&P 500 ETF (SPY) generated annualized total returns of 12.50% 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 well, outperforming the overall market by a significant margin while delivering Viking’s objective of proving best-in-class performance for its investors.

Viking’s Top 10 Most Significant Investments

Viking’s public-equity portfolio is comprised of a selection of 75 individual equities. While this is quite a diversified portfolio, its top 10 holdings make up just over 40% of its total weight. Still, no stock accounts for more than 8.3%, which is likely attributable to management avoiding being overweight in any individual investment.

Source: Viking’s 13f filing, Author

Microsoft (MSFT)

Found at the top holdings of amongst several of the funds we have covered, Microsoft is Viking’s largest holding, occupying just over 8% of its portfolio. The fund increased its position by around 43% during its latest quarter, further betting on a prosperous future for the tech giant. Microsoft’s bullish case remains robust, as the company’s latest quarter posted an all-time high net income of $15.46 billion.

Investors that choose to buy Microsoft even at its current post-rally price levels above $230 should hardly end up regretting it. The company is a free-cash-flow generation machine, conquering the cloud industry as its Azure segment has shown little signs of deceleration, similar to Amazon Web Services. While shares may look pricy at a 20-year high P/E of around 30, you are buying a quality company run by a visionary, best-in-class management team.

Additionally, despite Microsoft’s soft dividend which currently hovers below 1%, the stock’s dividend growth prospects remain robust, with a 5-year dividend CAGR of 9.52% and a comfortable payout ratio of just 30%.

Adaptive Biotechnology Corp. (ADPT) & BridgeBio Pharma (BBIO)

Adaptive Biotechnologies is a company that develops an immune-medicine platform for the diagnosis and treatment of a number of diseases. The company remains unprofitable, while its sales are relatively small – below $90 million over the past four quarters -despite growing.

Considering that Viking has been holding ~30 million shares since the company’s IPO, it’s likely that the fund strives to have an active role in management, as well as board seats. The fund’s stake makes for nearly ¼ of Adaptive’s shares outstanding. It also makes for around 5.5% of its total holdings.

Similarly, BridgeBio Pharma is a pre-revenue company with a pipeline of 20 development programs. Viking holds around 22% of the $10.2billion company, in what looks like an active-influence stake to its operations, before a potential exit from big pharma.

Fidelity National Information Services (FIS)

Viking increased its stake in Fidelity by 33%, currently holding around 1.9% of the company’s total shares. The company is Viking’s fourth-largest holding and another example of Viking’s strong-fundamentals type of investing. Fidelity enjoys highly secured revenues, as the company’s information services are of a recurring nature. Sales have grown at a 5-year CAGR of 13.7%, while the stock’s forward P/E ratio is at a reasonable of around 22.3, considering the current environment’s sky-high multiples.

Fidelity is also yielding a complementary 1.1%, though dividends have historically grown relatively rapidly, at a 5-year CAGR of 6.72%.

Alphabet (GOOGL)(GOOG)

Alphabet, Google’s parent company, occupies around 3.8% of Viking’s public-equity holdings after the fund increased its stake by a significant 222% quarter-over-quarter. The company’s growth story has recently been rekindled due to delivering accelerated growth metrics in its latest quarterly report. Gross margins are robust at nearly 54%, while revenue has seen consistent growth despite its many “moonshot” ventures, which bring in no sales.

As a result of steady net income margins in the low 20s%, robust organic growth, and recent fueling of stock buybacks, the company currently displays a 5-year EPS CAGR of 19.96%, 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.

JPMorgan Chase & Co. (JPM)

JPMorgan remained as Viking’s sixth-largest holding, despite the fund trimming its position by around 10%. The company features a 5-year DPS (dividend-per-share) CAGR (compound annual growth rate) of 15.92%, while management has bought back and retired around 22% of its stock over the past decade, turning JPMorgan into a shareholder value creation machine.

The minute after the Fed’s announcement that banks could resume their buybacks was released, JPM published a new monster buyback program of $30B, which represents nearly 8% of its current market cap, which should further aid with maximizing shareholder returns in the medium term. JPM arguably showcases the most investable case amongst the US’s biggest banks, and most certainly a high-quality pick.

Boston Scientific Corporation (BSX)

Boston Scientific Corporation is Viking’s seventh-largest holding and its biggest large-cap healthcare position. The company’s growth has been propelled both by acquisitions and internally developed products, with its largest, Interventional Cardiology segment, making up a little over 25% of its annual sales. Revenues have been growing relatively consistently, however, the company has failed to deliver sustainable profitability levels so far. Hence, the stock has attracted a mixed valuation, of around 25 times its forward earnings. If management achieve a net income margin expansion at some point, shares are likely to skyrocket, as they are trading at around 5 times sales, which from that perspective are quite cheap assuming strong profitability levels kicks in.

Viking increased its equity stake in the company by a confident 59%, pushing Boston Scientific into its top 10 most significant holdings.

T –Mobile (TMUS):

Since its merger with Sprint, the company has grown into a $157 billion telecommunication giant. The company should now be able to leverage its increased network and client base to compete against AT&T, as well as Verizon actively. Viking increased its position by 7%, bringing its total exposure up to around 3%, likely to capitalize on the company’s promising future. Revenues took a huge bump due to the merger, though profitably should remain compressed over the next couple of years as management gradually unlocks the post-merger synergies/effiencies.

United Health (UNH):

Viking initiated its position in United Health during the latest quarter, at prices around $350. United Health benefits from the growing market of Medicare Advantage. It has grown its earnings every single year in the last decade and thus it has more than quadrupled its earnings per share over this period. Thanks to the favorable trends in its business and expanding margins due to economies of scale, it is likely to keep growing its bottom line at a double-digit rate in the upcoming years.

We thus view its forward price-to-earnings ratio of 20.1 as exceptionally attractive and expect the stock to continue to highly reward its shareholders.

Visa (V):

Intuitions love the payment processing duo consisting of Visa and Mastercard, as the two companies have effectively monopolized the sector, with every bank utilizing their networks for consumers all over the world to complete their everyday transactions. While the company was hit hard by COVID-19, as consumer spending drastically diminished during the early months of the pandemic, quarterly revenues have almost recovered to their pre-pandemic levels due to a massive shift towards e-commerce transactions.

This shift should also have strong 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 more unusual risks involved. While cross-border volumes continue to be depressed due to strict traveling restrictions, we consider that the long-term shift of consumer spending in e-commerce will more than offset the current headwinds. Therefore, Visa’s growth story remains intact.

The fund increased its Visa position by a massive 1170% over the past quarter, lifting the stock into its top 10 largest holding list.

Final Thoughts

Viking’s 75-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 market-beating returns over the past few years.

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, excluding Viking’s stakes in the more speculative Adaptive Biotechnology and BridgeBio Pharma, the rest of its top 10 largest investments are made of trustworthy, long-term investment operations, feature decades of long-term shareholder value creation.

 

Additional Resources:

Bridgewater Associates’ 484 Stock Portfolio: Top 10 Holdings Analyzed

Valley Forge Capital Management’s 10 Stock Portfolio: All 10 Holdings Analyzed

Slate Path Capital’s 20 Stock Portfolio: Top 10 Holdings Analyzed

Akre Capital’s 26 Stock Portfolio: Top 10 Holdings Analyzed

Appaloosa Management’s 35 Stock Portfolio: Top 10 Holdings Analyzed

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