Viking Global's 64 Stock Portfolio: Top 10 Holdings Analyzed - Sure Dividend

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Viking Global’s 64 Stock Portfolio: Top 10 Holdings Analyzed


Updated on August 27th, 2021 by Nikolaos Sismanis

Viking Global Investors is a Connecticut-based hedge fund, specializing both in early-stage companies and mature equities, with around $32.9 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-August 2018 through mid-August 2021) would have generated annualized total returns of 19.6%. For comparison, the S&P 500 ETF (SPY) generated annualized total returns of 18.08% 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 64 individual equities. While this is quite a diversified portfolio, its top 10 holdings make up just over 51.9% of its total weight. The fund’s largest holding is General Electric (GE), in which the company has allocated around 25% of its total capital.

Source: Viking’s 13F filing, Author

General Electric (GE)

Viking’s largest holding, by far, is the $113 billion diversified conglomerate, General Electric. The company operates in five segments: Power, Renewable Energy, Aviation, Healthcare, and Capital. General Electric continues to work through a major transformation, including taking a variety of actions to de-leverage its balance sheet, such as reducing the quarterly dividend, accelerating the sell-down of Baker Hughes (to be fully monetized in three years), and selling some of its industrial and capital assets. Previously GE had sold Biopharma and Transportation assets.

Over the past decade, General Electric has managed to retain a solid cash position while reducing its long-term debt from a humongous ~$360 billion to around $59.2 billion at the end of its latest quarter.

Viking is likely betting on General Electric succeeding in its prolonged transformation, which may explain its massive stake increase during the last quarter. The fund increased its equity stake by 51%, now holding 11.4 million shares or around 1.04% of the entire company.

Amazon (AMZN):

Being one of the five companies in the trillion-dollar-market-cap club, the company is currently the fourth-largest in the world, worth around $1.66T. 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.

Amazon delivered another solid quarter recently, with Q2 AWS net sales up 37% 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 month) 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 4.1% of Viking’s portfolio.

Microsoft (MSFT):

Found amongst the top holdings of the majority of the funds we have covered, Microsoft is Viking’s largest holding, occupying just over 3.5% of its portfolio. The fund trimmed its position by around 45% during the quarter, most likely due to diversification reasons amid Microsoft’s prolonged rally.

Microsoft is a mega-cap stock with a market capitalization of $2.2 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 $27.3 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, 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 $130 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. Not only are current earnings extensively covering buybacks (59% buyback “payout ratio”), but 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 34.4, which is quite reasonable for a dominating tech behemoth.

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

BridgeBio Pharma is a pre-revenue company with a pipeline of 20 development programs. Viking holds around 17.7% of the $7.3 billion company, in what looks like an active-influence stake in its operations.

Similarly, 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 humble with just over $100 million over the past four quarters, although sales are 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 22% of Adaptive’s shares outstanding.

The two companies account for around 3.5% and 2.4% of Viking’s total portfolio.

Fidelity National Information Services (FIS):

Viking trimmed its position in Fidelity by 4%, currently holding around 1.48% of the company’s total shares. The company is Viking’s fifth-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 10.7%, while the stock’s forward P/E ratio is at a reasonable of around 18.4, considering the current environment’s sky-high multiples.

Fidelity is also yielding a complementary 1.2%. Dividends have historically grown at a solid pace, featuring a 5-year CAGR of 6.72%.

T –Mobile (TMUS):

Since its merger with Sprint, the company has grown into a $173 billion telecommunication giant. The company should now be able to leverage its increased network and client base to further compete against AT&T Inc. (T) and Verizon.

Viking trimmed its position by 26%, bringing its total exposure up to around 2.8%, likely to pursue other, more promising opportunities. Still, as a result of the synergies to be unlocked, the company should undergo a growth phase over the next few quarters. Revenues rose by 13.2% to $20 billion in the most recent quarter, with service revenues growing to $14.5 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 approximately 20% of Sprint customers have been moved over). It now expects merger synergies of $2.8-$3.1 billion for FY2021 (up from $2.7-$3 billion), which amounts to double last year’s synergies.

Palo Alto Networks, Inc. (PANW):

Palo Alto Networks provides firewall solutions for the control of appliances and software deployed on an end-customer’s network as a virtual or a physical appliance. The company is seen as one of the most promising cyber-security companies, growing its top line at a 5-year CAGR of 26%. Still, Palo Alto has not turned profitable, reinvesting the majority of its profits in product development.

Viking increased its position by 5% during the quarter, currently holding around 2.7% of Palo Alto’s shares.

Chubb Limited (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 company features a very consistent, long-term track record of shareholder value creation, including a 28-year streak of consecutive annual dividend increases.

Chubb is a member of the exclusive Dividend Aristocrats list.

Dividend growth has slowed down over the past few years, currently featuring a 5-year CAGR of just 3.07%

Viking increased its position by 17% during the quarter, currently holding 1.12% of Chubb’s total shares outstanding.

Fortive Corporation (FTV):

Fortive is an industrial conglomerate with multiple divisions. These include Intelligent Operating Solutions, Advanced Healthcare Solutions, and Precision Technologies, amongst others. Despite operating in a rather cyclical sector, its diversified cash flows are relatively resilient, as demonstrated by the company’s latest dividend hike, which occurred in the midst of the COVID-19 outbreak.

The company had entered into a spin-off agreement with Vontier (VNT) last September in a debt-to-equity exchange deal, which should help accelerate growth moving forward.

Viking hiked its equity stake by 5% during the quarter, now holding 3.2% of Fortive’s total shares. Fortive is now the fund’s 10th largest holding, as a result.

Final Thoughts

Viking’s 64-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 investments are made of trustworthy, long-term investment operations, most of which have demonstrated decades of shareholder value creation.

 

Additional Resources

Alkeon Capital Management’s 121 Stock Portfolio: Top 10 Holdings Analyzed

Bridgewater Associates’ 411 Stock Portfolio: Top 10 Holdings Analyzed

Maverick Capital’s 614 Stock Portfolio: Top 10 Holdings Analyzed

Baker Brothers’ 93 Stock Portfolio: Top 4 Holdings Analyzed

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

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