Viking Global's 63 Stock Portfolio List | Top 10 Holdings Analyzed

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Viking Global’s 63 Stock Portfolio List | Top 10 Holdings Analyzed


Updated on December 17th, 2021 by Nikolaos Sismanis

Viking Global Investors is a Connecticut-based hedge fund, specializing both in early-stage companies and mature equities, with around $36.0 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-November 2018 through mid-November 2021) would have generated annualized total returns of 29.00%. For comparison, the S&P 500 ETF (SPY) generated annualized total returns of 18.51% 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 63 individual equities. While this is quite a diversified portfolio, its top 10 holdings make up just over 37% of its total weight. The fund’s largest holding is Humana (HUM), in which the company has allocated around 4.6% of its total capital.

Source: Viking’s 13F filing, Author

Humana Inc. (HUM)

Humana offers medical and supplemental benefit plans to individuals. The company also has a contract with Centers for Medicare and Medicaid Services to administer the Limited Income Newly Eligible Transition prescription drug plan program as well as contracts with numerous states to offer Medicaid, dual eligible, and long-term support services benefits.

The company has been growing its top and bottom line consistently over the years. Investors must be wary, however, of the company’s low-margin business model, as is the case with almost all of its industry peers.

Humana is Viking’s largest holding, accounting for around 4.6% of its total public-equity portfolio.

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 $5.47 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 21.3% of Adaptive’s shares outstanding.

The two companies account for around 4.5% and 3.4% of Viking’s total portfolio.

Microsoft (MSFT)

Found among the top holdings of the majority of the funds we have covered, Microsoft is Viking’s third-largest holding, occupying ~4.3% of its portfolio. The fund left its position unchanged during the quarter.

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 been growing, with the company currently sitting on top of a $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”). Meanwhile, 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.

T-Mobile US, Inc. (TMUS)

T-Mobile has had a place in Appaloosa’s portfolio since 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 1.7% to $19.6 billion in the most recent quarter, with service revenues growing to $14.7 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 $2.9-$3.2 billion for FY2021 (up from $2.8-$3.1 billion), which amounts to double last year’s synergies. Due to increased investor expectations, the stock’s valuation multiple has expanded, currently at a forward EV/EBITDA multiple of 8.7.

The stock currently occupies around 4.2% of Viking’s portfolio. It is now the fund’s fourth-largest holding.

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 $39.5 billion with annual revenues of over $14 billion.

Parker-Hannifin has paid a dividend for 71 years and has increased that dividend for a remarkable 65 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 is recovering from the pandemic.

Parker-Hannifin is Viking’s fifth-largest holding, comprising 3.6% of its public equity portfolio.

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 2020: 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 sixth-largest holding, comprising 3.5% of its public-equity portfolio.

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 consistent rate, investors should be wary of the fact that losses have also been widening.

Coupa Software is Viking’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.

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 cyclical sector, its diversified cash flows are relatively resilient.

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 trimmed its equity stake by 8% during the quarter, now holding 3.0% of Fortive’s total shares. Fortive is now the fund’s 10th largest holding, as a result.

Fidelity National Information Services (FIS):

Viking trimmed its position in Fidelity by 22%, currently holding around 1.16% of the company’s total shares. The company is Viking’s tenth-largest holding and another example of Viking’s fundamentals-based 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 9.29%, while the stock’s forward P/E ratio is at a reasonable of around 14.7, considering the current environment’s sky-high multiples.

Fidelity is also yielding 1.46%. Dividends have historically grown at a solid pace, featuring a 5-year CAGR of 7.89%.

Final Thoughts

Viking’s 63-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

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

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