By Alex Oleinic
Since we are already in May, therefore several weeks since the end of the first calendar quarter, we find ourselves in the period when institutional investors who exercise investment discretion more than $100 million, are filing their 13F forms with the SEC. Generally speaking, 13F forms are used by institutional investors to report all holdings in their equity portfolios. One of the funds that recently disclosed its holdings is Christopher R. Hansen's Valiant Capital Management (see its entire Q4 equity portfolio). See the Q1 13F filing here.
Why should you pay attention?
Quantitative analyses have revealed that hedge fund sentiment can benefit regular investors, and more specifically, the best picks of the best managers can beat Mr. Market by as much as 18 percentage points a year (check out the secrets of this strategy here).
Two top tech picks
According to its latest filing, the two most valuable positions in Valiant's equity portfolio are major tech players. The first is Apple (AAPL), in which the fund reported a $138.8 million position. The fund now holds 313,527 shares of Apple, a number that remained flat from the previous 13F filing. A year-to-date return of -13%, and an even more dreadful return since all-time highs were hit last fall, have pushed Apple shares to bargain bin territory and then some, but a key bullish driver in many investors' minds appears to be the next iteration of the company's product cycle.
Until more details emerge about if, or when, Apple might enter the low-cost smartphone market, as well as the smart TV space, the upside on this stock is limited. Apple reported a net profit of $9.5 billion in its latest fiscal quarter, equaling a diluted EPS of $10.09. This was a declination from $11.6 billion ($12.30 per share) from the same period one year earlier, but a boosted dividend yield and an increased share buyback have brought in some income-seeking investors of late. We originally predicted this move here on Seeking Alpha by looking at the little-known moves made by Apple's asset management firm.
Next up is Google (GOOG); the fund disclosed a $101.8 million position at the end of the first quarter. According to its latest 13F, Valiant Capital owns 128,237 shares of Google. In its previous filing with the SEC, the fund reported a stake containing 140,837 shares, worth $99.6 million. Google is one of the best peer-supported investments a money manager can make, with this buy supported by over 120 of the 450 hedge funds we track (according to Q4 aggregate data). Google is approaching $900 a share, but is still trading at a forward P/E of 16.3x, cheaper than 66% of all other equities listed in the 47-stock Internet information provider industry.
Liberty Global (LBTYA) is another holding in the 13F portfolio of Mr. Hansen's fund. According to the latest filing, Valiant owns 1,259,951 shares of the company, worth about $92.5 million. The stake of Liberty Global in its equity portfolio decreased from 1,421,351 shares in the previous filing; the previous value of the stake was $89.5 million. According to our database, more than 40 hedge funds were invested in Liberty Global heading into 2013. The stock is currently trading at an industry-average forward P/E near 23.0x, and has an impressive year-to-date return of more than 24%.
In Anheuser-Busch InBev (BUD), Valiant disclosed an $89.4 million holding, containing 898,500 shares. The ADR stake is a new position in the fund's equity portfolio. Out of the hedge funds we track, there are over 20 money managers with stakes in Anheuser-Busch InBev - solid, but unspectacular support. Similarly, the stock has had a solid, but unspectacular year-to-date return of 11%, and is trading at a forward P/E of 17.3x, near industry averages.
Baidu.com (BIDU) is the last member of this hedgies' top five; Valiant increased its holding in the Chinese search provider to 815,000 shares, from 575,395 shares disclosed in the previous 13F. The current value of the stake is around $71.5 million, up from the $57.7 million reported in the previous filing. Baidu shares are trading at a forward P/E near 15.0x, and have a year-to-date return of about -8%; it's possible to make the case for a value play here, given the company's mobile potential.
Some final thoughts
The equity portfolio of Valiant Capital Management contains 15 positions, down from 18 disclosed in the previous 13F filing. Even if the number of holdings is relatively small, Valiant Capital holds stakes in companies engaged in sectors with generally positive returns. Apple and Google are the heavyweights in this fund, and should be watched the closest by investors. Baidu also represents a stock with a ton of chatter, and a decent amount of value potential moving forward. To continue preparing for 13F-filing season, learn what the data can reveal here.