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This article is first in a series that provides an ongoing analysis of the changes made to William Von Mueffling's U.S. stock portfolio on a quarterly basis. It is based on Mueffling's regulatory 13F Form filed on 07/11/2013. William Von Mueffling shot to fame while at Lazard Asset Management by posting 30% annualized returns in the 1998-2003 time frame. That level of return during the extended market turmoil was made possible through timely short positions on several Internet high-fliers. Mueffling founded Cantillon Capital Management in 2003. By 2007, Assets Under Management (AUM) had grown to around $10B. In 2008, the business had net outflows as his funds lost money. The following year he surprised everyone by abandoning shorting as an investment strategy explaining that it was very difficult to short when the government is printing money. As a result, his long/short funds were closed and all except around $1B in the long-only global equity funds (launched in 2005) were returned. Currently, the firm has around $8B in AUM of which around 40% is in U.S. listed stocks. In the Winter 2012 Issue of Columbia Business School's Graham & Doddsville Newsletter, Mueffling classified his investment style as "high-ROE investing" whereby the focus is on picking stocks that show consistently high Returns On Equity (ROE) that are "neither super-expensive nor super-cheap, where the market has a hard time trying to figure out what the right price is".

This quarter, Mueffling's U.S. long portfolio increased marginally from $3.15B to $3.27B. The number of holdings in the portfolio remained steady at 21. The top five holdings represent more than 40% of the U.S. long assets. The largest holding is Google Inc. (GOOG) which has been in the portfolio since 2010 and now accounts for 11.11% of the U.S. long portfolio.

Stake Disposals:

Core Laboratories (CLB): CLB is a 1.59% of the U.S. long portfolio position established in 2012. In Q1 2013, the position was doubled to a 3.27% stake at prices between $109 and $140. This quarter, the entire position was eliminated at prices between $126 and $154. The stock currently trades at around $154. The about-turn this quarter indicates a clear bearish bias.

New Stakes:

Harley Davidson (HOG): HOG is a fairly large 5.92% of the U.S. long portfolio position that was established this quarter at prices between $50 and $60. The stock currently trades at near the mid-point of that range at $56. For investors attempting to follow Mueffling, HOG is a good option to consider.

Stake Decreases:

Colgate Palmolive (CL): CL is a very long-term position which accounted for over 7% of the U.S. long portfolio as of last quarter. The position was reduced by more than half this quarter at prices between $56 and $63. The stock currently trades at $59. The significant stake reduction of a large long-term position indicates a clear bearish bias.

Open Table (OPEN): OPEN was a small 1.10% of the U.S. long portfolio position first established in 2011. The position was doubled to a 2% stake in 2012. The position was reduced by more than half this quarter to a 0.88% of the U.S. long portfolio position at prices between $55 and $70. The stock currently trades at around $68. The significant stake reduction indicates a bearish bias.

Oracle (ORCL): ORCL was a fairly large 6.10% of the U.S. long portfolio position in 2009. In 2010 the position was increased by almost 4 times and was doubled in 2011 as well. Last year Oracle and Google were the top two positions and each had an allocation just over 10% of the U.S. long portfolio. The position was increased by 25% last quarter at prices between $31 and $37. This quarter saw an about-turn as the position was reduced by half to a still significant ~5% of the U.S. long portfolio at prices between $30 and $35. The stock currently trades at around $31. The large stake reduction indicates a bearish bias.

Stake Increases:

Baidu Inc. (BIDU): BIDU was a ~5% of the U.S. long portfolio position established in 2012. The stake was increased by over 30% last quarter at prices between $84 and $113 and another 30% this quarter at prices between $83 and $103. The stock currently trades at $97. The aggressive stake build-up over several quarters indicates a clear bullish bias.

Companhia Bebidas (ABV): ABV was a 3.29% of the U.S. long portfolio stake first established in 2010. The position was increased by 50% this quarter at prices between $33 and $44. The stock currently trades at around $36. Despite the increase in the number of shares owned, the stake only represent about 3.34% of the U.S. long portfolio stake, as his U.S. long-only assets has increased significantly during the last three years. The stake increase indicates a bullish bias.

Credit Acceptance Corporation (CACC): CACC was a ~1% of the U.S. long portfolio position established in 2012. The position was increased by around 50% this quarter to a ~1.50% position at prices between $96 and $122. The stock currently trades at $110. The activity indicates a mild bullish bias.

Fidelity National Information Services (FIS): FIS was a minute 0.20% of the U.S. long portfolio position established last quarter. This quarter, the position was increased to a large 6.11% of the U.S. long portfolio position at prices between $39 and $46. The stock currently trades at the top end of that range at around $45. The stake increase indicates a clear bullish bias.

The rest of the positions were marginally increased this quarter. Significantly large positions among them include Altera Corporation (ALTR) at 4.56%, Analog Devices (ADI) at 9.24%, Coca Cola (KO) at 8.87%, Ecolab Inc. (ECL) at 6.72%, Google Inc. at 11.11%, LKQ Corporation (LKQ) at 5.72%, Philip Morris (PM) at 3.10%, Priceline Inc. (PCLN) at 7.71%, Solera Holdings (SLH) at 2.98%, and Waters Corporation (WAT) at 3.29%. Banco Bradesco (BBD) and Brinks (BCO) are smaller 2% positions also in the portfolio.

The spreadsheet below highlights changes to Mueffling's U.S. stock holdings in Q2 2013:


(Click to enlarge)

Source: Tracking William Von Mueffling's Cantillon Capital Management Portfolio - Q2 2013 Update