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Summary

  • Halvorsen's 13F portfolio decreased 4% this quarter from $23.84B to $22.91B. The number of positions increased from 60 to 62.
  • Viking Global significantly increased Pioneer Natural Resources & Regeneron Pharmaceuticals stakes this quarter while reducing Time Warner and Twenty-First Century Fox.
  • The top-three positions are Walgreen Company (6.52%), Valeant Pharmaceuticals (6.51%), and Illumina Inc. (6.23%) which together is at almost 20% of the portfolio.

This article is the first in a series that provides an ongoing analysis of the changes made to Ole Andreas Halvorsen's US stock portfolio on a quarterly basis. It is based on Viking Global's regulatory 13F Form filed on 08/14/2014.

Ole Andreas Halvorsen, a Tiger cub, launched Viking Global in 1999 as a long/short global fund. He is considered as one of the most successful protégés of Julian Robertson's Tiger Management. AUM has grown to around $40B as the fund has vastly outperformed the MSCI World Index since inception. Recent reports show the 13F portfolio having around 60 individual stock positions. Their bottom-up investing philosophy seeks to study businesses as deeply as possible. Talking to management, understanding the dynamics of the industry the business is operating in, unveiling information from competitors, suppliers, etc. are all part of the process. Prime importance is also given to the strength of the management team. In this regard, the final investment decision hinges on whether Viking's view of the underlying business dynamics is similar to what company management believes.

This quarter, Halvorsen's US long portfolio decreased 4% from $23.84B to $22.91B. The number of holdings increased from 60 to 62. Largest five individual stock positions are Walgreen Company, Valeant Pharmaceuticals, Illumina Inc., Lowe's Companies, and LyondellBasell Industries.

New Stakes:

Netflix Inc. (NASDAQ:NFLX): NFLX is a 2.53% of the US long portfolio established this quarter at prices between $314 and $450. The stock currently trades outside that range at $479. The substantial stake establishment represents a bullish bias.

Allergan Inc. (NYSE:AGN), Apple Inc. (NASDAQ:AAPL), Cognizant Technology (NASDAQ:CTSH), Hilton Worldwide (NYSE:HLT), Newfield Exploration (NYSE:NFX), and Ralph Lauren (NYSE:RL): These are very small (less than ~1% of the US long portfolio each) positions established this quarter. The stake establishments indicate a mild bullish bias toward these businesses.

Stake Disposals:

American International Group (NYSE:AIG): AIG was a 1.33% of the US long portfolio position established last quarter at prices between $46.88 and $52.22. This quarter the stake was eliminated at prices between $49.40 and $55.70. The stock currently trades at $55.33. The quick about-turn indicates a bearish bias.

Bank of America (NYSE:BAC): BAC was a fairly large 3.42% of the US long portfolio position established in Q3 2013 at prices between $13 and $14.84. Almost 45M shares were purchased at that time. The stake was sold down every quarter since. The bulk of the selling happened last quarter at prices between $15.57 and $17.92. This quarter, the remaining position was eliminated at prices between $14.51 and $17.34. The stock currently trades at $16.13. The activity indicates a clear bearish bias.

Triumph Group Inc. (NYSE:TGI) and Verizon Communications (NYSE:VZ): These are very small (less than ~1% of the US long portfolio each) positions that were eliminated this quarter. TGI stake was eliminated at prices between $62 and $72. The original position was purchased in Q2 2013 and substantially increased in Q3 2013 at around $79 per share. The stock currently trades at $69.25. The VZ stake was sold out at prices between $45.94 and $50.05. The position was established last quarter at prices between $46 and $49.30 and the stock currently trades at $48.64.

Stake Increases:

DaVita Healthcare (NYSE:DVA): DVA is a 1.10% of the US long portfolio position that was increased by just over 80% this quarter at prices between $67 and $73. The stake was established last quarter at prices between $62.74 and $70. The stock currently trades just outside those ranges at $73.65. The activity indicates a bullish bias.

Kansas City Southern (NYSE:KSU): KSU is a 1.42% of the US long portfolio position established last quarter at prices between $91 and $124. It was increased by ~65% this quarter at prices between $95 and $108. The stock currently trades at $114.

Lowe's Companies (NYSE:LOW): LOW is a top-five position at 4.80% of the US long portfolio. It was increased by just over 26% this quarter at prices between $44.63 and $49.52. The position was first purchased in Q3 2013 at prices between $41 and $48. The stock currently trades outside those ranges at $52.53. The build-up indicates a clear bullish bias.

MasterCard Inc. (NYSE:MA): MA is a 3.15% of the US long portfolio position that was increased by ~27% this quarter at prices between $68.68 and $77.47. The original position was purchased in Q4 2011 at prices between $31 and $38 and the position has wavered since. The stock currently trades at $76.48.

Monsanto Company (NYSE:MON): MON is a 3.15% of the US long portfolio stake that was increased by ~87% this quarter at prices between $110 and $127. The stock currently trades near the middle of that range at $117. Halvorsen had established a small position in MON in 2011 but it was sold soon after. The current position was a very small stake first purchased in Q1 2013 and increased substantially in Q2 2013 at around $100 (4.2M shares). By last quarter, the position had been sold down to just over 3M shares. The huge increase this quarter indicates a bullish bias. For investors attempting to follow Halvorsen, MON is a good option to consider.

Mohawk Industries (NYSE:MHK): MHK is a 2.74% of the US long portfolio stake that was increased by just over 80% this quarter at prices between $125 and $141. The position was established last quarter at prices between $133 and $150 and the stock currently trades at $146.

Pioneer Natural Resources (NYSE:PXD): PXD is a 4.09% of the US long portfolio stake established last quarter at prices between $165 and $205. It was increased by almost 150% this quarter at prices between $181 and $233. The stock currently trades at $204. The aggressive stake build-up indicates a clear bullish bias. For investors attempting to follow Halvorsen, PXD is a good option to consider for further research.

Regeneron Pharmaceuticals (NASDAQ:REGN): REGN is a 3.65% of the US long portfolio position established last quarter at prices between $267 and $348. It was increased by a whopping 180% this quarter at prices between $277 and $313. The stock currently trades at $341. The buying pattern indicates a clear bullish bias.

Salix Pharmaceuticals (NASDAQ:SLXP): SLXP is a 1.56% of the US long portfolio position established last quarter at prices between $89 and $115. It was increased by 86% this quarter at prices between $97 and $125. The stock currently trades well outside those ranges at $159.

Valeant Pharmaceuticals (NYSE:VRX): VRX is the second-largest position at 6.51% of the US long portfolio. It was increased by 27% this quarter at prices between $117 and $138. It is a long-term position that was established in 2010 when around 9.3M shares were purchased at around $20. The stock currently trades at $117. The position has wavered since although last quarter the share count was back at 9.3M shares. Halvorsen is sitting on huge long-term gains on this position and continues to be very bullish.

Actavis plc (NYSE:ACT), Alexion Pharmaceuticals (NASDAQ:ALXN), Baidu Inc. (NASDAQ:BIDU), and Mondelez International (NASDAQ:MDLZ): These are significant positions (more than 0.5% of the US long portfolio) that were increased marginally (less than ~10% change in position size) this quarter. As the activities were very minor, they do not indicate a clear change in bias.

Stake Decreases:

Cameron International (NYSE:CAM): CAM is a 1.45% of the US long portfolio position that was reduced by ~37% this quarter at prices between $60.66 and $67.75. The original stake was purchased in Q4 2013 at prices between $53.25 and $65.11 and was increased substantially last quarter at prices between $56.73 and $64.06. The stock currently trades at $72.58. The about-turn indicates a bearish bias.

Canadian Pacific Railway (NYSE:CP): CP is a 2.38% of the US long portfolio position that was established in Q4 2013 at prices between $123 and $157. It had since been kept relatively steady. This quarter saw a 25% reduction at prices between $144 and $185. The stock currently trades at around $200. Viking is harvesting significant short-term gains from this position.

Concho Resources (NYSE:CXO): The 1.31% CXO position was almost eliminated this quarter at prices between $121 and $145. It was first purchased in Q4 2013 at prices between $96 and $121 and substantially increased last quarter at prices between $95 and $124. The stock currently trades at $132.

Constellation Brands (NYSE:STZ): The small 1.27% STZ stake was reduced by ~53% this quarter at prices between $78 and $89. The position was first established in Q3 2013 with the bulk purchased in Q4 2013 at prices between $57 and $71. The stock currently trades at $87.23.

Facebook Inc. (NASDAQ:FB): The original FB stake was established in Q3 2013 at prices between $24 and $51. The position was increased by a stunning 315% next quarter at prices between $47 and $58. Q1 2014 saw an about-turn as the stake was reduced by over half at prices between $53 and $72. The selling continued this quarter with another ~55% reduction at around the same price range. The stock currently trades at $74.57 and the remaining stake is at 1.20% of the portfolio.

H&R Block (NYSE:HRB): The small 0.87% HRB stake is a long-term position that has been in the portfolio since 2010. The original stake was more than doubled in 2011. The position was reduced by ~64% this quarter at prices between $27.40 and $33.50 and the stock currently trades at $33.78. The buying happened at much lower prices and so Halvorsen is harvesting large long-term gains.

Michael Kors (NYSE:KORS): KORS was a fairly large 3.79% of the US long portfolio position in Q2 2013 when close to 10M shares were purchased at around $55 per share. The stake was sold every quarter since and last quarter the position showed a total reduction of ~50% from the peak. This quarter, the remaining position was reduced by 60% at prices between $86.59 and $97. The stock currently trades at $82.64. Halvorsen is harvesting large short-term gains from this position.

LyondellBasell Industries (NYSE:LYB): LYB is a top-five position at 4.59% of the US long portfolio. The long-term stake has been in the portfolio since 2010. The bulk of the current position was purchased in 2010 and 2011 at much lower prices compared to the current price of around $112. This quarter saw a ~16% stake reduction at prices between $87 and $101.

Micron Technology (NASDAQ:MU): The 2.55% MU stake was first purchased in Q2 2013 at prices between $9.31 and $14.40. The position was increased by ~400% in Q3 2013 when almost 30M shares were purchased at prices between $12.59 and $18. The position peaked that quarter at over 37M shares. Since then, the stake was sold every quarter and the current position is at 17.7M shares (2.55%). This quarter saw a ~15% reduction at prices between $21 and $34. The stock currently trades at $33.29.

Thermo Fisher Scientific (NYSE:TMO): The fairly large 4.26% TMO stake was first established in Q2 2013 when around 8.7M shares were purchased at prices between $77 and $88. It was increased to 10.6M shares the following quarter at prices between $85 and $94. The position was reduced since Q4 2013 and the current stake is at 8.2M shares. This quarter saw a ~15% reduction at prices between $113 and $122 and the stock currently trades at $121.

Time Warner Inc. (NYSE:TWX): The 2.41% TWX position was first purchased in 2010 but was quickly sold. The current stake was established in 2012 when ~20M shares were purchased at around $38 per share. The position has wavered since. Last quarter saw a ~60% increase at prices between $61.52 and $70 and the stake stood at 21.6M shares (5.93%). This quarter, the position was reduced by ~64% at prices between $62.76 and $71. The stock currently trades at $77.23.

Twenty-First Century Fox (NASDAQ:FOXA): The ~2% FOXA stake was established in Q3 2013 at prices between $30 and $33.50. The position was at 5.09% of the portfolio as of last quarter. This quarter, the stake was reduced by almost two-thirds at prices between $32 and $36.21. The stock currently trades at $35.69.

Valero Energy (NYSE:VLO): The small 0.92% VLO stake was first purchased in Q1 2013 and substantially increased in Q2 2013 at prices between $34 and $47. The position has wavered since. This quarter saw an almost two-third reduction at prices between $51 and $59 and the stock currently trades at $53.81.

Walgreen Company (NYSE:WAG): The large 6.52% WAG stake is Viking's largest 13F position. It was first purchased in Q4 2013 and substantially increased last quarter at prices between $53.80 and $69.09. This quarter saw a turnaround as ~17% of the position was sold at prices between $63.40 and $76.08. The stock currently trades at $61.05.

Adobe (NASDAQ:ADBE), Autodesk (NASDAQ:ADSK), Crown Castle (NYSE:CCI), Intercept Pharmaceuticals (NASDAQ:ICPT), Universal Health Services (NYSE:UHS), and Workday Inc. (NYSE:WDAY): These are very small positions (less than ~1% of the US long portfolio each) that were further reduced this quarter.

Capital One Financial (NYSE:COF), Illumina Inc. (NASDAQ:ILMN), and Visa Inc. (NYSE:V): These are significant positions (more than 0.5% of the US long portfolio) that were reduced marginally (less than ~10% change in position size) this quarter. As the activities were very minor, they do not indicate a clear change in bias.

Kept Steady:

None.

The 13F portfolio also shows the following minute (less than 0.5% of the portfolio each) stakes: American Airlines Group (NASDAQ:AAL), Ctrip.com (NASDAQ:CTRP), Intercept Pharmaceuticals , BlackBerry Ltd. (NASDAQ:BBRY), Melco Crown Entertainment (NASDAQ:MPEL), Myriad Genetics (NASDAQ:MYGN), Precision Castparts (NYSE:PCP), Principal Financial Group (NYSE:PFG), Rite Aid Corp. (NYSE:RAD), SBA Communications (NASDAQ:SBAC), State Street Corp. (NYSE:STT), Centene Corporation (NYSE:CNC), Cimarex Energy (NYSE:XEC), WellPoint Inc. (NYSE:WLP), Zimmer Holdings (NYSE:ZMH), Zynga Inc. (NASDAQ:ZNGA), Allegion plc (NYSE:ALLE), and Acadia Pharmaceuticals (NASDAQ:ACAD).

The spreadsheet below highlights changes to Halvorsen's US stock holdings in Q2 2014:

(click to enlarge)

Source: Tracking Ole Andreas Halvorsen's Viking Global Portfolio - Q2 2014 Update