Seeking Alpha
Research analyst, growth at reasonable price, newsletter provider, Top 300 fund picks
Profile| Send Message| ()  
What do the top Hedge Fund and Mutual Fund Gurus like in the Outsourcing and IT Services group? This article, the 40th in a series, identifies, through research of the latest available institutional 13-F filings, the Gurus who are most invested in the Outsourcing and IT Services group, and the specific stocks within that group that they prefer to hold in their portfolios. Please note that the group includes Consulting, Business Process Outsourcing, Staffing, and IT Services companies.

Furthermore, please note that this article will be among the last in this series, as the latest March 2011, quarter 13-F Institutional filings are now almost complete. Later this week, I will bring to you the ‘Top New and Added Picks’ of Guru Funds by industry/sector detailing this time not the top holdings, but more importantly what new positions they took and what existing positions they added to in the latest March 2011, quarter. Please check my
article page for previous articles in this series.
A Guru is defined as someone who is regarded as having great knowledge, wisdom, and authority in a certain area. When it comes to hedge funds, there are a number of ways to anoint leading managers as Gurus, including long-term performance, low portfolio volatility and an elite reputation in the investment community.
Many of us are familiar with leading investors and hedge fund managers such as Warren Buffett, George Soros, Carl Icahn and Julian Robertson, but the hedge fund community alone includes over 9,000 funds; add in mutual funds, ETFs, and other investment entities and the number is likely to be at least two to three times that number. While there is no official list of Gurus, less than one percent or between 100 to 200 fund managers are commonly believed by the larger investment community to have earned the distinction of being called Gurus.
The study of the investing habits of Gurus can be informative as these are very savvy, well-respected investors with a high personal net worth deploying large sums of capital from their funds regularly. They have a long-term track record of success, and while one can easily just ride their coattails, the savvy investor may want to use these lists as a starting point to conduct their own due diligence.
The total capitalization of the US Equity markets is somewhere in the $15 trillion range, and the total market capitalization of leading Outsourcing and IT Services group companies is $470 billion or just over 3.1% of the overall market. The Table lists the top five investment Gurus whose funds have invested more than that average of 3.1% in the group. The following are their leading picks in that group:
  • Cognizant Tech Solutions CL A (CTSH) provides custom IT Consulting, Technology and Outsourcing Services for Companies.
  • Accenture PLC (ACN) provides management consulting, technology and outsourcing services to businesses and government agencies.
  • Towers Watson & Co. (TW) provides human resources and financial management consulting services to corporations and public institutions.
  • Broadridge Financial Solutions (BR) provides outsourcing solutions for investor communications, securities processing, and securities clearing.
  • Covergys Corp. (CVG) is a global leader in relationship management, and provides outsourced customer care, billing services, and interaction software worldwide.
  • Amdocs Ltd. (DOX) provides business support system software to service providers in the communications, media and entertainment industry.
Table
Fund and Guru
Type of Fund
Assets Under Management
Percent Equity Portfolio invested in Outsourcing and IT Services Companies
Major Outsourcing and IT Services company positions in Portfolio
Lone Pine Capital LLC (Steve Mandel)
Hedge Fund - Long/Short
$ 12.5 billion
7.1%
CTSH, ACN, TW
Brave Warrior Capital, Inc. (Glenn Greenberg)
Hedge Fund
$ 1.2 billion
6.8%
BR
Jana Partners LLC (Barry S. Rosenstein)
Hedge Fund - Event Driven
$ 1.9 billion
5.5%
CVG
Maverick Capital (Lee Ainslie)
Hedge Fund
$ 9.4 billion
3.7%
DOX, CTSH
Wallace R Weitz & Co (Wallace Weitz)
Mutual Fund - Value Investing
$ 2.3 billion
3.3%
ACN
Steve Mandel, who started Lone Pine Capital in 1997, is also a former Tiger Cub. He was a senior managing director and consumer analyst at Julian Robertson's Tiger Management Corporation from 1990-97 prior to starting Lone Pine Capital.

Brave Warrior Capital, a hedge fund co-founded in 1984 by Guru Glenn Greenberg and John Shapiro, maintains a highly concentrated portfolio of 11 holdings. Mr. Greenberg describes that as a defense against ignorance, and maintains that the more companies you own the less you know about each, and the less you know about a business the more you are likely to make a mistake out of fear or greed.

Jana Partners LLC, a hedge fund co-founded by Guru Barry S. Rosenstein in 2001 with partner Gary Claar, invests in event-driven strategies, meaning that the fund finds opportunity in corporate transactional events such as consolidations, acquisitions, recapitalizations, bankruptcies and liquidations in selecting its investments.

Dallas, TX-based Hedge Fund Maverick Capital was founded in 1993 by Lee Ainslie. Mr. Ainslie is one of the Tiger Cubs, so called because they learned to pick stocks at Julian Robertson's legendary hedge fund Tiger Management LLC. For an almost $10 billion fund, it is relatively concentrated in only 71 securities, with 40% of the fund being invested in the Technology Sector.

Omaha, NE-based Wallace R. Weitz & Co, founded in 1983 by Guru Wallace Weitz, manages assets for the Weitz Funds, individuals, corporations, pension plans, foundation and endowments. They seek understandable, well-managed, cash-generating businesses, and base their investment decisions on the present value of the future free cash that the business will generate.
Credit: Historical fundamentals including operating metrics and stock ownership information were derived using I-Metrix® by Edgar Online®, Zacks Investment Research, DailyGraphs®, Thomson Reuters and Briefing.com. Fund data including assets under management and firm profiles are sourced mostly from Hedgetracker.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are my opinions and I may be wrong. I may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to my thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Source: Top Outsourcing and IT Services Picks by Fund Gurus Concentrated in the Sector