Top Internet Picks by Fund Gurus Concentrated in the Sector

 |  Includes: BIDU, CHKP, GOOG, XOXO, YHOO
by: GuruFundPicks

What do the top hedge fund and mutual fund gurus like in the Internet group? This article, the forty-third in a series, identifies, through research of the latest available institutional 13-F filings, the gurus who are most invested in the Internet content, software and services group, and the specific stocks within that group that they prefer to hold in their portfolios.

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 Buffet, 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 U.S. equity markets is somewhere in the $15 trillion range, and the total market capitalization of leading companies in the Internet group (as defined above) is $320 billion or just over 2.1% of the overall market. The table lists the top five investment gurus whose funds have invested more than one-and-a-half times that average or 3.3% in the group. The following are their leading picks in that group:

  • Yahoo! Inc. (NASDAQ:YHOO) is a premier digital media company that delivers personalized digital content and experiences, across devices and around the globe, to vast audiences. They provide internet search, shopping services and advertising through their website.
  • Google Inc. (NASDAQ:GOOG) provides online search, internet content services and web-based and desktop software applications via its website.
  • Baidu Inc. ADS (NASDAQ:BIDU), a leading Chinese provider of internet search, targeted online advertising and other internet content services.
  • Check Point software Tech. (NASDAQ:CHKP), an Israeli provider of Internet security software, hardware and services for enterprises and consumers.
  • Knot Inc. (KNOT) offers multimedia services tailored to the engaged, newly married and pregnant audiences.


Fund and Guru

Type of Fund

Assets Under Management

Percent Equity Portfolio invested in Internet Content, Software and Services Group

Major Internet Content, Software and Services Group Company Positions in Portfolio

Joho Capital LLC (Robert Karr)

hedge fund - Long/Short

$ 600 million



Brave Warrior Capital, Inc. (Glenn Greenberg)

hedge Fund

$ 1.2 billion



Viking Global Investors LP (Andreas Halvorsen)

hedge Fund

$ 12.1 billion



GMO (Jeremy Grantham)

mutual Fund

$107 billion including $ 29.4 billion in Equities



Wallace R Weitz & Co (Wallace Weitz)

mutual fund - Value Investing

$ 2.3 billion



Click to enlarge

Joho Capital, with $600 million in assets under management, was founded by Robert Karr in 1996. Mr. Karr is one of the Tiger Cubs, so called because they learned to pick stocks at Julian Robertson's legendary hedge fund Tiger Management LLC. The fund is generally concentrated in new technologies, with over 40% of the current allocation in Chinese equities.

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.

Greenwich, CT-based hedge fund, Viking Global Investors, was founded in 1999 by guru Andreas Halvorsen along with David Ott and Brian Olson. All three founders are Tiger Cubs, in that prior to founding the firm, they all worked at Julian Robertson’s Tiger Management LLC. The firm employs a fundamental analysis with a bottom-up stock picking approach to make its investments. The firm also employs a long-short strategy to select its securities.

Jeremy Grantham is one of the co-founders of Grantham Mayo Van Otterloo, a Boston-based asset management firm that manages over $107 billion in total client assets. Besides its headquarters in Boston, GMO has offices in San Francisco, London, Zurich, Singapore, and Sydney. Besides the equities markets, GMO also is regarded as a highly knowledgeable investor in various stock, bond and commodity markets. Grantham's philosophy can be summarized by his commonly used phrase "reversion to the mean." Essentially, he believes that all asset classes and markets will revert to mean historical levels from highs and lows. His firm seeks to understand historical changes in markets and predict results for seven years into the future. When there is deviation from historical means (averages), the firm may take an investment position based on a return to the mean. The firm allocates assets based on internal predictions of market direction.

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 fund data, including assets under management and firm profiles are sourced mostly from The information and data are 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 consider 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.