Seeking Alpha
Consensus Picks DIY Tools, Top 20 Small-cap Newsletter, Trade Alert Service (Auto)
Profile| Send Message|
( followers)

Summary: Hedge Fund Maverick Capital with $9.2 billion in assets under management and headed by Tiger Cub and Stellar Investor Lee Ainslie has returned market-beating 14.2% compounded returns between 1995 and 2009. Their major new conviction buys include Wells Fargo & Co. (NYSE:WFC), Capital One Financial Inc. (NYSE:COF), Goldman Sachs Group Inc. (NYSE:GS), NetApp Inc. (NASDAQ:NTAP) and Yingli Green Energy (NYSE:YGE). Their major conviction sells include Citigroup Inc. (NYSE:C) and Dell Inc. (NASDAQ:DELL).

Dallas, Texas-based Hedge Fund Maverick Capital, headed by Tiger Cub and Star Manager Lee Ainslie, manages $9.2 billion and invests mainly in U.S. the public equity markets. Ainslie, like Stephen Mandel at Lone Pine Capital LLC and John Griffin at Blue Ridge Capital Holdings LLC is a Tiger Cub, meaning that he honed his investment skills while working for legendary hedge fund manager Julian Robertson at Tiger Management LLC. Mr. Ainslie, like his peer Tiger Cub Mr. Griffin earned his undergrad degree from the University of Virginia and he got his MBA from University of North Carolina. Besides the headquarters in Dallas, the firm also has an additional office in New York where Mr. Ainslie is based out of. Maverick Capital is a long/short equity hedge fund and employs a bottom-up, fundamental approach in making its investments. In the period from 1995-2009, Maverick Capital returned a cumulative 618% or 14.2% compounded return versus a cumulative 314% or 10.3% compounded return for the S&P 500.

The fund holds a moderately diversified portfolio of 89 positions and almost two-thirds of their holdings are in large-caps, 20% are in mid-caps and small-caps account for the remaining 15% of their holdings. Their portfolio turnover is around 50% implying an average holding period of two years. Based on the most recent SEC 13-F filing for the March 2011 quarter, we determined that their portfolio is over-weight in the services, healthcare and technology sectors and it is under-weight the basic materials, energy, transportation and utility sectors.

The following summarizes their largest new buys and sells in the latest reported 13-F filing for the March 2011 quarter and updated based on any 13-G filings since the end of the quarter:

  • Finance Sector: They added a minor $1 million to their prior $1.62 billion position in the Finance Sector. However, this was accomplished by significant re-shuffling of their Sector holdings, including adding large new positions in Wells Fargo & Co. at $271 million, Capital One Financial Corp. at $137 million and Goldman Sachs Group Inc. at $130 million. Furthermore, they doubled their position in insurance company Progressive Corp. (NYSE:PGR) by adding $141 million to their prior position. The position in PGR was initiated in early 2009 in the low-teens, so them adding to this position in the $20 range is a conviction buy. They balanced it with a large $328 million selling out of their entire position in Citigroup Inc., a position they initiated in mid-2009 in the low-$40s, so their selling out of this position almost two years later at the same price is a conviction sell.
  • Technology Sector: They sold $205 million from their prior quarter $2.9 billion position in the Technology Sector, including selling out of their $260 million position in Dell Inc., a manufacturer of desktop PCs, mobility products and networking products. The position in DELL was initiated at the end of 2005 in the mid-$30s, so their selling out in the mid-teens over five years later is a conviction sell. They also initiated a large new $145 million position in NetApp Inc., a manufacturer of integrated network storage and data management hardware. Furthermore, they sold out their positions in semiconductor manufacturing companies Skyworks Solutions Inc. (NASDAQ:SWKS) and Avago Technologies Ltd. (NASDAQ:AVGO). The position in SWKS was initiated in mid-2010 in the mid-teens and its sell in the $30 range was profit-taking and the position in AVGO was initiated at the end of 2010 in the mid-$20s, so the sell in the mid-$30s, less than six months later was profit-taking. Furthermore, they initiated a large new position in Chinese solar company Yingli Green Energy during the quarter.
  • Consumer Cyclical Sector: They sold out their large $152 million position in hand and mechanical tools manufacturer Stanley Black & Decker Inc. (NYSE:SWK) during the quarter; that position was initiated in early 2010 in the low-$50s, so them sell this position in the $70s was profit-taking.
  • Services Sector: They sold $320 million from their prior $2.2 billion position in the Services Sector, including selling out of their $146 million position in retailer Bed Bath & Beyond Inc. (NASDAQ:BBBY), selling out their $130 million position in Abercrombie & Fitch Co. (NYSE:ANF) , and adding a new $140 million position in Dollar Tree Inc. (NASDAQ:DLTR). The position in BBBY was initiated in mid-2010 in the low-$40s so them sell this position in the mid-$50s was profit-taking, and the position in ANF was initiated in early 2010 in the high-$30s, so them selling this position in the $70 range was profit-taking.

Table

Company

Ticker

Action

Market Value at end of March 2011 Quarter

Change in Value from Prior Quarter

Percent of Portfolio

Percent Shares Owned

Citigroup Inc.

C

Drop

$0 million

($328) million

0.00%

0.00%

Wells Fargo & Co.

WFC

New

$ 271 million

$271 million

2.84%

0.16%

Dell Inc.

DELL

Drop

$ 0 million

($260) million

0.00%

0.00%

Yingli Green Energy

YGE

New

$ 189 million

$189 million

1.98%

10.07%

Stanley Black & Decker Inc.

SWK

Cut

$ 140 million

($152) million

1.47%

1.09%

Bed Bath & Beyond Inc.

BBBY

Drop

$ 0 million

($146) million

0.00%

0.00%

NetApp Inc.

NTAP

New

$ 145 million

$145 million

1.53%

0.82%

HCA Holdings Inc.

HCA

New

$ 143 million

$143 million

1.50%

0.82%

Progressive Corp.

PGR

Add

$ 278 million

$141 million

2.92%

2.01%

Dollar Tree Inc.

DLTR

New

$ 140 million

$140 million

1.47%

2.06%

Capital One Financial Corp.

COF

New

$ 137 million

$137 million

1.44%

0.58%

Skyworks Solutions Inc.

SWKS

Drop

$ 0 million

($136) million

0.00%

0.00%

Avago Technologies Ltd.

AVGO

Cut

$ 3 million

($132) million

0.03%

0.04%

Abercrombie & Fitch Co.

ANF

Drop

$ 0 million

($130) million

0.00%

0.00%

Goldman Sachs Group Inc.

GS

New

$ 130 million

$130 million

1.36%

0.16%

Citrix Systems Inc.

CTXS

Drop

$ 0 million

($129) million

0.00%

0.00%

Bank Of America Corp.

BAC

Drop

$ 0 million

($123) million

0.00%

0.00%

JPMorgan Chase & Co.

JPM

Cut

$ 276 million

($119) million

2.89%

0.15%

Credit: Historical fundamentals including operating metrics and stock ownership information were derived using SEC filings data, I-Metrix® by Edgar Online®, Zacks Investment Research, Thomson Reuters and Briefing.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 Sector-Based Buys and Sells of Tiger Cub and Stellar Investor Lee Ainslie of Maverick Capital