Viking Global's Stock Picks With High Upside Potential

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Includes: AAPL, ALXN, AMT, CAH, CHTR, CI, ESRX, HUM, MA, PCLN, PXD, QCOM, SLB, SPG, WDC
by: Insider Monkey

Andreas Halvorsen is one of the most successful Tiger cubs. He used to be the Senior Managing Director and the Director of Equities at Julian Robertson's Tiger Management. He started his own hedge fund Viking Global Investors in 1999, since when Halvorsen has been producing consistently high returns. Viking Global returned a stunning 89% after fees in the first year of establishment. Between June 2005, and March 2010, the fund returned 119% versus 11% for the MSCI World Index. It lost 1.9% in 2008, gained 20% in 2009, and returned 3.8% in 2010. Viking Global also returned close to 8% this year through end of November.

In this article, we are going to look at the stocks with high upside potential that Halvorsen’s Viking Global is bullish about. All companies have at least $10 billion market cap and average analyst recommendation scores lower than 2.0 (5=strong sell, 4=sell, 3=hold, 2=buy, 1=strong buy).

Company Name

Ticker

Value

Activity

Analyst Recom

APPLE INC

AAPL

431730

New

1.7

TIME WARNER CABLE

TWC

412236

-27%

2

HUMANA INC

HUM

296046

47%

2

AMERICAN TOWER CORP

AMT

256544

65%

1.7

C I G N A CORP

CI

243457

111%

2

MASTERCARD INC

MA

241771

New

1.8

PRICELINE COM INC

PCLN

144164

-68%

2

QUALCOMM INC

QCOM

134053

19%

1.9

CARDINAL HEALTH INC

CAH

95906

-53%

1.9

SIMON PROPERTY GR

SPG

72311

New

2

EXPRESS SCRIPTS INC

ESRX

68419

71%

1.8

SANDISK CORP

SNDK

55091

New

1.8

PIONEER NATURAL RES

PXD

51701

New

1.9

ALEXION PHARMA

ALXN

45597

New

2

SCHLUMBERGER LTD

SLB

41518

-50%

1.9

Click to enlarge

During the third quarter, Viking Global initiated a brand new $432 million position in Apple Inc (NASDAQ:AAPL). The stock did not go up as much as the market so far in the fourth quarter. It returned 5.59% since the end of September, versus 11.02% for SPY. However, we still like AAPL a lot. It has an average analyst recommendation score of 1.7, indicating that the stock is quite likely to grow in the future. Moreover, AAPL also has a relatively low P/E ratio of 14.55 and its earnings are expected to grow at over 10% in the next few years. AAPL is also the most popular stock among hedge funds tracked by us. There are 125 hedge funds, including Viking Global, with AAPL positions in their portfolios at the end of September. For example, another Tiger cub Stephen Mandel’s Lone Pine Capital had $785 million invested in AAPL at the end of the third quarter.

Another new position opened by Viking Global in the third quarter is Mastercard Inc (NYSE:MA). At the end of June, Viking Global did not report to own any shares of MA. The fund disclosed owning $242 million of the stock at the end of September. MA returned 17.91% since the end of the third quarter, beating the market by nearly 7 percentage points. The average analyst recommendation score for MA is also bullish: 1.8. Chase Coleman’s Tiger Global Management also invested $245 million in MA at the end of September.

Other Halvorsen’s stock picks with high upside potential include Time Warner Cable Inc (TWC), Humana Inc (NYSE:HUM), American Tower Corp (NYSE:AMT), CIGNA Corp (NYSE:CI), Priceline.com Inc (NASDAQ:PCLN) and Qualcomm Inc (NASDAQ:QCOM). We like Halvorsen. His track record is outstanding. We believe that by focusing on Halvorsen’s stock picks, especially those stocks with high upside potential, investors are more likely to outperform the market in the long run.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.