Tracking Glenn Greenberg's Brave Warrior Advisors Portfolio - Q1 2016 Update

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Includes: AR, AXTA, BAC, BAM, BIP, BPY, CMCSA, CMPR, EQIX, HAL, JPM, LBTYK, PRI, SCHW, TDW, VRX
by: John Vincent

Summary

Glenn Greenberg’s US long portfolio decreased from $2.52B to $2.05B this quarter.

The huge stake in Valeant Pharmaceuticals was reduced during the quarter.

Brave Warrior Advisors added Axalta Coating Systems and Liberty Global plc while dropping Equinix Inc.

This article is part of a series that provides an ongoing analysis of the changes made to Glenn Greenberg's US stock portfolio on a quarterly basis. It is based on Greenberg's regulatory 13F Form filed on 05/16/2016. Please visit our Tracking Glenn Greenberg's Brave Warrior Advisors Portfolio series to get an idea of his investment philosophy and our previous update for the fund's moves during Q4 2015.

This quarter, Greenberg's US long portfolio decreased 18.64% from $2.52B to $2.05B. The top three holdings represent over ~46% of the portfolio while the top-five is at ~70%. The largest position is JP Morgan Chase & WTS which was first purchased in Q3 2014 and now accounts for a whopping 17.65% of the portfolio.

Stake Disposals:

Equinix Inc. (NASDAQ:EQIX): EQIX was a 3.98% of the US long portfolio position as of last quarter. It was sold out this quarter at prices between $265 and $330. The position was first purchased in Q2 2014 at prices between $170 and $210. The stake was increased by ~43% the following quarter at prices between $206 and $224. Q4 2014 saw a further ~17% increase at prices between $192 and $234. The pattern reversed in Q3 2015: ~27% reduction at prices between $251 and $292 and that was followed with another ~48% reduction last quarter at prices between $265 and $305. The stock currently trades at $343.

Brookfield Infrastructure Partners (NYSE:BIP) and Brookfield Property Partners (NYSE:BPY) are minutely small stakes also sold out this quarter.

New Stakes:

Axalta Coating Systems (NYSE:AXTA) and Liberty Global plc (NASDAQ:LBTYK): These two are fairly large new stakes established this quarter. AXTA is a 6.87% of the portfolio position established at prices between $21.05 and $29.20 and the stock currently trades at $27.52. LBTYK is an even larger 9.42% of the portfolio stake purchased at prices between $30.32 and $40.77 and the stock is now at $35.52.

Stake Decreases:

Brookfield Asset Management (NYSE:BAM): BAM is a large 11.76% of the US long portfolio stake established in Q2 2015 at prices between $34.20 and $38.66 and increased by ~57% the following quarter at prices between $29.91 and $36.18. This quarter saw an about turn: ~23% reduction at prices between $27.30 and $34.98. The stock currently trades at $33.48.

Cimpress (NASDAQ:CMPR) previously VistaPrint: CMPR is a large (top three) 15.01% of the US long portfolio position. The original stake consisted of ~2M shares purchased in Q4 2011 at prices between $27 and $36. H1 2014 saw a ~40% increase at prices between $37 and $55. Q4 2014 saw an about-turn as ~38% of the position was sold at prices between $52.63 and $75.98. H1 2015 had also seen a ~20% reduction at prices between $79.52 and $91.16. Last quarter, the pattern reversed again: ~79% increase at prices between $64.53 and $84.51. The stock currently trades at $92.73. This quarter saw a ~13% reduction.

Note: Brave Warrior's ownership stake in the business is ~11%.

Halliburton (NYSE:HAL): The large 11.26% of the US long portfolio HAL stake was established in Q4 2014 at prices between $37.82 and $64.51 and increased by one-third the following quarter at prices between $38.34 and $44.87. Q3 2015 saw a ~25% further increase at prices between $33.47 and $43.29. The stock currently trades at $40.13. This quarter saw a marginal reduction.

Note: Greenberg had a previous very successful round-trip with HAL: It was a large 9.70% of the US long portfolio stake in Q1 2014. That position was established in Q1 2013 at prices between $34.50 and $43.50 and was increased by roughly two times in Q2 2013 at prices between $37 and $45.50. The entire stake was eliminated over the next two quarters at prices between $57 and $74.

JPMorgan Chase & Co. (NYSE:JPM) & JPMorgan WTS: JPM is a large 13.64% of the US long portfolio stake established in Q3 2014 at prices between $55.56 and $61.63 and increased by ~14% in the following quarter at prices between $55 and $63.15. The stake was again increased by ~16% in Q1 2015 at prices between $54.38 and $62.58. The stock currently trades at $63.39. The TARP warrant (Strike 42.42, 10/28/2018 Expiry, Yahoo Ticker: JPM-WT) stake was established in Q1 2015 and increased by ~44% the following quarter. Q3 2015 saw a further ~20% increase. The warrant currently trades at $21.49 which implies a nominal leverage of 2.95. This quarter saw marginal reductions in both.

Valeant Pharmaceuticals (NYSE:VRX): VRX was Greenberg's largest position at 25.22% of the US long portfolio as of last quarter. The original stake consisted of ~2.4M shares purchased in Q1 2011 at prices between $28.50 and $53.25. There have been periodic purchases since and the position size peaked at ~6.25M shares last quarter when there was a ~12% increase at prices between $70 and $182. The pattern reversed this quarter: two-thirds reduction at prices between $26.30 and $102. The stock currently trades at $26.26.

Charles Schwab Corporation (NYSE:SCHW): SCHW stake was first purchased in Q3 2012. Close to 6M shares were purchased at prices between $12.50 and $14.50. The position has since been built up to the current stake of ~9.6M shares (13.06% of the US long portfolio). The stock currently trades at $28.96. Last two quarters saw minor increases while this quarter saw a marginal reduction.

Stake Increases:

Antero Resources (NYSE:AR): AR is a 5.10% of the US long portfolio position established in Q2 2015 at prices between $34.22 and $45.65 and increased by ~84% the following quarter at prices between $20.20 and $34.34. This quarter saw another ~21% increase at prices between $19.77 and $27.70. The stock currently trades at $26.21. For investors attempting to follow Greenberg, AR is a good option to consider for further research.

Note: Seth Klarman (Baupost Group) controls ~18.72% of Antero Resources.

Primerica Inc. (NYSE:PRI): PRI is a 7.19% of the US long portfolio position established in Q3 2011 at much lower prices. Q4 2014 saw a ~30% reduction at prices between $46 and $55.60 and the following quarter saw a further ~10% reduction at prices between $49.64 and $55.09. In Q1 2015, the pattern reversed: ~28% increase at prices between $43.84 and $50.90 and that was followed by a ~15% increase in Q3 2015 at prices between $41.01 and $46.24. The stock currently trades at $52.36. Greenberg controls 6.6% of the business. This quarter saw a ~12% increase.

Kept Steady:

The following very small positions (less than 0.1% of the US long portfolio each) were kept steady in the quarter: Bank of America (NYSE:BAC), Comcast Corporation (NASDAQ:CMCSA), and Tidewater Inc. (NYSE:TDW).

The spreadsheet below highlights changes to Greenberg's US stock holdings in Q1 2016:

Click to enlarge

Disclosure: I am/we are long BAC.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.