Tracking William Von Mueffling's Cantillon Capital Management Portfolio - Q2 2016 Update

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Includes: A, ABEV, ADI, AGN, AMT, BIDU, BITA, CACC, CBG, CME, CMPR, ECL, FIS, GOOG, GOOGL, GWW, HOG, ICE, MSM, PRI, SERV, SPGI, ST, TNET, V, WLTW, ZTS
by: John Vincent

Summary

William Von Mueffling's U.S. long portfolio increased ~4% this quarter from $5.71B to $5.94B.

Mueffling substantially increased CBRE Group, ServiceMaster Global, and American Tower while decreasing MSC Industrial Direct. They also added Allergan & Primerica.

The portfolio continues to be very concentrated with the top five positions accounting for ~39% of the US long portfolio.

This article is part of a series that provides an ongoing analysis of the changes made to William Von Mueffling's US stock portfolio on a quarterly basis. It is based on Mueffling's regulatory 13F Form filed on 08/03/2016. Please visit our Tracking William Von Mueffling's Cantillon Capital Management Portfolio series to get an idea of his investment philosophy and our previous update highlighting the fund's moves during Q1 2016.

This quarter, Mueffling's US long portfolio increased 3.91% from $5.71B to $5.94B. The number of holdings increased from 23 to 25: stakes in Allergan plc, Primerica, and TriNet were added during the quarter while eliminating WW Grainger. The portfolio continues to be heavily concentrated with the top five positions representing 39.23% of the total US long holdings. The largest stake is Alphabet Inc. which accounts for 9.96% of the US long portfolio. The largest five positions are Alphabet Inc., Fidelity National Information Services, S&P Global, Analog Devices, and Ecolab.

New Stakes:

Allergan plc (NYSE:AGN), Primerica Inc. (NYSE:PRI), and TriNet Group Inc. (NYSE:TNET): These are the three new positions this quarter. AGN is a medium-sized 2.86% of the portfolio stake established at prices between $202 and $278 and the stock is now at $253. PRI is a small 1.07% position purchased at prices between $43 and $59 and it currently trades at $50.36. TNET is a minutely small 0.15% portfolio stake established at prices between $14 and $21 and the stock is now at $20.98.

Stake Disposals:

Grainger W. W. (NYSE:GWW): GWW stake was established in Q3 2013 at prices between $247 and $274. The position was almost doubled the following quarter at prices between $248 and $272. H1 2015 also saw another ~60% increase at prices between $229 and $266. There was an about turn in Q3 2015: ~38% reduction at prices between $211 and $238. That was followed with a ~40% further selling the following quarter at prices between $191 and $231. The remaining position was eliminated this quarter at prices between $216 and $239. The stock is now at $217. The disposal indicates a bearish bias.

Stake Decreases:

Ambev SA (NYSE:ABEV): ABEV is a small ~1% of the US long portfolio position established in November 2013 as a result of a stock-swap merger transaction that resulted in ABV holders receiving 5 shares of Ambev SA for each share they held. Q1 2014 saw a one-third stake increase at prices between $6.23 and $7.45. In Q3 2015, the stake was reduced by ~57% at prices between $4.59 and $6.25. Last three quarters have seen only minor activity. The stock currently trades at $5.73.

Analog Devices (NYSE:ADI): ADI is a long-term position that has been in the portfolio since 2010. At the time, it accounted for just over 10% of the US long portfolio. The stake was increased by two-thirds in 2011 as well. The last major activity was in Q4 2014 when the position saw a ~18% increase at prices between $43.10 and $57.49. The stock currently trades at $62.87. It is Mueffling's fourth-largest position at 6.70% of the US long portfolio.

Agilent Inc. (NYSE:A): Agilent is a medium-sized 3.37% of the US long portfolio position established in Q4 2015 at prices between $33.74 and $42.36. The stock currently trades well above that range at $47.09. Last two quarters have seen minor reductions.

Baidu Inc. (NASDAQ:BIDU): BIDU is a large 5.79% portfolio stake first purchased in 2012. The original position was increased by over 30% in Q1 2013 at prices between $84 and $113 and another 30% in the following quarter at prices between $83 and $103. Since then, the activity has been very minor. The stock currently trades at $162. Mueffling is sitting on large gains on this position.

Bitauto Holding (NYSE:BITA): BITA is a small ~1% of the US long portfolio position established in Q3 2014 at prices between $46 and $96. Q1 2015 saw a ~60% increase at prices between $47.39 and $89.11. Q3 2015 also saw a further ~38% increase at prices between $24.50 and $51. Last quarter saw another ~18% stake increase at prices between $16.41 and $28.28. The stock currently trades at $27.40. This quarter saw very minor trimming.

Credit Acceptance Corporation (NASDAQ:CACC): CACC is a 1.29% of the US long portfolio position first purchased in 2012. The original stake was increased by around 50% in Q2 2013 at prices between $96 and $122. The position has since been kept relatively steady. The stock currently trades well above his most recent purchase price range at ~$196. This quarter saw minor trimming.

Ecolab Inc. (NYSE:ECL): ECL is a large (top-five) 6.20% of the US long portfolio stake first purchased in 2012. The original position was increased by around 75% in Q1 2013 at prices between $72.50 and $80. Q4 2014 saw a ~21% increase at prices between $101 and $115 and the following quarter saw a further ~10% increase at prices between $99 and $117. The stock currently trades above those ranges at $121. Last few quarters have seen only minor activity.

Fidelity National Information Services (NYSE:FIS): FIS was a minute 0.20% of the US long portfolio position established in Q1 2013. In Q2 2013, the position was increased to a large 6.11% of the US long portfolio stake at prices between $39 and $46. Q3 2013 saw a 15% stake increase at prices between $42.50 and $47.50 and the following quarter saw another 44% increase at prices between $48.87 and $56.55. The stock currently trades well above those ranges at $78.15. FIS is Mueffling's second-largest position at 9.36% of the US long portfolio. Last nine quarters have seen only minor activity.

Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) previously Google: GOOG is Mueffling's largest position at 9.96% of the US long portfolio. The original stake was established in 2010 and doubled in 2011 at much lower prices. The last significant buying happened in Q2 2014 when the position was increased by ~14% at prices between $510 and $580. Last eight quarters have seen only very minor activity. The stock currently trades at $773. Mueffling is sitting on huge long-term gains on this position.

Harley Davidson (NYSE:HOG): HOG is a fairly large 4.33% of the US long portfolio position. The original stake was established in Q2 2013 at prices between $50 and $60. The position was increased by 56% in Q3 2013 at prices between $54 and $65. Q2 2014 also saw a ~16% increase at prices between $65 and $74. The stock currently trades at $51.63. For investors attempting to follow Mueffling, HOG is a good option to consider for further research. Last few quarters have seen only very minor activity.

MSC Industrial Direct Inc. (NYSE:MSM): MSM is a 1.82% of the US long portfolio position established in Q4 2013 at prices between $75.50 and $83.50. Q1 2014 saw an 84% stake increase at prices between $80 and $89. In Q4 2014, the position saw another ~145% increase at prices between $77 and $86. Last five quarters had seen only minor activity. There was a ~30% reduction this quarter at prices between $69 and $78. The stock currently trades at $72.21.

S&P Global (NYSE:SPGI) previously McGraw Hill Financial (MHFI): The top-five 7.02% SPGI stake was established in Q1 2015 at prices between $85.76 and $109. Q3 2015 saw a huge ~140% increase at prices between $85 and $107 and that was followed with another ~75% increase the following quarter at prices between $87 and $100. There was a further ~18% stake increase last quarter at prices between $80.77 and $99.46. The stock currently trades at $121. This quarter saw minor trimming.

Sensata Technologies Holding N.V. (NYSE:ST): ST is a 3.58% of the US long portfolio position established in Q2 2014 at prices between $44.50 and $50. The stake was increased by ~30% in Q1 2015 at prices between $48.98 and $57.74 and another one-third the following quarter at prices between $52.56 and $58.66. Q3 2015 saw a further 26% increase at prices between $43 and $53. The stock currently trades well below his purchase price ranges at $36.72. Last two quarters had seen minor additional buying while this quarter saw a small reduction. For investors attempting follow Mueffling, ST is a good option to consider for further research.

Visa Inc. (NYSE:V) and Zoetis Inc. (NYSE:ZTS): These medium-sized stakes were established in Q4 2015 and substantially increased last quarter. The 2.84% of the portfolio Visa position was purchased at prices between $70 and $80 and increased by ~73% last quarter at prices between $67.77 and $76.78. The stock is now at $78.71. The 4.80% ZTS stake was established at prices between $40.80 and $48.33 and increased by ~170% last quarter at prices between $39.33 and $48.01. It currently trades just outside those ranges at $51.21. This quarter saw minor trimming in both positions. For investors attempting to follow Mueffling, these two are good options to consider for further research.

Willis Towers Watson plc (NASDAQ:WLTW): The large 6.18% stake came about as a result of the merger between Willis Group Holdings (WSH) and Towers Watson (TW) that closed on January 6, 2016. It was structured as a merger-split-rename transaction and the resultant entity was named Willis Towers Watson plc . WSH shareholders received one share of WLWT in place of every 2.6490 shares of WSH held. Cantillon's large stake in WSH was converted to WLTW shares. Last two quarters have seen very minor trimming. The original position is from Q3 2013 and his overall cost-basis is ~$110 compared to the current price of $124.

Stake Increases:

American Tower (NYSE:AMT), CBRE Group Inc. (NYSE:CBG), and ServiceMaster Global Holdings (NASDAQ:SERV): These three positions were established last quarter and increased substantially this quarter. AMT is a 2.18% position established at prices between $84 and $102 and increased by ~50% this quarter at prices between $103 and $113. The stock currently trades at $116. The 3.29% stake in CBG was purchased at prices between $23.32 and $34.58 and increased by ~94% this quarter at prices between $25 and $31. The stock is now at $28.77. The medium-sized 3.84% SERV position was purchased at prices between $35.13 and $42.21 and increased by ~25% this quarter at prices between $35.42 and $40.31. It currently trades at $37.77. The aggressive build-up indicates a clear bullish bias toward these businesses.

Note 1: Jeffrey Ubben's ValueAct has a ~10% ownership stake in CBRE Group.

Note 2: ServiceMaster was taken private in 2007 in a private equity transaction. In June 2014, it had an IPO at $17 per share. The stock has more than doubled since.

Cimpress (NASDAQ:CMPR) previously VistaPrint: CMPR was a minutely small 0.17% of the US long portfolio position established in Q3 2014. The following quarter saw the stake increased to a 1.52% of the US long portfolio position at prices between $52.63 and $75.98. Q2 2015 saw a ~15% increase at prices between $80.51 and $91.16 and the following quarter saw a further ~38% increase at prices between $64.53 and $84.51. The stock currently trades at $93.11. The stake is now at 2.49% of the US long portfolio. Last three quarters have seen only minor activity.

CME Group (NASDAQ:CME): CME is a medium-sized 4.23% of the US long portfolio stake established in Q4 2014 at prices between $78.26 and $92.91. Q4 2015 saw a ~60% stake increase at prices between $87 and $100. The stock currently trades at $103 Last two quarters have seen only very minor adjustments.

Intercontinental Exchange (NYSE:ICE): ICE is a 4.48% of the US long portfolio stake established in Q4 2014 at prices between $194 and $227. In Q1 2015, the position was increased by ~50% at prices between $205 and $240 and the following quarter saw a further ~26% increase at prices between $222 and $242. The stock currently trades at $278. There was only marginal activity over the last four quarters.

The spreadsheet below highlights changes to Mueffling's US stock holdings in Q2 2016:

Click to enlarge

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

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.