Tracking Robert Karr's Joho Capital Portfolio - Q3 2016 Update

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Includes: AEO, AMZN, BABA, BIDU, CGNX, COE, CSTE, ETSY, GRUB, HXL, LABL
by: John Vincent

Summary

Robert Karr's 13F portfolio increased from $367M to $508M.

Etsy, Inc. was increased significantly during the quarter.

The top three positions are GrubHub Inc., Alibaba Group Holding, and Cognex Corporation. They add up to ~72% of the portfolio.

This article is part of a series that provides an ongoing analysis of the changes made to Robert Karr's US stock portfolio on a quarterly basis. It is based on Karr's regulatory 13F Form filed on 11/14/2016. Please visit our Tracking Robert Karr's Joho Capital Portfolio article for an idea on his investment philosophy and our last update for the fund's moves during Q2 2016.

This quarter, Karr's US long portfolio increased ~38% from $367M to $508M. The number of holdings increased from 10 to 11: a minutely small stake in American Eagle Outfitters was added during the quarter. The top three holdings represent ~72% of the US long assets: GrubHub Inc., Alibaba Group Holding, and Cognex Corporation.

Karr is one of the most successful among the "tiger cubs" (protégés of Julian Robertson & his legendary Tiger Fund). Although Karr's main expertise is in Asian equities, ~30% of the assets are typically in US listed 13F securities. To know more about Robert Karr and "tiger cubs," check out the book Julian Robertson: A Tiger in the Land of Bulls and Bears.

Stake Disposals:

None.

New Stakes:

American Eagle Outfitters (NYSE:AEO): AEO is a minutely small 0.21% portfolio stake established this quarter at prices between $15.50 and $19.50 and the stock is now at $18.04.

Stake Decreases:

Amazon.com Inc. (NASDAQ:AMZN): AMZN is a very small 0.66% position established in Q2 2015 at prices between $370 and $446 and reduced by ~28% the following quarter at prices between $430 and $548. The stock is now at $780. This quarter saw a marginal reduction.

Multi-Color Corporation (NASDAQ:LABL): LABL is a fairly large ~6% position purchased in Q4 2015 at prices between $58.50 and $79.50 and almost doubled the following quarter at prices between $41 and $63. There was a ~23% selling last quarter at prices between $50 and $64. The stock is now at ~$74. This quarter also saw a ~6% trimming.

Stake Increases:

Alibaba Group ADR (NYSE:BABA): BABA is a large (top-three) 25.23% stake established in Q2 2015 at prices between $79.50 and $94 and almost doubled the following quarter at prices between $57 and $84. Q1 2016 saw another ~48% increase at prices between $60.50 and $81.50. Last two quarters have also seen a ~21% combined increase at prices between $74 and $109. The stock currently trades at $93.41.

Caesarstone Sdot-Yam (NASDAQ:CSTE): CSTE is a large 10.20% of the 13F portfolio stake established in Q1 2016 at prices between $29.23 and $43.34. It was increased by ~72% last quarter at prices between $32.50 and $40.33. The stock currently trades at $29. This quarter also saw a ~13% further increase. For investors attempting to follow Karr, CSTE is a good option to consider for further research.

Note: A regulatory 13G filing on November 14th show Joho Capital owning ~2M shares. Around 600K additional shares were purchased at ~$29 per share.

Cognex Corporation (NASDAQ:CGNX): The top-three 17.58% CGNX stake was first purchased in Q3 2015 at prices between $33.50 and $48. It was increased by ~340% the following quarter at prices between $33.50 and $38. This quarter saw another ~10% increase at prices between $42 and $53. The stock is currently well above those ranges at $59.43.

Etsy, Inc. (NASDAQ:ETSY): ETSY was a very small position purchased in Q1 2016 at prices between $6.50 and $9.50. This quarter saw a huge increase to a ~6% portfolio stake at prices between $9 and $15. The stock is now at $12.94.

Kept Steady:

Baidu Inc. (NASDAQ:BIDU): BIDU is a very small 0.74% of the portfolio stake. It was established in Q4 2015 at prices between $137 and $218 and increased by around two-thirds in Q1 2016 at prices between $141 and $191. It is currently at $166.

Note: Baidu has seen a previous roundtrip in the portfolio. It was Joho Capital's third-largest position at 16.23% of the US long portfolio as of Q1 2015. This was even after a ~85% reduction over the previous two years at prices between $190 and $250. It was almost eliminated in Q2 2015 at prices between $189 and $221. The remaining minutely small stake was sold in Q3 2015. The original position was from Q1 2013 & Q2 2013 at an overall cost-basis of ~$100 per share. Joho Capital harvested huge gains.

China Online Education Group (NYSE:COE): COE is a very small ~1% portfolio stake established last quarter. The stock currently trades at $13.59. The firm had an IPO on June 10th priced at $19 per share.

GrubHub Inc. (NYSE:GRUB): GRUB is Joho Capital's largest position at 29.06% of the US long portfolio. It was established in Q2 2015 at prices between $33 and $47 and increased by almost two-thirds the following quarter at prices between $24 and $37. Q1 2016 saw another ~28% increase at prices between $18 and $25. There was a ~10% trimming last quarter at prices between $22 and $31. The stock currently trades at $37.99.

Hexcel Corporation (NYSE:HXL): HXL is now a 3.37% of the US long portfolio stake. The original position was from Q4 2012 when around 1.3M shares were purchased at prices between $24 and $28. The stake saw a 60% reduction in Q1 2014 at prices between $41.50 and $45.50. Q3 2014 saw an about turn: ~13% increase at prices between $37 and $42 and the following quarter saw another ~37% increase at prices between $37 and $44. Q3 2015 saw a ~47% further increase at prices between $44 and $55. The pattern reversed again in Q1 2016 as there was a ~13% trimming. That was followed by another two-thirds reduction last quarter at prices between $39 and $46. The stock currently trades at $49.24.

The spreadsheet below highlights changes to Karr's US stock holdings in Q3 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.