Tracking William Von Mueffling's Cantillon Capital Management Portfolio - Q2 2017 Update

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Includes: A, ADI, AGN, AMT, AON, AVGO, BDX, BIDU, BITA, CACC, CBRE, CME, CMPR, ECL, EFX, FIS, GOOG, GOOGL, IBKR, ICE, NXPI, PRI, QCOM, SABR, SERV, SPGI, SSNC, ST, TNET, V, WLTW, ZTS
by: John Vincent
Summary

William Von Mueffling's U.S. long portfolio value increased this quarter from $7.82B to $8.01B.

Mueffling added Interactive Brokers while dropping Sabre Corp.

The portfolio continues to be very concentrated, with the top five positions accounting for close to one-third 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 08/07/2017. 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 2017.

This quarter, Mueffling’s US long portfolio value increased 2.39%, from $7.82B to $8.01B. The number of holdings remained steady at 29. The portfolio continues to be heavily concentrated, with the top five positions representing ~32% of the total US long holdings. The largest stake is Alphabet Inc. (GOOG, GOOGL) which accounts for ~8% of the US long portfolio. The largest five positions are Alphabet Inc., S&P Global (NYSE:SPGI), Analog Devices (NASDAQ:ADI), Fidelity National Information Services (NYSE:FIS), and Willis Towers Watson plc (NASDAQ:WLTW).

New Stakes:

Interactive Brokers Group Inc. (IEX:IBKR): IBKR is a ~1% of the portfolio stake established this quarter at prices between $34 and $38, and the stock is now at $40.37.

Stake Disposals:

Sabre Corp. (NASDAQ:SABR): A ~1% of the portfolio stake in SABR was purchased last quarter at prices between $21 and $25. It was disposed of this quarter at prices between $20.50 and $25. The stock currently goes for $19.13.

Stake Increases:

Equifax (NYSE:EFX): EFX is a ~1.6% of the portfolio stake purchased in Q4 2016 at prices between $112 and $135 and increased by ~55% last quarter at prices between $117 and $137. This quarter saw another 15% stake increase at prices between $134 and $143. The stock is now at $145. The build-up indicates a clear bullish bias.

Bitauto Holding (NYSE:BITA): BITA is a ~1.4% position first purchased in Q3 2014 at prices between $48 and $93. Q1 2015 saw a ~60% increase at prices between $47.50 and $89. That was followed with another one-third increase in Q3 2015 at prices between $25 and $50. Last year also saw a ~75% stake increase at prices between $17 and $31. The stock is now at $37.72. This quarter saw a ~10% increase.

Note: Cantillon controls 5.4% of Bitauto.

Stake Decreases:

Alphabet Inc.: GOOG is Mueffling's largest position at 7.92% 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. The past three quarters have seen a combined ~20% reduction at prices between $736 and $984. The stock currently trades at $929. Mueffling is harvesting huge long-term gains.

S&P Global (previously McGraw Hill Financial): The top-three 6.21% SPGI stake was established in Q1 2015 at prices between $86 and $109. Q3 2015 saw a huge ~140% increase at prices between $85 and $107, and that was followed with another ~75% increase next quarter at prices between $87 and $100. There was a further ~20% stake increase in Q1 2016 at prices between $81 and $100. The stock currently trades at ~$151. The past four quarters have seen a combined ~10% trimming.

Analog Devices: ADI is a long-term stake 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 ~20% increase at prices between $43 and $58. The stock currently trades at $78.87. It is Mueffling's third-largest position at ~6.24% of the US long portfolio. There was a ~4% trimming this quarter.

Fidelity National Information Services: FIS was a minutely small position in Q1 2013. The following quarter saw the stake increased to a large ~6% position at prices between $39 and $46. Q3 2013 saw a 15% increase at prices between $43 and $48, and the following quarter saw another 44% increase at prices between $49 and $57. The stock currently trades well above those ranges at $90.55. The past three quarters have seen a combined ~30% reduction at prices between $74 and $87. It is still Mueffling's fourth-largest position at 5.75% of the US long portfolio.

Willis Towers Watson plc: The large (top-five) 5.51% stake came about as a result of the merger between Willis Group Holdings and Towers Watson 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. Cantillon's large stake in Willis Group Holdings was converted to WLTW shares. There was a ~12% increase in Q3 2016 at prices between $120 and $133. The original position is from Q3 2013, and his overall cost basis is ~$110, compared to the current price of ~$150. There was a ~4% trimming this quarter.

Ecolab Inc. (NYSE:ECL): ECL is a large 4.74% 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 ~20% increase at prices between $101 and $115, and the following quarter saw a further ~10% increase at prices between $99 and $117. Since then, the activity has been very minor. The stock currently trades at $132. This quarter saw a ~4% trimming.

Intercontinental Exchange (NYSE:ICE): ICE is a large 4.74% of the US long portfolio stake established in Q4 2014 at prices between $39 and $45. In Q1 2015, the position was increased by ~50% at prices between $41 and $48, and the following quarter saw a further ~25% increase at prices between $44 and $48. There was another ~17% increase in Q4 2016 at prices between $52.50 and $60. The stock currently trades at $64.37. The past two quarters saw minor trimming.

Note: Prices are adjusted for the 5-for-1 stock-split in October 2016.

American Tower (NYSE:AMT): AMT is a 4.42% position established in Q1 2016 at prices between $84 and $102 and increased by ~50% the following quarter at prices between $103 and $113. There was another ~150% increase in Q4 2016 at prices between $101 and $117. The stock currently trades at ~$138. The past two quarters saw marginal selling.

Zoetis Inc. (NYSE:ZTS): The 4.3% ZTS stake was established in Q4 2015 at prices between $41 and $48 and increased by ~170% the following quarter at prices between $39 and $48. It currently trades at $61.83. The past five quarters saw minor trimming.

Baidu Inc. (NASDAQ:BIDU): BIDU is a 4.25% 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 $227. Mueffling is sitting on large gains on this position.

Visa Inc. (NYSE:V): V is a 3.91% stake established in Q4 2015 at prices between $70 and $80. It was increased by ~125% last year at prices between $70 and $83. Last quarter saw another ~15% stake increase at prices between $78 and $90. The stock is now well above those ranges at $101. There was a ~4% selling this quarter.

NXP Semiconductors (NASDAQ:NXPI): NXPI is a fairly large 3.82% position purchased in Q3 2016 at prices between $76 and $102. Q4 2016 saw a ~9% increase at prices between $96.50 and $105. The stock is now at ~$113. The past two quarters saw minor selling.

Note: NXPI share price experienced a 25% spike following Qualcomm's (NASDAQ:QCOM) announcement to acquire NXPI for $110 per share cash last October.

Agilent Inc. (NYSE:A): Agilent is a medium-sized 3.71% of the US long portfolio position established in Q4 2015 at prices between $33.50 and $42.50. The stock currently trades well above that range at $60.87. Q4 2016 saw a ~17% increase at prices between $43 and $48. There was marginal selling in the past two quarters.

CME Group (NASDAQ:CME): CME is a 3.7% of the US long portfolio stake established in Q4 2014 at prices between $78 and $93. Q4 2015 saw a ~60% stake increase at prices between $87 and $100. The stock currently trades above those ranges at ~$125. The past six quarters have seen a combined ~10% trimming.

CBRE Group Inc. (CBG): The 3.55% stake in CBG was purchased in Q1 2016 at prices between $23 and $34.50 and increased by ~125% over the next two quarters at prices between $24.50 and $31. The stock is now at $37.48. There was minor trimming in the last three quarters.

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

ServiceMaster Global Holdings (NASDAQ:SERV): The medium-sized 3.33% SERV position was purchased in Q1 2016 at prices between $35 and $42.50 and increased by ~55% in the next three quarters at prices between $32.50 and $41.50. It currently trades at $44.79. The past two quarters saw minor trimming.

Note 1: Cantillon controls ~5% of ServiceMaster Global Holdings.

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.

Beckton, Dickinson (NYSE:BDX): BDX is a 3.14% of the portfolio stake established in Q4 2016 at prices between $163 and $180 and increased by ~30% last quarter at prices between $165 and $185. The stock is now at $198. There was a ~4% trimming this quarter.

Allergan plc (NYSE:AGN): AGN is a ~3% of the portfolio stake established in Q2 2016 at prices between $202 and $278 and increased by one-third in Q3 2016 at prices between $231 and $260. The stock is now at $241. Last quarter saw a ~10% increase, while there was a ~4% selling this quarter.

Sensata Technologies Holding N.V. (NYSE:ST): ST is a 2.97% of the US long portfolio position established in Q2 2014 at prices between $44 and $50. The first three quarters of 2015 saw the stake more than doubled at prices between $49 and $59. The stock currently trades at $45.06. The past two quarters have seen minor trimming.

Broadcom Ltd. (NASDAQ:AVGO): AVGO is a 2.41% of the portfolio stake established last quarter at prices between $174 and $227, and the stock currently trades at $252. There was minor selling this quarter.

Aon plc (NYSE:AON), TriNet Group Inc. (NYSE:TNET), Cimpress (NASDAQ:CMPR), Credit Acceptance Corporation (NASDAQ:CACC), Primerica Inc. (NYSE:PRI), and SS&C Technologies (NASDAQ:SSNC): These small stakes (less than ~1.5% of the portfolio each) saw minor reductions this quarter.

Note: Cantillon controls 6.3% of TriNet Group and 4.8% of Cimpress.

The spreadsheet below highlights changes to Mueffling's US stock holdings in Q2 2017:

William Von Mueffling

Disclosure: I am/we are long QCOM. 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.