Tracking Ole Andreas Halvorsen's Viking Global Portfolio - Q3 2017 Update

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Includes: ABEO, ABUS, ADSK, AFL, ALB, ALGN, AMZN, ANTM, APC, AVGO, AVXS, AXON, BABA, BAC, BMRN, BUD, CALA, CB, COG, CP, CRM, DCPH, DE, DHI, DPZ, DWDP, ECA, EDIT, EFX, EQT, EXPE, FB, FLT, FOXA, FWONK, GILD, GOOG, GOOGL, GWPH, HDB, HUM, JAZZ, JCI, JD, KITE, LEN, LIFE, LNC, LOW, LYB, MA, MHK, MMC, MOH, MSFT, MTZXF, MYOV, NDRM, NFLX, NSC, NUVA, NWL, ONCE, PE, PH, RICE, RJF, SHPG, TD, TDG, UHS, UNH, UTX, V, VZ, WBA, WFC, XOG, XRAY, ZBH
by: John Vincent

Summary

Halvorsen's 13F portfolio value increased from $14.85B to $15.44B. The number of positions increased from 53 to 59.

Viking Global more than doubled stakes in Alphabet and Netflix, while reducing Facebook and Microsoft.

The top three portfolio positions are Alphabet, Encana, and Visa.

This article is part of a series that provides an ongoing analysis of the changes made to Ole Andreas Halvorsen’s US stock portfolio on a quarterly basis. It is based on Viking Global’s regulatory 13F Form filed on 11/14/2017. Please visit our Tracking Ole Andreas Halvorsen’s Viking Global Portfolio series to get an idea of his investment philosophy and our previous update for the fund’s moves during Q2 2017.

This quarter, Halvorsen’s US long portfolio value increased ~4%, from $14.85B to $15.44B. The number of holdings increased from 53 to 59. The largest five individual stock positions are Alphabet Inc. (GOOG, GOOGL), Encana Corp. (NYSE:ECA), Visa Inc. (NYSE:V), Facebook Inc. (NASDAQ:FB), and Microsoft Corporation (NASDAQ:MSFT), and they add up to one-third of the entire portfolio.

Ole Andreas Halvorsen is one of the most successful “tiger cubs” (protégés of Julian Robertson and his legendary Tiger Fund). To know more about "tiger cubs", check out the book Julian Robertson: A Tiger in the Land of Bulls and Bears.

New Stakes

Toronto-Dominion Bank (NYSE:TD) and United Technologies (NYSE:UTX): These are medium-sized positions purchased this quarter. TD is a 3.51% portfolio stake established at prices between $50 and $56.60, and the stock currently trades just above that range at $57.65. The 3.14% UTX position was purchased at prices between $110 and $124, and it is now at $116.

Note: United Technologies is back in the portfolio after a quarter’s gap.

Autodesk Inc. (NASDAQ:ADSK): ADSK is a 1.77% portfolio stake established this quarter at prices between $99 and $117, and the stock currently trades well above that range at $126.

Parsley Energy (NYSE:PE), Anheuser-Busch InBev (NYSE:BUD), Bank of America (NYSE:BAC), Verizon Communications (NYSE:VZ), EQT Corp. (NYSE:EQT), Newell Brands (NYSE:NWL), and Align Technology (NASDAQ:ALGN): These are small (less than 1.5% of the portfolio each) new positions purchased this quarter.

Note 1: Regulatory filings since the quarter ended show Viking Global owning 17.8M shares (7.2% of the business) of Parsley Energy. This is compared to 7.9M shares in the 13F report.

Note 2: Bank of America is back in the portfolio after a quarter’s gap.

Lincoln National (NYSE:LNC), Albemarle Corp. (NYSE:ALB), Domino’s Pizza (NYSE:DPZ), Equifax Inc. (NYSE:EFX), Deciphera Pharmaceuticals (Pending:DCPH), Johnson Controls (NYSE:JCI), Abeona Therapeutics (NASDAQ:ABEO), Mohawk Industries (NYSE:MHK), Spark Therapeutics (NASDAQ:ONCE), Chubb Ltd. (NYSE:CB), and aTyr Pharma (NASDAQ:LIFE): These are very small (less than 0.5% of the portfolio each) stakes established this quarter.

Note 1: Regulatory filings since the quarter ended show Viking Global owning 2.9M shares (9.5% of the business) of aTyr Pharma. This is compared to 1.78M shares in the 13F report.

Note 2: Viking Global controls 8.1% of Deciphera Pharmaceuticals and 5.6% of Abeona Therapeutics.

Note 3: Lincoln National is back in the portfolio after a quarter’s gap.

Stake Disposals

Lyondellbasell Industries (NYSE:LYB): LYB is a 2.2% portfolio position first purchased in Q3 2016 at prices between $74.50 and $81 and increased by ~70% in the last two quarters at prices between $79 and $96. The position was disposed this quarter at prices between $83 and $100. The stock is now at $104.

Aflac Inc. (NYSE:AFL), Alibaba Group Holdings (NYSE:BABA), and Transdigm Group (NYSE:TDG): These are small (~1% of the portfolio each) positions purchased last quarter but disposed this quarter. AFL was a 1.12% stake purchased at prices between $72 and $79 and disposed at prices between $77 and $84. It now goes for $84.68. The 1% BABA position was established at prices between $107 and $144 and sold at prices between $141 and $180. It is now at $188. TDG was a 0.97% position purchased at prices between $219 and $273 and eliminated at prices between $250 and $288. It is currently at $267.

BioMarin Pharmaceuticals (NASDAQ:BMRN), DowDuPont (NYSE:DWDP) (previously Dow Chemical), Expedia Inc. (NASDAQ:EXPE), Extraction Oil & Gas (NASDAQ:XOG), Humana Inc. (NYSE:HUM), Kite Pharmaceuticals (NASDAQ:KITE), Lowe's Companies (NYSE:LOW), Marsh & McLennan (NYSE:MMC), Neuroderm Ltd. (NASDAQ:NDRM), Norfolk Southern (NYSE:NSC), and Zimmer Biomet (NYSE:ZBH): These are very small (less than ~0.5% of the portfolio each) stakes disposed this quarter.

Note: Neuroderm was acquired by Mitsubishi Tanabe Pharma (OTCPK:MTZXF), and that transaction closed in July. Gilead Sciences (NASDAQ:GILD) acquired Kite Pharmaceuticals for $180 per share, and that transaction closed last month.

Stake Increases

Alphabet Inc.: GOOG is now the largest 13F position at 9.30% of the portfolio. It was established in Q3 2014, and H1 2015 saw a huge ~425% increase at prices between $493 and $575. The position has wavered since. In recent activity, there was a ~75% reduction last quarter at prices between $823 and $984, and that was followed with a ~115% increase this quarter at prices between $899 and $980. The stock is now at $1018. For investors attempting to follow Viking Global, GOOG is a good option to consider for further research.

Encana Corp.: ECA is a large (top-three) 7.12% portfolio stake. The vast majority of the position was purchased in Q1 2016 at prices between $3 and $6. Q1 2017 saw an ~11% trimming at prices between $10 and $14, and that was followed with another ~8% trimming last quarter at prices between $8 and $12. This quarter saw the pattern reverse: a ~30% stake increase at prices between $8.40 and $11.80. The stock is now at $11.63.

Note: Viking Global owns ~9.6% of Encana.

Visa Inc.: The large (top-three) ~7% V stake was purchased in H2 2016 at prices between $74 and $83. Q1 2017 had seen a ~12% trimming at prices between $80 and $90. There was an ~85% increase last quarter at prices between $89 and $97, and that was followed with another ~30% increase this quarter at prices between $93 and $106. The stock is now at $110.

Netflix Inc. (NASDAQ:NFLX): NFLX is a 4.60% of the 13F portfolio stake. It was established in H2 2015 at prices between $93 and $131. Q2 and Q3 2016 saw a two-thirds reduction at prices between $85 and $112, while the following quarter saw a ~150% increase at prices between $98.50 and $128. That trading pattern continued over the last two quarters: a ~72% reduction last quarter at prices between $140 and $166, followed with a ~135% increase this quarter at prices between $146 and $189. The stock is now at $194.

Canadian Pacific Railway (NYSE:CP): The CP stake saw a huge ~280% increase in Q3 2016 at prices between $129 and $156. Q4 2016 saw the position reduced by one-third at prices between $140 and $156. Q1 2017 saw another about-turn: a ~37% increase at prices between $141 and $155. There was a ~42% selling last quarter at prices between $147 and $161, and that was followed with a ~90% increase this quarter at prices between $151 and $169. The stock is now at $168, and the stake is at 3.73% of the portfolio.

Note: CP has been in the portfolio since Q4 2013. The position size peaked in Q1 2015 at ~6.2M shares. The build-up was at prices between $123 and $215. The five quarters through Q2 2016 saw a combined ~85% stake reduction at prices between $104 and $162.

Lennar Corporation (NYSE:LEN): LEN is a 3.25% position purchased in Q1 2017 at prices between $43 and $53 and increased by ~80% this quarter at prices between $50 and $55. The stock is now above those ranges at $59.12.

MasterCard Inc. (NYSE:MA): MA was a minutely small stake as of last quarter. This quarter saw a ~9x stake increase to a ~2% portfolio stake at prices between $121 and $143. The stock currently trades at ~$150.

Raymond James (NYSE:RJF): RJF is a 1.75% position purchased last quarter at prices between $72 and $81 and increased by ~235% this quarter at prices between $75 and $85. The stock is now at $84.72.

Dentsply Sirona (NASDAQ:XRAY) and Jazz Pharmaceuticals (NASDAQ:JAZZ): These two small positions saw large increases in the past two quarters. The 1.38% XRAY stake saw a two-thirds increase last quarter and a ~150% increase this quarter at prices between $53 and $66. The stock currently trades at $66.43. JAZZ is a ~1% position that saw a 400% increase last quarter at prices between $141 and $162. This quarter also saw a ~20% increase. The stock is now at $136.

Anthem Inc. (NYSE:ANTM), Calithera Biosciences (NASDAQ:CALA), Fleetcor Tech. (NYSE:FLT), HDFC Bank (NYSE:HDB), Molina Healthcare (NYSE:MOH), and NuVasive Inc. (NASDAQ:NUVA): These are very small (less than ~1% of the portfolio each) stakes that saw increases this quarter.

Note: Viking Global owns 7.4% of Calithera Biosciences.

Stake Decreases

Facebook Inc.: FB is a large (top-five) ~5% of the 13F portfolio stake. It was purchased in Q1 2016 at prices between $94 and $116. There was a ~60% reduction last quarter at prices between $139 and $155, and that was followed with another ~30% selling this quarter at prices between $148 and $174. The stock is now at ~$179. Viking Global is harvesting gains.

Microsoft Corporation: MSFT is a large (top-five) ~5% position. It was established in Q2 2016 at prices between $48.50 and $56.50 and increased by ~140% in the following quarter at prices between $51 and $58.50. There was another ~60% increase in Q4 2016 at prices between $57 and $64, and that was followed with a one-third increase the following quarter at prices between $62 and $66. Last quarter saw the pattern reverse: a one-third selling at prices between $65 and $72.50, and that was followed with another ~50% reduction this quarter at prices between $68 and $75.50. The stock is now at $82.53.

Broadcom Ltd. (NASDAQ:AVGO) (previously Avago): AVGO is a 3.39% of the portfolio stake established in Q2 and Q3 2015 at prices between $109 and $148. Q3 2016 saw an about-turn: a ~55% reduction at prices between $150 and $177. Q1 2017 saw a ~20% selling at prices between $174 and $227, and that was followed with another one-third reduction this quarter at prices between $230 and $257. The stock currently trades at $275. Viking Global is realizing gains.

United Health (NYSE:UNH): UNH is a 2.67% portfolio stake established in Q4 2016 at prices between $134 and $164 and increased by ~62% the following quarter at prices between $158 and $172. The past two quarters have seen a ~40% selling at prices between $164 and $200. The stock is now at $210.

Deere & Co. (NYSE:DE): DE is ~2.5% portfolio stake. A large position was established in Q4 2016 at prices between $85 and $104 and increased by ~55% the following quarter at prices between $103 and $111. The past two quarters have seen a combined ~80% reduction at prices between $108 and $132. It now goes for $137.

Amazon.com Inc. (NASDAQ:AMZN): AMZN is a ~2.5% of the US long portfolio position. It was established in Q2 2015 at prices between $370 and $446 and increased by roughly one-third the following quarter at prices between $429 and $548. The position has wavered since. In recent activity, the past four quarters saw a combined ~85% selling at prices between $739 and $1026. The stock currently trades at $1126. Halvorsen is harvesting gains.

Salesforce.com (NYSE:CRM): CRM ~2% portfolio position established in Q1 2017 at prices between $70.50 and $84 and increased by ~80% last quarter at prices between $82 and $91. There was a ~25% selling this quarter at prices between $86 and $98. The stock currently trades at $107.

Twenty-First Century Fox (NASDAQ:FOXA): The 1.75% FOXA position was purchased in Q4 2016 at prices between $24 and $29 and increased by roughly two-thirds the following quarter at prices between $28.50 and $32.50. There was a ~55% reduction this quarter at prices between $25.50 and $30. The stock currently trades at $30.66.

Rice Energy (NYSE:RICE): The 1.36% RICE stake was first purchased in Q2 2016 at prices between $13.50 and $22. The position has wavered since. Q1 2017 saw a ~55% increase at prices between $18.50 and $24, while last quarter saw a one-third reduction at prices between $19 and $27. There was another ~40% selling this quarter at prices between $25 and $29.

Note: EQT Corporation acquired Rice Energy ($5.30 cash and 0.37 EQT shares for each share held), and that transaction closed last week.

JD.com (NASDAQ:JD): JD is now a very small ~0.90% of the US long portfolio position. The original large (~38M shares) position was established in 2016 at prices between $20 and $32.50. The past three quarters saw the position reduced by ~90% at prices between $25 and $48. The stock is currently at $39.20. Viking Global harvested huge gains.

Cabot Oil & Gas (NYSE:COG): The original position (~36M shares) in COG was purchased in Q4 2015 and Q1 2016 at prices between $15.50 and $23.50. The past four quarters saw a combined ~90% selling at prices between $20 and $27. The stock is now at $29.01.

Wells Fargo (NYSE:WFC): WFC was a large 4.6% of the portfolio stake established last quarter at prices between $51 and $56 and sold down by ~85% this quarter to a very small 0.70% portfolio stake at prices between $49.50 and $56. The stock is now at $54.05.

Anadarko Petroleum (NYSE:APC), AveXis Inc. (NASDAQ:AVXS), D. R. Horton Inc. (NYSE:DHI), GW Pharmaceuticals (NASDAQ:GWPH), Parken Hannifin (NYSE:PH), Shire plc (NASDAQ:SHPG), Universal Health Services (NYSE:UHS), and Walgreen Boots Alliance (NASDAQ:WBA): These very small (less than ~1% of the portfolio each) positions saw reductions this quarter.

Kept Steady

Liberty Media Formula One (NASDAQ:FWONK): FWONK is a ~3% position purchased last quarter at prices between $27.50 and $35, and the stock is now at $38.58.

Editas Medicine (NASDAQ:EDIT): EDIT is a minutely small 0.27% portfolio stake kept steady this quarter. Viking Global owns 4.7% of Editas.

Note: Regulatory filings show Viking Global owning 37.2M shares (~62% of the business) of Myovant Sciences (NYSE:MYOV), 16M shares (~29% of the business) of Arbutus Biopharma Corp. (NASDAQ:ABUS) and 75M shares (~70% of the business) of Axovant Sciences Ltd (NASDAQ:AXON). The three positions are indirectly held through Roivant Sciences, which they acquired in 2015.

The spreadsheet below highlights changes to Halvorsen’s US stock holdings in Q3 2017:

Ole Andreas Halvorsen - Viking Global - Q3 2017 13F Report

Disclosure: I am/we are long BAC, SHPG.

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.

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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