Tracking Al Gore's Generation Investment Management Portfolio - Q1 2018 Update

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Includes: ADP, AMZN, ANSS, APTV, AYI, BAP, BDX, CERN, CMG, COO, CRM, DE, FB, GOOG, HSIC, INFY, IR, JD, JLL, MA, MSFT, NKE, SCHW, ST, TMO, V, WAT, XRAY
by: John Vincent
Summary

Generation Investment Management’s 13F portfolio value decreased marginally from $10.32B to $10.26B this quarter.

It increased Cooper Companies and Automatic Data Processing while reducing Cerner and Deere.

The top three positions are Henry Schein, Jones Lang LaSalle, and Thermo Fisher Scientific, and they add up to ~22% of the entire portfolio.

This article is part of a series that provides an ongoing analysis of the changes made to Generation Investment Management's 13F portfolio on a quarterly basis. It is based on Al Gore's regulatory 13F Form filed on 05/15/2018. Please visit our Tracking Al Gore's Generation Investment Management Portfolio series to get an idea of its investment philosophy and our previous update for the fund's moves in Q4 2017.

This quarter, Al Gore's 13F portfolio value decreased marginally from $10.32B to $10.26B. The number of positions decreased from 34 to 31. The largest five stakes are Henry Schein (NASDAQ:HSIC), Jones Lang LaSalle (NYSE:JLL), Thermo Fisher Scientific (NYSE:TMO), JD.com (NASDAQ:JD), and Cooper Companies (NYSE:COO) and they together account for about one-third of the total portfolio value.

Generation Investment Management's whitepapers and Al Gore's books are good precursors for anyone interested in investing based on sustainability analysis.

New Stakes:

MuleSoft (NYSE:MULE): MULE is a very small 1.55% of the portfolio established this quarter. In March, Salesforce.com (NYSE:CRM) agreed to buy MuleSoft in a cash-and-stock deal ($36 per share cash and 0.0711 shares of Salesforce.com for each share held). The transaction closed earlier this month.

Stake Disposals:

Delphi Technologies (NYSE:DLPH) and MercadoLibre Inc. (NASDAQ:MELI): These two positions established last quarter were disposed this quarter. The very small 0.61% DLPH position came about as a result of the spinoff from Delphi Automotive (now Aptiv plc (NYSE:APTV)) last November. Terms called for shareholders to receive one share of Delphi Technologies for every three shares of Delphi Automotive held. Generation IM held ~3.6M shares of Delphi Automotive for which it received ~1.2M shares of Delphi Technologies. The position was eliminated this quarter at prices between $46.50 and $59.50 and the stock is now at $51.18. MELI was a very small 0.51% stake established at prices between $222 and $329 and disposed at prices between $315 and $414. The stock is now at ~$315.

Ansys, Inc. (NASDAQ:ANSS) and Facebook, Inc. (NASDAQ:FB): These two very small (less than ~1.5% of the portfolio each) positions were reduced last quarter and eliminated this quarter.

Stake Increases:

Henry Schein: HSIC became the largest position last quarter as it saw a ~550% increase at prices between $66.50 and $84.50. There was another ~22% increase this quarter at prices between $63 and $79.50. Q3 2017 had also seen a ~30% increase at prices between $79 and $93. The stock is now at $70.43 and the stake is at ~9% of the portfolio. For investors attempting to follow Generation IM, HSIC is a good option to consider for further research.

Note: HSIC stock split 2-for-1 last September. Generation IM has a ~8.5% ownership stake in Henry Schein.

Jones Lang LaSalle Inc.: JLL is a top-three 7.35% long-term position first purchased in 2008. By 2013, that original position was doubled to a fairly large ~5% stake through consistent buying every year. The next two years saw selling: ~75% overall reduction at prices between $103 and $178. The pattern reversed in H1 2016: ~200% increase at prices between $96 and $141. H2 2016 also saw a ~50% stake increase at prices between $91 and $120. That was followed with a ~30% increase in Q2 2017 at prices between $103 and $125. The stock currently trades at $170. Last two quarters have seen only minor adjustments.

Note: Generation IM has a 9.4% ownership stake in Jones Lang LaSalle.

Thermo Fisher Scientific: TMO is a large (top three) 5.83% portfolio position first purchased in Q3 2016 and more than doubled the following quarter at prices between $141 and $159. Q2 2017 saw another ~20% increase at prices between $152 and $176. The stock currently goes for ~$214. Last three quarters have seen only minor activity.

JD.com: The original JD purchase in 2014 was in the low-20s. H1 2017 had seen a ~40% selling at prices between $25.50 and $43. There was an about turn in Q3 2017: ~73% increase at prices between $38 and $48 and that was followed with a ~52% increase last quarter at prices between $36.50 and $43. The stock is at $36.87 and it is now a top-five stake at 5.28% of the portfolio. There was a marginal increase this quarter. For investors attempting to follow Generation IM, JD is a good option to consider for further research.

Cooper Companies: The bulk of the large (top five) 5.25% position in COO was purchased in Q4 2016 at prices between $159 and $183. The original stake was doubled this quarter at prices between $218 and $251. The stock is now at ~$228.

Note: Regulatory Filings since the quarter ended show the fund owning ~2.5M shares (5.2% of the business) of Cooper Companies. This is compared to ~2.4M shares in the 13F Report.

Dentsply Sirona (NASDAQ:XRAY): XRAY is a large 5.22% portfolio stake built in 2014 at prices between $44 and $56. 2015 saw a ~10% stake increase while last year saw a similar reduction. There was a ~20% selling in Q1 2017 at prices between $55.50 and $64.50. Q3 2017 saw an about turn: ~43% increase at prices between $52.50 and $65 and that was followed with a ~115% increase last quarter at prices between $55.50 and $68.50. The stock is now near the low end of its purchase price ranges at $46.57. This quarter also saw a ~18% stake increase. For investors attempting to follow Generation IM, XRAY is a good option to consider for further research.

Note: Regulatory Filings since the quarter ended show the fund owning 11.8M shares (5.2% of the business) of Dentsply Sirona. This is compared to 10.6M shares in the 13F report.

Microsoft Corporation (NASDAQ:MSFT): MSFT is a fairly large 5.20% portfolio position. The stake was first purchased in 2014 and more than doubled the following year at prices between $36 and $56. The position saw a ~50% selling in Q2 2017 at prices between $65 and $72.50 and that was followed with a ~25% reduction last quarter at prices between $74 and $87. The stock is now at $98.36. There was a marginal increase this quarter.

Acuity Brands (NYSE:AYI): AYI is a fairly large 5.18% of the portfolio stake purchased in Q1 2017 at prices between $199 and $240 and increased by ~85% the following quarter at prices between $163 and $204. The stock is now well below those ranges at ~$120. There was a ~12% increase last quarter at prices between $156 and $178. This quarter also saw a marginal increase. For investors attempting to follow Generation IM, AYI is a good option to consider for further research.

Note: Generation IM controls ~9% of AYI.

Charles Schwab (NYSE:SCHW): SCHW is a 5.18% portfolio position. Q2 2017 saw a two-thirds increase at prices between $37.50 and $43 and that was followed with a ~40% increase in the following quarter at around the same price range. The stake is from Q4 2016 at prices between $31 and $40.50. The stock is now at $57.30. There was a very minor stake increase this quarter.

Note: SCHW has seen a previous round-trip. A large ~7.2M share stake purchased in 2013 in the high-teens price-range was disposed the following year at much higher prices.

Sensata Technologies (NYSE:ST): The bulk of the 4.35% ST position was purchased in Q2 2016 at prices between $33.50 and $39. Q2 2017 saw a two-thirds increase at prices between $39 and $43.50 and that was followed with ~12% increases each in the next two quarters. The stock currently goes for $52.08. This quarter saw a marginal increase.

Note: Generation IM has a ~5% ownership stake in Sensata Technologies NV.

Automatic Data Processing (NASDAQ:ADP): ADP is a ~4% portfolio stake purchased last quarter at prices between $109 and $119 and increased by ~160% this quarter at prices between $108 and $124. The stock currently trades above those ranges at ~$131.

Infosys Ltd. (NASDAQ:INFY): The 3.34% INFY position saw a ~145% increase last quarter at prices between $14.50 and $16.25. The stock is now at $18.32. This quarter saw a ~7% stake increase.

Aptiv plc, previously Delphi Automotive: APTV is a 3.31% DPH position. It was first purchased in Q4 2016 at prices between $46 and $55. The following quarter saw a ~28% selling at prices between $50 and $65 while Q2 2017 saw a ~60% increase at prices between $57 and $72. The stock currently trades at $97.65. Last two quarters had seen marginal trimming while this quarter saw a ~12% stake increase.

Note: The prices quoted above are adjusted for the Delphi Technologies spinoff last November.

Credicorp Ltd. (NYSE:BAP): BAP is a ~3% of the portfolio position established in Q2 2017 at prices between $152 and $183 and increased by ~22% in the following quarter at prices between $179 and $213. It is now at ~$224. There was a ~10% increase last quarter and that was followed with a ~16% increase this quarter.

Ingersoll-Rand plc (NYSE:IR): IR is a ~3% portfolio position first purchased in 2015 at prices between $51 and $71. The stake saw a ~30% reduction in 2016 at prices between $50.50 and $78.50 and that was followed with another ~50% selling during Q1 to Q3 2017 at prices between $75 and $93. The stock is now at $89.81. Last quarter saw a marginal reduction while there was a similar increase this quarter.

Chipotle Mexican Grill (NYSE:CMG): CMG is a 2.47% stake established in Q4 2016 at prices between $360 and $438 and increased by ~53% in Q3 2017 at prices between $297 and $417. The stock currently trades at ~$429. There was a ~17% reduction last quarter at prices between $269 and $329. This quarter saw a marginal increase.

Allegion (NYSE:ALLE), Salesforce.com, SPDR Trust (NYSEARCA:SPY) and Texas Instruments (NYSE:TXN): These small (less than ~2% of the portfolio each) positions saw increases this quarter.

Stake Decreases:

Cerner Corporation (NASDAQ:CERN): CERN is a 4.24% of the portfolio position. The stake was established in 2015 and doubled in Q1 2016 at prices between $52 and $60. Q4 2016 also saw another ~50% stake increase at prices between $47 and $62. There was a ~37% selling last quarter at prices between $64.50 and $73.50 and that was followed with a one-third reduction this quarter at prices between $56.50 and $73. The stock currently trades at $59.94.

Becton, Dickinson (NYSE:BDX): BDX is a ~3% long-term position that has been in the portfolio since their first 13F filing in 2006. The position saw a two-thirds increase in Q2 2017 at prices between $177 and $195. Last quarter saw a reversal: ~28% selling at prices between $194 and $228. The stock is now at ~$224. There was a ~4% trimming this quarter.

Deere & Co. (NYSE:DE): DE is a 2.75% portfolio stake. The position is from 2015 at prices between $75 and $97. There was a ~40% reduction in Q1 2017 at prices between $103 and $111 and that was followed with a ~20% selling over the next two quarters at prices between $107 and $132. The stock is now at $159. This quarter saw a ~41% selling at prices between $148 and $172.

Visa Inc. (NYSE:V): Visa is a ~2% portfolio stake purchased in Q3 2017 at prices between $93 and $106 and the stock currently trades at ~$131. There was a ~17% selling last quarter at prices between $105 and $114 and that was followed with a similar reduction this quarter at prices between $114 and $126.

Mastercard Inc. (NYSE:MA): MA is a 1.42% stake built in H1 2016 in the low-90s price range. Q4 2016 also saw a one-third increase at prices between $100 and $107. The stock is now well above those ranges at $191. There was a ~50% selling last quarter at prices between $143 and $154 and that was followed with another ~55% reduction this quarter at prices between $152 and $183. Generation IM is realizing huge gains.

Alphabet Inc. (NASDAQ:GOOG), Amazon.com (NASDAQ:AMZN), Nike Inc. (NYSE:NKE), Taiwan Semi (NYSE:TSM), and Waters Corp. (NYSE:WAT): These are very small (less than ~1.5% of the portfolio each) positions that saw reductions this quarter.

Kept Steady:

None.

Below is a spreadsheet that highlights the changes to Al Gore's Generation Investment Management US long stock portfolio as of Q1 2018:

Al Gore - Generation IM - Q1 2018 13F Report

Disclosure: I am/we are long JD. 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.