Tracking Robert Karr's Joho Capital Portfolio - Q4 2018 Update

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Includes: BABA, CGNX, EL, FEDU, FND, FTCH, HXL
by: John Vincent
Summary

Robert Karr's 13F portfolio value increased from $414M to $446M.

Joho Capital increased Floor & Décor Holdings and added Farfetch Ltd.

The top three positions are Floor & Décor Holdings, Alibaba Group Holding, and Cognex Corporation. They add up to ~81% of the portfolio.

This article is part of a series that provides an ongoing analysis of the changes made to Robert Karr’s 13F stock portfolio on a quarterly basis. It is based on Karr’s regulatory 13F Form filed on 02/12/2019. 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 Q3 2018.

This quarter, Karr’s 13F stock portfolio value increased ~8% from $414M to $446M. The number of holdings increased from 6 to 7. The top three positions represent ~81% of the 13F assets: Floor & Décor Holdings, Alibaba Group Holding, and Cognex Corporation.

Karr was 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. The fund (1996 inception) closed to outside money and became a Family Office in 2014. 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:

Farfetch Ltd. (FTCH): FTCH is a ~9% of the portfolio stake established this quarter. Farfetch had an IPO on September 21, 2018. The stock traded between $16 and $25 during the quarter and it currently goes for $19.60.

Stake Decreases:

Hexcel Corporation (HXL): HXL is a ~9% of the 13F portfolio stake. The original position was from Q4 2012 when around 1.3M shares were purchased at prices between $24 and $28. The stake has wavered. Recent trading pattern follow. Q2 2016 saw a two-thirds reduction at prices between $39 and $46 while Q2 2017 saw an ~85% increase at prices between $49.50 and $54.50. There was another ~15% increase in Q2 2018 at prices between $63 and $73 while this quarter saw similar selling at prices between $53.75 and $67.50. The stock currently trades at $71.57.

Estee Lauder (EL): EL is a minutely small 0.31% stake established during H1 2018 at prices between $128 and $158 and reduced by ~25% this quarter at prices between $122 and $153. The stock currently trades at $155.

Stake Increases:

Floor & Décor Holdings (FND): FND is currently the largest 13F stake at ~32% of the portfolio. It was established in Q1 2018 at prices between $44 and $52 and increased by ~60% next quarter at prices between $45 and $58. There was a stake doubling last quarter at prices between $30 and $52 and that was followed with a ~90% increase this quarter at prices between $24 and $34.50. The stock currently trades at $34.84. For investors attempting to follow Karr, FND is a good option to consider for further research.

Note: Joho Capital’s ownership stake in FND is ~5.8%.

Cognex Corporation (CGNX): The top-three ~24% CGNX stake was first purchased in Q3 2015. It was increased by ~340% the following quarter at prices between $17 and $19. The position has since wavered. Recent activity follow: H1 2018 saw a ~45% stake increase at prices between $44.50 and $69. Last quarter, there was a ~25% reduction at prices between $44 and $59 while this quarter saw a similar increase at prices between $35 and $57. The stock is currently at $50.73.

Note: The prices quoted above are adjusted for the two-for-one stock split in December 2017.

Kept Steady:

Alibaba Group ADR (BABA): BABA is Karr’s second-largest position at ~25% of the portfolio. It was 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 ~50% increase at prices between $60.50 and $81.50. The next two quarters had also seen a ~21% combined increase at prices between $74 and $109. There was an ~8% trimming in Q2 2017 and that was followed with a ~20% selling the following quarter at prices between $141 and $180. There was another similar trimming in Q4 2017 at prices between $169 and $191. Q1 2018 saw a ~12% increase while last quarter saw a ~9% trimming. The stock currently trades at ~$166.

Four Seasons Education Cayman (FEDU): The ~1% FEDU position was established in Q1 2018 at prices between $6 and $10 and it is now below that range at $1.99.

The spreadsheet below highlights changes to Karr’s 13F stock holdings in Q4 2018:

Robert Karr - Joho Capital Q4 2018 13F Report Q/Q Comparison Update

Disclosure: I am/we are long BABA. 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.