Tracking Robert Karr's Joho Capital Portfolio - Q1 2019 Update

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

Robert Karr's 13F portfolio value increased from $446M to $593M.

Joho Capital added Microsoft and Spotify while reducing Floor & Décor Holdings, Cognex Corp, and Hexcel Corp.

The top three positions are Floor & Décor Holdings, Alibaba Group Holding, and Cognex Corporation. They add up to ~68% 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 05/15/2019. 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 Q4 2018.

This quarter, Karr’s 13F stock portfolio value increased ~33% from $446M to $593M. The number of holdings increased from 7 to 10. The top three positions represent ~68% 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:

Microsoft Corp. (MSFT): MSFT is a large 8.11% of the portfolio position purchased this quarter at prices between $97 and $120 and the stock currently trades above that range at $126.

Spotify Technology (SPOT): The 5.15% of the portfolio SPOT stake was established at prices between $109 and $151 and the stock is now at $125.

TJX Companies (TJX): TJX is a minutely small 0.32% of the portfolio position purchased this quarter.

Stake Decreases:

Floor & Décor Holdings (FND): FND is currently the largest 13F stake at ~29% 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 in Q3 2018 at prices between $30 and $52 and that was followed with a ~90% increase last quarter at prices between $24 and $34.50. The stock currently trades at $38.01. There was a ~25% selling this quarter at prices between $26 and $42.

Note: Joho Capital’s ownership stake in FND is ~4.4%.

Alibaba Group ADR (BABA): BABA is Karr’s second-largest position at ~22% 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 next quarter saw a ~9% trimming. The stock currently trades at ~$155. This quarter also saw a ~10% trimming.

Cognex Corporation (CGNX): The top-three ~16% 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. There was a ~25% reduction next quarter at prices between $44 and $59 while last quarter saw a similar increase at prices between $35 and $57. The stock is currently at $42.40. This quarter saw a one-third selling at prices between $36 and $55.

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

Hexcel Corporation (HXL): HXL is a ~5% 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 last quarter saw similar selling at prices between $53.75 and $67.50. The stock currently trades at $74.13. There was another ~40% reduction this quarter at prices between $56 and $73.

Stake Increases:

Farfetch Ltd. (FTCH): FTCH is a ~13% of the portfolio stake established last quarter. Farfetch had an IPO on September 21, 2018. This quarter saw a ~30% stake increase at prices between $16.40 and $29.70. The stock currently trades at $21.84.

Estee Lauder (EL): EL is a minutely small 0.46% stake established during H1 2018 at prices between $128 and $158 and reduced by ~25% last quarter at prices between $122 and $153. The stock currently trades at $165. This quarter saw a ~55% stake increase at prices between $125 and $166.

Kept Steady:

Four Seasons Education (Cayman) (FEDU): The 0.57% FEDU position was established in Q1 2018 at prices between $6 and $10 and it is now below that range at $2.18.

The spreadsheet below highlights changes to Karr’s 13F stock holdings in Q1 2019:

Robert Karr - Joho Capital Q1 2019 13F Report Q/Q Comparison

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.