Tracking Al Gore's Generation Investment Management Portfolio - Q1 2019 Update

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Includes: ADI, ADP, ALLE, AMZN, APTV, AYI, BAP, BDX, CERN, CL, CMG, COO, CRM, CVET, DE, DOCU, EFX, GOOG, HSIC, IR, JLL, MCHP, MELI, MSFT, NTNX, NVDA, SCHW, SPY, SRCL, ST, TEL, TMO, TSM, TXN, WAT, XRAY
by: John Vincent
Summary

Generation Investment Management’s 13F portfolio value increased ~15% from $11.92B to $13.68B this quarter.

The fund increased Alphabet and Charles Schwab while decreasing Cooper Companies and Cerner Corporation during the quarter.

The top three positions are Analog Devices, Dentsply Sirona, and Alphabet Inc., and they add up to ~22% of the 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 05/15/2019. Please visit our Tracking Al Gore's Generation Investment Management Portfolio series to get an idea of their investment philosophy and our previous update for the fund's moves in Q4 2018.

This quarter, Al Gore's 13F portfolio value increased ~15% from $11.92B to $13.68B. The number of positions increased from 32 to 33. The top five stakes are Analog Devices, Dentsply Sirona, Alphabet, Charles Schwab, and Deere & Co. They account for ~34% of the total 13F 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

Equifax Inc. (EFX), Stericycle Inc. (SRCL), and Covetrus Inc. (CVET): These three are the new positions this quarter. The 2.22% EFX stake was purchased at prices between $91 and $115 and the stock currently trades well above that range at $130. SRCL is a ~1% of the portfolio position established at prices between $37 and $52 and it now goes for $45.37. The 0.89% CVET stake came about as a result of its spinoff from Henry Schein in January. Terms called for Henry Schein shareholders to receive CVET shares in the ratio 1:0.4. Generation IM had a ~11M share position in Henry Schein for which they received ~4.4M shares. They sold ~15% of the position since the spinoff at prices between $31.50 and $46. The stock is now at $25.80.

Stake Disposals

Chipotle Mexican Grill (CMG) and DocuSign Inc. (DOCU): These two very small (less than ~0.70% of the portfolio each) stakes were disposed this quarter.

Stake Increases

Alphabet Inc. (GOOG) (NASDAQ:GOOGL): The 6.78% GOOG position saw a stake doubling last quarter at prices between $975 and $1203 and that was followed with a ~75% increase this quarter at prices between $1016 and $1232. Q3 2018 had also seen a two-thirds increase at prices between $1102 and $1268. The stock currently trades at $1066. For investors attempting to follow, GOOG is a good option to consider for further research.

Charles Schwab (SCHW): SCHW is a large (top five) 6.54% portfolio position. The stake is from Q4 2016 at prices between $31 and $40.50. 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 stock is now at $43. Last quarter saw a ~22% stake increase at prices between $38 and $52 and that was followed with a ~50% stake increase this quarter at prices between $40.50 and $48. For investors attempting to follow, SCHW is a good option to consider for further research.

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.

Deere & Co. (DE): DE is a large (top five) 5.59% portfolio stake. The position is from 2015 at prices between $75 and $97. There was a two-thirds reduction over the first three quarters of 2017 at prices between $103 and $132. Q1 2018 saw another ~41% selling at prices between $148 and $172. The position was rebuilt over the last three quarters at prices between $131 and $162. The stock is now at ~$149. This quarter saw a marginal increase.

Jones Lang LaSalle Inc. (JLL): JLL is a 4.82% long-term position first purchased in 2008. By 2013, that original position was doubled to a fairly large ~5% stake thru consistent buying every year. The next two years saw selling: ~75% overall reduction at prices between $103 and $178. The pattern reversed in 2016: ~500% increase at prices between $91 and $141. That was followed with a ~30% increase in Q2 2017 at prices between $103 and $125. The stock currently trades at ~$132. Last six quarters have seen only minor adjustments.

Note: Generation IM has a ~9% ownership stake in Jones Lang LaSalle.

Texas Instruments (TXN): The vast majority of the 4.48% TXN stake was purchased last quarter at prices between $88 and $109. The stock currently trades at $111. This quarter saw a marginal increase.

Sensata Technologies (ST): The bulk of the 3.86% ST position was purchased in Q2 2016 at prices between $33.50 and $39 and doubled over the next two years at higher prices. The stock currently goes for $45.79. Last quarter saw a ~28% further increase at prices between $41 and $49.50 and that was followed with a marginal increase this quarter.

Note: Generation IM has a ~8% ownership stake in Sensata Technologies NV.

Acuity Brands (AYI): AYI is a ~3% 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 currently well below those ranges at ~$131. There was a ~12% increase in Q4 2017 at prices between $156 and $178. For investors attempting to follow Generation IM, AYI is a good option to consider for further research. There was a ~9% trimming last quarter and that was followed with a marginal increase this quarter.

Note: Generation IM controls ~8% of AYI.

Nvidia Corp (NVDA) and TE Connectivity (TEL): These two new stakes established last quarter were increased this quarter. TEL is a medium-sized 2.71% position established at prices between $71 and $87 and the stock currently trades at $90.91. This quarter saw a marginal increase. The 1.76% NVDA stake was purchased at prices between $127 and $289 and it is now at ~$146. There was a minor ~3% increase this quarter.

Aptiv plc (APTV) previously Delphi Automotive: APTV is a 2.45% 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 $73.40. Q1 2018 saw a ~12% stake increase while in Q3 2018 there was a ~25% selling at prices between $84 and $99. This quarter saw a ~40% stake increase at prices between $60.50 and $82.50.

Note: The prices quoted above are adjusted for the Delphi Technologies spinoff in November 2017.

Amazon.com (AMZN), Becton Dickinson (BDX), Microchip Technology (MCHP), and SPDR Trust (SPY): These small (less than ~1.5% of the portfolio each) positions were increased this quarter.

Stake Decreases

Analog Devices (ADI): ADI is now the largest position at 7.78% of the portfolio. It was established in Q2 2018 at prices between $87 and $102 and doubled next quarter at prices between $91 and $100. Last quarter saw another ~25% stake increase at prices between $78 and $94. The stock currently trades above those ranges at ~$101. This quarter saw a ~5% trimming.

Dentsply Sirona (XRAY): XRAY is a large (top three) 7.58% portfolio stake built in 2014 at prices between $44 and $56. The position has wavered. Recent activity follow: Q1 2018 saw a ~18% stake increase and that was followed with a ~65% increase next quarter at prices between $42 and $51. Q3 2018 saw another ~25% increase at prices between $37.50 and $48.50. The stock currently trades at $55.94. Last two quarters have seen only minor adjustments.

Note: Generation IM has a ~10% ownership stake in Dentsply Sirona.

Thermo Fisher Scientific (TMO): TMO is a large ~5% 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 ~$282. Last six quarters had seen only minor activity. This quarter saw a ~16% selling at prices between $212 and $276.

Cooper Companies (COO): The bulk of the fairly large ~5% position in COO was purchased in Q4 2016 at prices between $159 and $183. The original stake was doubled in Q1 2018 at prices between $218 and $251 and that was followed with a ~37% increase next quarter at prices between $218 and $237. The stock currently trades well above those ranges at $322. The stake was reduced by ~30% this quarter at prices between $246 and $297.

Note: Generation IM has a ~4.5% ownership stake in Cooper Companies.

Henry Schein (HSIC): HSIC became the largest position in Q4 2017 as it saw a ~550% increase at prices between $50.50 and $68.50. There was another ~22% increase next quarter at prices between $47 and $63.50. The stock is now at $69.76 and the stake is at 4.84% of the portfolio. Last three quarters have seen a combined ~22% reduction at prices between $58 and $71. Generation IM has a ~8% ownership stake in Henry Schein.

Note: The prices quoted above are adjusted for the spinoff of Covetrus Inc. in January. Also, HSIC split 2-for-1 last September.

Automatic Data Processing (ADP): ADP is a 3.53% portfolio stake purchased in Q4 2017 at prices between $109 and $119 and increased by ~160% next quarter at prices between $108 and $124. The stock currently trades well above those ranges at ~$167. The next two quarters had also seen a ~16% increase at prices between $114 and $151 while last quarter saw similar selling at prices between $122 and $152. There was another ~15% selling this quarter at prices between $126 and $160.

Microsoft Corporation (MSFT): MSFT is a 3.31% 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 in Q4 2017 at prices between $74 and $87. The stock is now at $131. Last quarter saw a one-third reduction at prices between $94 and $116 and that was followed with a ~8% trimming this quarter.

MercadoLibre (MELI): The 3.18% MELI stake was established in Q2 2018 at prices between $285 and $356 and it now goes for ~$605. Last two quarters have seen a ~27% selling at prices between $258 and $508.

Note: MELI had a previous round-trip: it was a very small 0.51% stake established in Q4 2017 at prices between $222 and $329 and disposed next quarter at prices between $315 and $414.

Ingersoll-Rand plc (IR): IR is a 2.60% 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 ~$125. There was a ~17% increase in Q2 2018 at prices between $80 and $93 while last quarter saw similar selling at prices between $86 and $106. There was a minor ~4% trimming this quarter.

Allegion Pub (ALLE): The ALLE stake saw a ~350% increase in Q2 2018 at prices between $75 and $87 and that was followed with a ~20% increase last quarter at prices between $77 and $91. This quarter saw an about turn: ~22% selling at prices between $81 and $94. The stock is currently at ~$104 and the stake is at 2.36%.

Credicorp Ltd. (BAP): BAP is a 2.24% 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. The four quarters thru Q3 2018 had seen a combined ~44% increase at prices between $192 and $236. The stock is now at ~$229. This quarter saw a ~18% selling at prices between $222 and $251.

Cerner Corporation (CERN): CERN is a 1.38% 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 in Q4 2017 at prices between $64.50 and $73.50 and that was followed with a one-third reduction next quarter at prices between $56.50 and $73. The stock currently trades at $72.74. Last two quarters have also seen a ~60% selling at prices between $49 and $65.

Colgate-Palmolive (CL), Salesforce.com (CRM), Taiwan Semi (TSM), and Waters Corp. (WAT): These small (less than ~1.5% of the portfolio each) positions were reduced this quarter.

Kept Steady

None.

Note: Regulatory filings since the quarter ended show them owning 8.6M shares (5.8% of business) of Nutanix Corporation (NTNX).

Below is a spreadsheet that highlights the changes to Al Gore's Generation Investment Management 13F stock portfolio as of Q1 2019:

Al Gore - Generation IM - Q1 2019 13F Report Q/Q Comparison

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.