Tracking Al Gore's Generation Investment Management Portfolio - Q2 2019 Update

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Includes: ADI, ADP, ALLE, AMAT, AMZN, APTV, AYI, BAP, BDX, CERN, CL, COO, CRM, CTSH, CVET, DE, EFX, GOOG, GOOGL, 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 ~6%, from $13.68B to $14.51B this quarter.

They added Cognizant and increased Alphabet, while reducing Analog Devices.

The top three positions are Alphabet, Dentsply Sirona, and Charles Schwab, and they add up to ~19% 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 08/14/2019. 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 Q1 2019.

This quarter, Al Gore’s 13F portfolio value increased ~6%, from $13.68B to $14.51B. The number of positions increased from 33 to 34. The top five stakes are Alphabet (GOOG), Dentsply Sirona (XRAY), Charles Schwab (SCHW), Deere & Co. (DE), and Henry Schein (HSIC). They account for ~30% 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

Cognizant Technology (CTSH), Nutanix (NTNX), and Applied Materials (AMAT): These are the new positions this quarter. The fairly large 4.57% of the portfolio CTSH stake was purchased at prices between $57 and $75, and the stock currently trades near the low end of that range at $61.48. NTNX is a medium-sized 2.58% position established at prices between $24.50 and $43.50, and it is now below that at $22.88. The small 1.41% AMAT stake was purchased at prices between $38.50 and $45.50, and it currently goes for $47.61.

Stake Disposals

Covetrus Inc. (CVET): The 0.89% CVET stake came about as a result of its spinoff from Henry Schein in January. The terms called for Henry Schein shareholders to receive CVET shares in the ratio 1:0.4. Generation IM had an ~11M share position in Henry Schein, for which they received ~4.4M shares. They sold ~15% of the position last quarter at prices between $31.50 and $46. The remaining stake was disposed this quarter at prices between $23 and $33. The stock is now at $13.46.

Colgate-Palmolive (CL): The very small 0.67% CL position was disposed during the quarter.

Stake Increases

Alphabet Inc.: The 6.84% GOOG position saw a stake doubling in Q4 2018 at prices between $975 and $1203, and that was followed with a ~75% increase last 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 $1168. For investors attempting to follow, GOOG is a good option to consider for further research. This quarter also saw a ~15% stake increase.

Texas Instruments (TXN): The vast majority of the 4.58% TXN stake was purchased in Q4 2018 at prices between $88 and $109. The stock currently trades well above that range at $122. The last two quarters saw marginal increases.

Aptiv plc (APTV) (previously Delphi Automotive): APTV is a 3.15% position. It was first purchased in Q4 2016 at prices between $46 and $55. The position has wavered. In recent activity, last quarter saw a ~40% stake increase at prices between $60.50 and $82.50, and that was followed with another one-third increase this quarter at prices between $64 and $91. The stock currently trades at $81.56.

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

Equifax Inc. (EFX): The ~3% EFX stake was purchased last quarter at prices between $91 and $115, and the stock currently trades well above that range at $146. This quarter saw a ~27% stake increase at prices between $116 and $136.

Microchip Technology (MCHP): The minutely small 0.25% of the portfolio stake in MCHP saw a ~9% stake increase this quarter.

Stake Decreases

Dentsply Sirona: XRAY is a large (top-three) 6.79% portfolio stake built in 2014 at prices between $44 and $56. The position has wavered. In recent activity, Q1 2018 saw an ~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 $51.73. This quarter saw a ~20% selling at prices between $49 and $59.

Note: Generation IM has an ~8% ownership stake in Dentsply Sirona.

Charles Schwab: SCHW is a large (top-three) 5.79% 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. Q4 2018 saw a ~22% stake increase at prices between $38 and $52, and that was followed with a ~50% stake increase last quarter at prices between $40.50 and $48. The stock is now at $37.96. For investors attempting to follow, SCHW is a good option to consider for further research. There was marginal trimming 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.

Deere & Co.: DE is a large (top-five) 5.44% 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 next three quarters at prices between $131 and $162. The stock is now at ~$151. The last two quarters have seen only minor adjustments.

Henry Schein: 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 last four quarters have seen selling: a combined ~25% reduction at prices between $57 and $71. The stock is now at $61.56 and the stake at ~5% of the portfolio. Generation IM has a ~7.5% 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.

Thermo Fisher Scientific (TMO): TMO is a fairly large 4.59% 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 next six quarters saw only minor activity. Last quarter saw a ~16% selling at prices between $212 and $276, and that was followed with an ~11% trimming this quarter. The stock currently goes for ~$284.

Cooper Companies (COO): The bulk of the fairly large 4.37% 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 ~$300. The last two quarters have seen a ~43% selling at prices between $246 and $340. Generation IM is harvesting gains.

Note: Generation IM has a ~3.5% ownership stake in Cooper Companies.

Jones Lang LaSalle Inc. (JLL): JLL is a ~4% 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: a ~75% overall reduction at prices between $103 and $178. The pattern reversed in 2016: a ~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. The last seven quarters have seen only minor adjustments.

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

Sensata Technologies (ST): The bulk of the ~4% 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 $45.41. Q4 2018 saw a ~28% increase at prices between $41 and $49.50. The last two quarters have seen only minor adjustments.

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

Analog Devices (ADI): ADI position is now at 3.89% 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. Q4 2018 saw another ~25% stake increase at prices between $78 and $94. The stock currently trades above those ranges at ~$106. There was a ~50% selling this quarter at prices between $96 and $117.

MercadoLibre (MELI): The 3.40% MELI stake was established in Q2 2018 at prices between $285 and $356, and it now goes for ~$581. The last three quarters have seen a one-third selling at prices between $258 and $641. Generation IM is harvesting gains.

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.

Microsoft Corporation (MSFT): MSFT is a 3.37% 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 ~$136. Q4 2018 saw a one-third reduction at prices between $94 and $116, and that was followed with an ~8% trimming last quarter. There was marginal trimming this quarter.

Acuity Brands (AYI): AYI is a 3.21% 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 ~$121. 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. The last three quarters have seen only minor changes.

Note: Generation IM controls ~8% of AYI.

Nvidia Corp. (NVDA) and TE Connectivity (TEL): These two new stakes were established in Q4 2018. TEL is a medium-sized ~3% position purchased at prices between $71 and $87, and the stock currently trades at $89.05. The 1.40% NVDA stake was established at prices between $127 and $289, and it is now at ~$164. The last two quarters saw only minor changes to these two positions.

Automatic Data Processing (ADP): ADP is a ~3% 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 next two quarters had also seen a ~16% increase at prices between $114 and $151. The last three quarters saw a ~40% selling at prices between $122 and $170. The stock is now at $167.

Ingersoll-Rand plc (IR): IR is a 2.49% portfolio position first purchased in 2015 at prices between $51 and $71. The position has wavered. In recent activity, there was a ~17% increase in Q2 2018 at prices between $80 and $93, while Q4 2018 saw similar selling at prices between $86 and $106. The stock is now at ~$119. The last two quarters have seen a combined ~17% selling at prices between $90 and $128.

Credicorp Ltd. (BAP): BAP is a ~2% 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 through Q3 2018 had seen a combined ~44% increase at prices between $192 and $236. The stock is now at ~$205. Last quarter saw an ~18% selling at prices between $222 and $251. There was marginal trimming this quarter.

Cerner Corporation (CERN): CERN is a 1.67% 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 $67.39. The last two quarters had also seen a ~60% selling at prices between $49 and $65. There was marginal 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 next quarter at prices between $77 and $91. Last quarter saw an about-turn: a ~22% selling at prices between $81 and $94. That was followed with a ~45% selling this quarter at prices between $92 and $112. The stock is currently at $95.33, and the stake is now small at ~1.5%.

Stericycle Inc. (SRCL): SRCL is a very small 0.84% of the portfolio position established last quarter at prices between $37 and $52, and it now goes for $44.51. This quarter saw marginal trimming.

Amazon.com (AMZN), Becton, Dickinson (BDX), SPDR S&P 500 Trust ETF (SPY), Salesforce.com (CRM), Taiwan Semiconductor Manufacturing Company (TSM), and Waters Corporation (WAT): These small (less than ~1.5% of the portfolio each) positions were reduced this quarter.

Kept Steady

None.

Below is a spreadsheet that highlights the changes to Al Gore's Generation Investment Management 13F stock portfolio as of Q2 2019:

Al Gore - Generation IM

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.