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Viking Found Value in Financials and Health Care: VISA INC., INVESCO LTD, MasterCard Inc., BANK OF AMERICA CORPORATION, Express Scripts Inc., JPMorgan Chase & Co.

March 17, 2010 | About:

guruek

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The three amigos -- Andreas Halvorsen, David Ott, and Brian Olson -- all worked for Julian Robertson’s Tiger Management. In early 1999, they all left the firm more than a year before the fund closed shop. Initially, each considered starting his own hedge fund until Halvorsen contacted them to form a team approach – therefore, Viking Global was born in October, 1999.

Like Tiger, Viking focuses on fundamental business factors to find companies to short or buy. Employing a long/short strategy has its advantages when the market is declining. In 2008, when the market tanked, Viking was only 30 percent long for the year and just 19 percent long by 4Q08, enabling the fund beating S&P 500 by 37 percent – which was not much, since the index dropped about 37% for the year, essentially they just broke even for the year, according to the firm’s 2008 Q4 letter to shareholders.

In 2009, the fund returned 19%, lagging S&P 500 by about 6 points, according to a Reuters write-up, whose author quotes “a person who saw the result”. Short positions helped in 2008 inevitably hindered the performance in 2009. But if investors consider the performances in both 2008 and 2009, they should not have any complaint. After all, there are also a few among the Investment Gurus tracked by GuruFocus stayed positive after these two years. Andreas’s performance would put him top on the list here.

Viking Global is quoted to be managing $12 billion. GuruFocus only tracks $8.78 billion allocated among 63 stocks (see herefor details). That is because we only have visibility during Form 13F the long equity positions traded in the US. International holdings and short positions are not included. The sector allocation of the long positions are as follow:

Industry2009-09-302009-12-31
Technology5.8%9.3%
Financials45.4%34.5%
Utilities2.8%1.8%
Telecommunications1.5%1.4%
Consumer Services14.6%7.9%
Health Care12.1%18.6%
Consumer Goods1.8%0.3%
Industrials14.1%16.5%
Oil & Gas2.1%3.1%
One must be impressed by the heavy financial (34.5%), and Health Care (18.6%) and Industrials (16.5%) holding.

And these are Viking Global’s top holdings as of Q4 2009:

No. 1: VISA INC. (V), Weightings: 7.97% - 7,998,027 Shares

VISA operates the world's largest retail electronic payments network and is one of the most recognized global financial services brands. Visa Inc. has a market cap of $77.07 billion; its shares were traded at around $91.51 with a P/E ratio of 29.3 and P/S ratio of 11.2. The dividend yield of Visa Inc. stocks is 0.5%.

Viking Global sold 4.6 million shares in 4Q09. It has held a position since 1Q08 when it had 6.7 million shares.

No. 2: INVESCO LTD (IVZ), Weightings: 7.32% - 27,353,200 Shares

Invesco is a independent global investment management company. Invesco Ltd has a market cap of $9.24 billion; its shares were traded at around $21.41 with a P/E ratio of 28.6 and P/S ratio of 3.5. The dividend yield of Invesco Ltdshs stocks is 1.9%.

Viking Global sold about one million shares in 4Q09.

No. 3: MasterCard Inc. (MA), Weightings: 6.01% - 2,060,946 Shares

MASTERCARD INCORPORATED advances global commerce by providing a critical economic link among financial institutions, businesses, cardholders and merchants worldwide. Mastercard Inc. has a market cap of $32.27 billion; its shares were traded at around $248.65 with a P/E ratio of 21.8 and P/S ratio of 6.4. The dividend yield of Mastercard Inc. stocks is 0.2%.

Viking Global bought 0.7 million shares of MasterCard in 4Q09.

No. 4: BANK OF AMERICA CORPORATION (BAC-PS), Weightings: 4.25% - 24,973,600 Shares.



This is a preferred class of Bank of America Corp. Viking Global bought this position in 4Q09.

No. 5: Express Scripts Inc. (ESRX), Weightings: 4.01% - 4,076,319 Shares

Express Scripts, Inc. is one of the largest pharmacy benefit management companies in North America. Express Scripts Inc. has a market cap of $27.26 billion; its shares were traded at around $99.01 with a P/E ratio of 28.1 and P/S ratio of 1.1. Express Scripts Inc. had an annual average earning growth of 32.8% over the past 10 years. GuruFocus rated Express Scripts Inc. the business predictability rank of 4.5-star.

Viking Global sold 0.7 million shares of ESRS in 4Q09.

No. 6: JPMorgan Chase & Co. (JPM), Weightings: 3.86% - 8,136,500 Shares

J.P. Morgan Chase & Co. is a global financial services firm. Jpmorgan Chase & Co. has a market cap of $173.98 billion; its shares were traded at around $43.79 with a P/E ratio of 19.7 and P/S ratio of 1.7. The dividend yield of Jpmorgan Chase & Co. stocks is 0.5%.

Viking Global sold 2.3 million shares of JPM in 4Q09.

Conclusion

Viking Global makes money both ways, short and long. It successful dodge the bullet in 2008 and made it fine in 2009. As of 4Q09, the firm saw value in financials, health care and industrials.

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Rating: 1.8/5 (9 votes)

Comments

extramiler
Extramiler - 4 years ago
Tiger Fund never "imploded" --- Julian Robertson wound it up because he could not find good valuations in the market mania, similar to what Buffett did in the late 60s with his investment LPs.
guruek
Guruek - 4 years ago
Good point! I edited as you suggested.

Thanks.

Please leave your comment:


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