Lee Ainslie (Trades, Portfolio), founder and CEO of Maverick Capital, disclosed last week that his top trades for the first quarter included a major sell in Monster Beverage Corp. (MNST, Financial) and increased bets in Restaurant Brands International Inc. (QSR, Financial), Humana Inc. (HUM, Financial) and Fleetcor Technologies Inc. (FLT, Financial).
Dallas-based Maverick employs six experts who each specialize in a specific industry: consumer, health care, cyclical, retail, financial and telecommunications, media and technology. Ainslie, a former protégé of Julian Robertson (Trades, Portfolio)’s Tiger Management, discusses with each industry head about the stocks in the portfolio and ultimately makes the investment decisions.
The $4.74 billion equity portfolio contains 466 stocks as of the quarter-end, with a turnover of 38%. The top three sectors in terms of weight are in consumer cyclical, technology and health care, representing 23.64%, 22.85% and 19.57% of the equity portfolio.
Monster Beverage
Ainslie sold 5,311,296 shares of Monster Beverage, slashing 98.66% of the stake and 4.91% of the equity portfolio. Shares averaged $64.39 during the first quarter.
The Corona, California-based company produces energy drinks under brands like Monster Energy, Monster Ultra and Java Monster. GuruFocus ranks the company’s financial strength 8 out of 10 and profitability 10 out of 10 on several positive investing signs, which include a 4.5-star business predictability rank and an operating margin that has increased approximately 3.40% per year on average over the past five years and is outperforming at least 97% of global competitors.
Despite high business quality, Monster’s valuation ranks 3 out of 10 on the back of price-book and price-sales ratios underperforming over 89% of global competitors, suggesting possible overvaluation. The stock is trading closer to its 10-year maximum price-sales valuation than its 10-year minimum price-sales valuation.
Restaurant Brands International
Ainslie purchased 4,162,376 shares of Restaurant Brands International, increasing the position 925.73% and the equity portfolio 3.52%. Shares averaged $56.99 during the first quarter.
The Toronto-based company operates three quick-service restaurant chains: Burger King, Tim Horton’s and Popeyes Louisiana Kitchen. GuruFocus ranks Restaurant Brands’ profitability 8 out of 10 on several positive investing signs, which include a return on equity that outperforms 95.78% of global competitors and operating margins that are outperforming over 97% of global restaurant companies despite contracting over the past five years.
Pershing Square manager Bill Ackman (Trades, Portfolio) said in his April 6 shareholder letter that restaurants that have “easy-to-use” digital ordering and delivery options have potential to “emerge stronger” from the coronavirus crisis as customers become more accustomed to ordering home delivery. Ackman said that while Restaurant Brands and Pershing’s other restaurant holdings Starbucks Corp. (SBUX, Financial) and Chipotle Mexican Grill Inc. (CMG, Financial) might lose “a substantial amount of sales” amid coronavirus lockdowns, the three restaurants are likely to gain market share in digital and delivery.
Humana
Ainslie purchased 475,055 shares of Humana, increasing the position 101.99% and the equity portfolio 3.15%. Shares averaged $338.77 during the first quarter.
The Louisville, Kentucky-based company administers Medicare Advantage plans and other government-sponsored programs. According to GuruFocus, Humana’s profitability ranks 8 out of 10 on the back of a 4.5-star business predictability rank and a three-year earnings growth rate that outperforms over 81% of global competitors.
Fleetcor
Ainslie purchased 674,416 shares of Fleetcor, increasing the holding 119.21% and the equity portfolio 2.65%. Shares averaged $277.28 during the first quarter.
The Atlanta-based company provides a range of specialized payment products. GuruFocus ranks the company’s profitability 10 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7, expanding operating margins and a 4.5-star business predictability rank.
Disclosure: No positions.
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