Himalaya Capital Management, the firm led by Chinese-born Li Lu (Trades, Portfolio), disclosed this week it reduced its Facebook Inc. (FB, Financial) holding and established new positions in Apple Inc. (AAPL, Financial) and Pinduoduo Inc. (PDD, Financial) during the fourth quarter of 2020.
A Columbia University graduate, Li seeks long-term capital appreciation by embracing key value investment principles taught by Ben Graham and Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) co-managers Warren Buffett (Trades, Portfolio) and Charlie Munger (Trades, Portfolio). The firm seeks investments in companies with high economic moat, great growth potential, and trustworthy management.
While the firm primarily invests in Chinese securities, with most of its holdings dating back since its 1997 inception, Himalaya Capital resumed filing 13-F reports with the Securities and Exchange Commission in 2020. As of the December-quarter end, the U.S.-based $1.82 billion equity portfolio contains six holdings with a turnover ratio of 9%. The top four sectors in terms of weight are technology, communication services, financial services and consumer cyclical, representing 53.07%, 22.74%, 20.63% and 3.55% of the equity portfolio.
Apple
Himalaya purchased 759,600 shares of Apple (AAPL, Financial), giving the position 5.55% equity portfolio weight. Shares of the Cupertino, California-based tech giant averaged $120.34 during the fourth quarter; the stock is significantly overvalued based on Wednesday's price-to-GF Value ratio of 1.73.
GuruFocus ranks Apple's profitability 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 and an operating margin that is outperforming over 95% of global competitors despite declining approximately 4.3% per year on average over the past five years.
While Berkshire curbed its Apple holding by 6.05% during the fourth quarter, Apple remains Berkshire's largest holding with a 43.61% equity portfolio weight.
Other gurus with holdings in Apple include Ken Fisher (Trades, Portfolio), Pioneer Investments (Trades, Portfolio) and Spiros Segalas (Trades, Portfolio).
Pinduoduo
Himalaya purchased 363,135 shares of Pinduoduo (PDD, Financial), dedicating 3.55% of equity portfolio space to the position. Shares averaged $120.29 during the fourth quarter.
The Shanghai-based company provides a platform for buyers with value-for-money merchandise and interactive shopping experiences. GuruFocus ranks the company's financial strength 6 out of 10: Although the company has a double-digit Altman Z-score, debt ratios are outperforming just over 68% of global competitors.
Himalaya sold 370,700 shares of Facebook (FB, Financial), curbing the position 27.85% and the equity portfolio 7.40%. Shares averaged $274.26 during the fourth quarter.
GuruFocus ranks the Menlo Park, California-based social media giant's profitability 10 out of 10 on several positive investing signs, which include a five-star business predictability rank and an operating margin that outperforms over 92% of global competitors.
See also
Himalaya's other holdings include Micron Technology Corp. (MU, Financial), Bank of America Corp. (BAC, Financial) and Alphabet Inc. (GOOG, Financial)(GOOGL, Financial). Top holding Micron occupies 47.52% of the U.S.-based equity portfolio as of the December 2020 quarter.
Disclosure: Long Apple.
Read more here:
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- Baron Funds' Top 5 Trades of the 4th Quarter
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