Viking Global leader Andreas Halvorsen (Trades, Portfolio) disclosed his fourth-quarter portfolio last week.
The guru's Connecticut-based firm selects stocks based on its understanding of the business' fundamentals and management team. It also takes cyclical and secular industry trends into consideration. Halvorsen was a former protégé of Tiger Management's Julian Robertson (Trades, Portfolio).
During the quarter, the investor entered 25 new positions, divested of 16 stocks and added to or trimmed a slew of other existing holdings. His most notable trades included new stakes in UnitedHealth Group Inc. (UNH, Financial), AbCellera Biologics Inc. (ABCL, Financial) and The Walt Disney Co. (DIS, Financial), as well as increased investments in Visa Inc. (V, Financial) and Microsoft Corp. (MSFT, Financial).
UnitedHealth
Having previously sold out of a position in UnitedHealth (UNH, Financial) in the first quarter of 2020, Halvorsen entered a new 2.7 million-share stake, dedicating it to 2.69% of the equity portfolio. It is now the firm's ninth-largest holding. The stock traded for an average price of $335.55 per share during the quarter.
The Minnetonka, Minnesota-based managed care company, which offers health care products and insurance services, has a $315 billion market cap; its shares were trading around $331.99 on Tuesday with a price-earnings ratio of 20.71, a price-book ratio of 4.67 and a price-sales ratio of 1.25.
The GF Value line indicates the stock is fairly valued currently based on historical ratios, past performance and projections of future achievements. The GuruFocus valuation rank of 2 out of 10, however, leans more toward overvaluation since the share price is approaching a 10-year high.
GuruFocus rated UnitedHealth's financial strength 6 out of 10. Although the company has issued approximately $10.7 billion in new long-term debt over the past three years, it is still at a manageable level due to having sufficient interest coverage. The strong Altman Z-Score of 3 also indicates it is in good standing even though assets are building up at a faster rate than revenue is growing. The return on invested capital surpasses the weighted average cost of capital, indicating it is creating good value.
The company's profitability fared even better with a 9 out of 10 rating, driven by an expanding operating margin, returns that outperform over half of its competitors and a high Piotroski F-Score of 7, which indicates business conditions are healthy. Consistent earnings and revenue growth contributed to a predictability rank of five out of five stars. According to GuruFocus, companies with this rank return an average of 12.1% annually over a 10-year period.
Of the gurus invested in UnitedHealth, the Vanguard Health Care Fund (Trades, Portfolio) has the largest holding with 0.9% of outstanding shares. Other major guru shareholders include Dodge & Cox, Steve Mandel (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio), Pioneer Investments (Trades, Portfolio) and Barrow, Hanley, Mewhinney & Strauss.
AbCellera Biologics
The guru invested in 19.3 million shares of AbCellera Biologics (ABCL, Financial), allocating 2.13% of the equity portfolio to the stake. Shares traded for an average price of $45.73 each during the quarter.
The Canadian biotech company, which researches and develops human antibodies to address pandemics and common diseases, has a market cap of $9.93 billion; its shares were trading around $37.87 on Tuesday with a price-book ratio of 2,305.63 and a price-sales ratio of 550.6.
Since its initial public offering on Dec. 11, the stock has tumbled over 30%.
AbCellera's financial strength was rated 4 out of 10 by GuruFocus, while its profitability scored a 1 out of 10 rating.
While the WACC currently eclipses the ROIC, indicating struggles with creating value, the company's negative margins and returns still outperform a majority of industry peers.
With a 7.16% stake, Halvorsen is the AbCellera's largest guru shareholder. Other gurus who took advantage of the stocks IPO were Stanley Druckenmiller (Trades, Portfolio), Ron Baron (Trades, Portfolio) and Steven Cohen (Trades, Portfolio).
Walt Disney
After previously closing out of a holding in Walt Disney (DIS, Financial) in the second quarter of 2019, the investor picked up a new 4.3 million-share stake. The transaction had an impact of 2.13% on the equity portfolio. The stock traded for an average per-share price of $143.86 during the quarter.
The Burbank, California-based media and entertainment giant has a $351.87 billion market cap; its shares were trading around $195.34 on Tuesday with a price-book ratio of 4.2 and a price-sales ratio of 5.79.
According to the GF Value line, the stock is significantly overvalued currently. The GuruFocus valuation rank of 1 out of 10 also supports this assessment since the share price and price ratios are all approaching 10-year highs.
GuruFocus rated Disney's financial strength 4 out of 10. As a result of issuing approximately $11.2 billion in new long-term debt, the company has weak interest coverage. The Altman Z-Score of 2.42 indicates the company is under some pressure since its assets are building up at a faster rate than revenue is growing. The ROIC is also being eclipsed by the WACC, suggesting issues with creating value.
The company's profitability fared much better, scoring a 7 out of 10 rating despite having a declining operating margin and negative returns that underperform over half of its competitors. Disney also has a low Piotroski F-Score of 3, indicating business conditions are in poor shape. Declining revenue per share and operating losses over the past several years have also contributed to the one-star predictability rank being on watch. GuruFocus says companies with this rank return an average of 1.1% annually.
Philippe Laffont (Trades, Portfolio) is currently Disney's largest guru shareholder with a 0.61% stake. Fisher, Poineer, Daniel Loeb (Trades, Portfolio), PRIMECAP Management (Trades, Portfolio), Diamond Hill Capital (Trades, Portfolio), Ruane Cunniff, Yacktman Asset Management (Trades, Portfolio), Tom Gayner (Trades, Portfolio) and Mairs and Power (Trades, Portfolio) also have significant stakes.
Visa
Impacting the equity portfolio by 2.27%, Halvorsen expanded his stake in Visa (V, Financial) by 1,170.4%, buying 3.7 million shares. During the quarter, the stock traded for an average price of $204.66 per share.
The guru now holds 4.08 million shares total, representing 2.46% of the equity portfolio and his 10th-largest holding. GuruFocus estimates he has gained 27.57% on the investment.
The financial services and payments company, which is headquartered in San Francisco, has a market cap of $463.81 billion; its shares were trading around $210.28 on Tuesday with a price-earnings ratio of 43.46, a price-book ratio of 13.62 and a price-sales ratio of 21.69.
Based on the GF Value line, the stock appears to be modestly overvalued. The GuruFocus valuation rank of 1 out of 10 aligns with this assessment since the share price and price-sales ratio are both approaching 10-year highs.
Visa's financial strength was rated 6 out of 10, driven by adequate interest coverage and a robust Altman Z-Score of 7.76. The ROIC also surpasses the WACC, indicating good value creation.
The company's profitability scored a 9 out of 10 rating on the back of operating margin expansion, strong returns that outperform a majority of industry peers and a moderate Piotroski F-Score of 4 that implies business conditions are stable. As revenue per share has declined over the past 12 months, the five-star predictability rank is on watch.
Of the gurus invested in Visa, Sands has the largest stake with 1.29% of outstanding shares. Other top guru shareholders include Fisher, Warren Buffett (Trades, Portfolio), Spiros Segalas (Trades, Portfolio), Pioneer, Chuck Akre (Trades, Portfolio)'s firm, PRIMECAP, Loeb, Cohen, Diamond Hill and Mairs and Power (Trades, Portfolio).
Microsoft
With an impact of 2.19% on the equity portfolio, the guru expanded his Microsoft (MSFT, Financial) stake by 43.37%, buying 3.6 million shares. During the quarter, shares traded for an average price of $215.07 each.
Halvorsen now holds 11.8 million shares total, which account for 7.24% of the equity portfolio and is his largest holding. GuruFocus data shows he has gained an estimated 32.83% on the investment.
The Redmond, Washington-based software company, which owns the Windows operating system and Microsoft Office products, has a $1.75 trillion market cap; its shares were trading around $231.27 on Tuesday with a price-earnings ratio of 34.56, a price-book ratio of 13.55 and a price-sales ratio of 11.57.
The GF Value line shows the stock is currently significantly overvalued. The GuruFocus valuation rank of 1 out of 10 also supports this assessment since the share price and price ratios are all approaching 10-year highs.
GuruFocus rated Microsoft's financial strength 7 out of 10. In addition to solid interest coverage, the Altman Z-Score of 7.92 indicates the company is in good standing despite the fact assets are building up at a faster rate than revenue is growing. The company is also creating value since its ROIC tops the WACC.
The company's profitability scored an 8 out of 10 rating. In addition to an expanding operating margin, Microsoft has strong returns that outperform a majority of competitors as well as a high Pitroski F-Score of 8. As a result of steady earnings and revenue growth, it also has a 2.5-star predictability rank. GuruFocus data shows companies with this rank return, on average, 7.3% annually.
With a 0.31% stake, Fisher is Microsoft's largest guru shareholder. Other gurus with large holdings in the stock are Pioneer, PRIMECAP, Dodge & Cox, Chase Coleman (Trades, Portfolio), Segalas, Mandel, Grantham, First Eagle Investment (Trades, Portfolio), Druckenmiller, Hotchkis & Wiley and Mairs and Power (Trades, Portfolio).
Additional trades and portfolio composition
Other major trades Halvorsen made during the quarter were reductions of the Thermo Fisher Scientific Inc. (TMO, Financial) and American Express Co. (AXP, Financial) holdings, a new position in Palo Alto Networks Inc. (PANW, Financial), an addition to Alphabet Inc. (GOOGL, Financial) and the sale of Comcast Corp. (CMCSA, Financial).
The guru's $36.37 billion equity portfolio, which is composed of 96 stocks, is largely invested in the health care and technology sectors.
Disclosure: No positions.
Read more here:
- Steve Mandel's Lone Pine Reports 4th-Quarter Portfolio
- David Rolfe's Top Trades of the 4th Quarter
- Daniel Loeb's Top Trades of the 4th Quarter
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