Lee Ainslie (Trades, Portfolio) has revealed his equity portfolio for the third quarter of 2021. His top trades include a reduction to his top holding Coupang Inc. (CPNG, Financial), additions to his Visa Inc. (V, Financial), Workday Inc. (WDAY, Financial) and Lam Research Corp. (LRCX, Financial) positions alongside selling out of his Alibaba Group Holdings Ltd. (BABA, Financial) holding.
Ainslie is the founder and CEO of Dallas-based Maverick Capital. Maverick employs six industry experts to research investment opportunities in the following categories: consumer, health care, cyclical, retail, financial and telecommunications, media and technology. Ainslie talks to them about new and current stocks in the portfolio, and with that input, he makes the final decision on investments.
Portfolio overview
At the end of the quarter, Ainslie’s portfolio contained 626 stocks with 203 new holdings. It was valued at $9.91 billion and has seen a turnover rate of 12%. His top holdings include Coupang, Microsoft Corp. (MSFT, Financial), Centene Corp. (CNC, Financial), Amazon.com Inc. (AMZN, Financial) and Netflix Inc. (NFLX, Financial).
The top sectors represented in the portfolio are consumer cyclical (40.16%), health care (15.57%) and technology (13.33%).
Coupang
Ainslie took a chunk out of his top holding Coupang (CPNG, Financial) during the quarter with the sale of 5.82 million shares. The sale cut the holding by 5.27% and the shares traded at an average price of $34.58. Overall, the sale had a -2.23% impact on the equity portfolio and GuruFocus estimates the total loss on the holding at 43.43%.
Coupang is an e-commerce company that sells apparel, electronics, footwear, food products, furniture, nutritional supplements and other products.
On Nov. 23, the stock was trading at $25.62 per share with a market cap of $44.86 billion. There is not currently enough data to display a GF Value Line and shares prices have fallen below the company’s debut price.
GuruFocus gives the company a financial strength rating of 5 out of 10 and there is a severe warning sign issued for inventory building up. The company’s cash-to-debt ratio of 1.88 ranks better than 73.49% of industry competitors despite an increase in debt in 2020.
Other top guru shareholders in Coupang (CPNG, Financial) include Baillie Gifford (Trades, Portfolio), Stanley Druckenmiller (Trades, Portfolio), Bill Gates (Trades, Portfolio), David Abrams (Trades, Portfolio) and Chris Davis (Trades, Portfolio).
Visa
The guru made a significant addition to his Visa (V, Financial) holding for the second quarter in a row. The purchase of 515,895 shares grew the holding by 248.08%. During the quarter, the shares traded at an average price of $234.41, setting the guru up for a total estimated gain of 19.20%. The purchase had a 1.16% impact on the equity portfolio overall.
Visa is the largest payment processor in the world. In fiscal 2020, it processed almost $9 trillion in purchase transactions. Visa operates in over 200 countries and processes transactions in over 160 currencies. Its systems are capable of processing over 65,000 transactions per second.
As of Nov. 23, the stock was trading at $198.28 per share with a market cap of $430.96 billion. The GF Value Line gives the stock a fair value rating.
GuruFocus gives the company a financial strength rating of 6 out of 10, a profitability rank of 9 out of 10 and a valuation rank of 2 out of 10. There are currently no severe warning signs issued for the company and a medium warning sign was triggered for insiders selling. The company shows exceptional profitability compared to its credit services peers with returns on equity and assets beating at least 93% of the competition.
Visa (V, Financial) shares are also owned by Ken Fisher (Trades, Portfolio), Frank Sands (Trades, Portfolio), Warren Buffett (Trades, Portfolio), Pioneer Investments and Chuck Akre (Trades, Portfolio)'s firm.
Workday
Ainslie also made a 13,841.64% addition to his Workday (WDAY, Financial) holding. The guru purchased 404,591 shares that traded at an average price of $247.92 during the quarter. GuruFocus estimates the total gain of the holding at 9% and the purchase had a 1.02% impact on the equity portfolio.
Workday is a software company that offers human capital management, or HCM, financial management and business planning solutions. Known for being a cloud-only software provider, Workday is headquartered in Pleasanton, California. Founded in 2005, Workday now employs over 12,000 employees.
The stock was trading at $270.10 per share with a market cap of $67.63 billion on Nov. 23. A fair value rating is given to the stock by the GF Value Line.
GuruFocus gives the company a financial strength rating of 5 out of 10 and a profitability rank of 3 out of 10. There is one severe warning sign issued for assets growing faster than revenue. The company has been edging its way to solid profitability over the last decade with its return on invested capital just falling into the red in 2020.
Baillie Gifford (Trades, Portfolio), Steve Mandel (Trades, Portfolio), Chase Coleman (Trades, Portfolio), Bill Nygren (Trades, Portfolio) and Spiros Segalas (Trades, Portfolio) also own Workday (WDAY, Financial) shares.
Alibaba
Ainslie cut ties with his Alibaba (BABA, Financial) holding after a 41.3% addition in the second quarter. The 450,109 shares that were sold traded at an average price of $182.30 during the quarter. Overall, the sale had a -0.96% impact on the equity portfolio and GuruFocus estimates the total gain of the holding at 14.63%.
Alibaba is the world's largest online and mobile commerce company, measured by GMV (6.6 trillion yuan ($1 trillion) for the fiscal year ended March 2020). It operates China's most-visited online marketplaces, including Taobao (consumer-to-consumer) and Tmall (business-to-consumer). Alibaba's China commerce retail division accounted for 69% of revenue in the December 2020 quarter, with Taobao generating revenue through advertising and other merchant data services and Tmall deriving revenue from commission fees. Additional revenue sources include China commerce wholesales (2%), international retail/wholesale marketplaces (5%/2%), cloud computing (7%), digital media and entertainment platforms (4%), Cainiao logistics services (5%) and innovation initiatives/other (2%).
On Nov. 23, the stock was trading at $133.62 per share with a market cap of $363.72 billion. According to the GF Value Line, the stock is trading at a significantly undervalued rating.
GuruFocus gives the company a financial strength rating of 7 out of 10 and a profitability rank of 8 out of 10. There are two severe warning signs issued for a declining gross margin and a declining operating margin. Alibaba has drastically increased reported revenue and net income over the last year.
Other top guru shareholders in Alibaba (BABA, Financial) include Primecap Management, Ken Fisher (Trades, Portfolio), Baillie Gifford (Trades, Portfolio), Dodge & Cox and Pioneer Investments.
Lam Research
Rounding out Ainslie’s top trades is an addition to his Lam Research (LCRX) after three quarters of large reductions. The purchase of 98,641 shares grew the holding by 57.26% and the shares traded at an average price of $608.70 during the quarter. GuruFocus estimates the guru has gained 29.44% on the holding and the purchase had a 0.57% impact on the equity portfolio.
Lam Research manufactures equipment used to fabricate semiconductors. The company is focused on the etch, deposition and clean markets, which are key steps in the semiconductor manufacturing process, especially for 3D NAND flash storage, advanced DRAM and leading-edge logic/foundry chipmakers. Lam's flagship Kiyo, Vector and Sabre products are sold in all major geographies to key customers such as Samsung Electronics, Micron and Taiwan Semiconductor Manufacturing.
As of Nov. 23, the stock was trading at $653.88 per share with a market cap of $91.89 billion. A modestly overvalued rating is given to the stock by the GF Value Line.
GuruFocus gives the company a financial strength rating of 6 out of 10, a profitability rank of 9 out of 10 and a valuation rank of 2 out of 10. There is one severe warning sign issued for a Beneish M-Score indicating the company may manipulate its financials. The company posted strong cash flow gains this year that were more than adequate to support dividend payouts.
Lam Research (LCRX) positions are also maintained by Ken Fisher (Trades, Portfolio), Frank Sands (Trades, Portfolio), Pioneer Investments, Jeremy Grantham (Trades, Portfolio) and Philippe Laffont (Trades, Portfolio).
