Viking Global leader Andreas Halvorsen (Trades, Portfolio) disclosed his portfolio for the second quarter of 2022 earlier this week.
In addition to considering cyclical and secular industry trends, the guru's Connecticut-based hedge fund selects stocks based on its understanding of the business' fundamentals and management team. Halvorsen was a former protégé of Tiger Management's Julian Robertson (Trades, Portfolio).
The 13F filing for the three months ended June 30 show Halvorsen entered 15 new positions, exited 24 stocks and added to or trimmed a slew of other existing investments. His most notable trades included new stakes in McKesson Corp. (MCK, Financial) and American International Group Inc. (AIG, Financial), an increased bet on Elevance Health Inc. (ELV, Financial), a reduction in the T-Mobile US Inc. (TMUS, Financial) holding and the divestment of the Comcast Corp. (CMCSA, Financial) position.
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
McKesson
Having previously sold out of McKesson (MCK, Financial) in the first quarter of 2020, the guru invested in a new 1.63 million-share stake, allocating 2.43% of the equity portfolio to it. The stock traded for an average price of $319.73 per share during the quarter.
The Irving, Texas-based company, which is a pharmaceutical distributor and provider of health information technology, medical supplies and care management tools, has a $53.22 billion market cap; its shares were trading around $368.07 on Friday with a price-earnings ratio of 39.39 and a price-sales ratio of 0.21.
The GF Value Line suggests the stock is significantly overvalued based on historical ratios, past financial performance and analysts’ future earnings projections.
GuruFocus rated McKesson’s financial strength 6 out of 10. In addition to adequate interest coverage, the Altman Z-Score of 5.13indicates the company is in good standing. The return on invested capital also overshadows the weighted average cost of capital, meaning value is being created as the company grows.
The company’s profitability scored an 8 out of 10 rating. Although its margins are in decline, the returns on equity, assets and capital are overall outperforming versus competitors. McKesson also has a high Piotroski F-Score of 7 out of 9, meaning operations are healthy, and a predictability rank of one out of five stars. According to GuruFocus research, companies with this rank return an average of 1.1% annually over a 10-year period.
Of the gurus invested in McKesson, Warren Buffett (Trades, Portfolio) has the largest stake with 2.23% of its outstanding shares. Richard Pzena (Trades, Portfolio), Larry Robbins (Trades, Portfolio), Ray Dalio (Trades, Portfolio), Charles Brandes (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Ronald Muhlenkamp (Trades, Portfolio) and several other gurus also own the stock.
American International Group
After selling out in the first quarter, Halvorsen picked up 10.11 million shares of American International Group (AIG, Financial), dedicating 2.37% of the equity portfolio to the stake. Shares traded for an average price of $58.16 each during the quarter.
Also known as AIG, the insurance company headquartered in New York has a market cap of $43.01 billion; its shares were trading around $56.52 on Friday with a price-earnings ratio of 3.72, a price-book ratio of 0.96 and a price-sales ratio of 0.82.
According to the GF Value Line, the stock is fairly valued currently.
AIG’s financial strength was rated 4 out of 10 by GuruFocus. Since assets are building up at a faster rate than revenue is growing, the company may be becoming less efficient. Further, the WACC eclipses the ROIC, so it is struggling to create value.
The company’s profitability did not fare much better, scoring a 5 out of 10 rating on the back of margins and returns that top over half of its industry peers. AIG also has a high Piotroski F-Score of 7 and a one-star predictability rank.
With a 2.08% stake, Diamond Hill Capital (Trades, Portfolio) is AIG’s largest guru shareholder. Other gurus with large investments in the stock include Hotchkis & Wiley, Pzena, Barrow, Hanley, Mewhinney & Strauss, the T Rowe Price Equity Income Fund (Trades, Portfolio), First Pacific Advisors (Trades, Portfolio), Bill Nygren (Trades, Portfolio), Steven Romick (Trades, Portfolio), Brandes and Donald Smith & Co.
Elevance Health
The investor upped the Elevance Health (ELV, Financial) position by 939.42%, buying 1.32 million shares. The transaction expanded the equity portfolio by 2.93%. During the quarter, the stock traded for an average per-share price of $494.66.
Halvorsen now holds a total of 1.46 million shares, accounting for the seventh-largest holding with a 3.24% weight in the equity portfolio. GuruFocus estimates he has gained 5.67% on the investment so far.
Formerly known as Anthem, the Indianapolis-based health insurance company has a $119.59 billion market cap; its shares were trading around $500.23 on Friday with a price-earnings ratio of 19.99, a price-book ratio of 3.35 and a price-sales ratio of 0.82.
Based on the GF Value Line, the stock appears to be fairly valued currently.
GuruFocus rated Elevance’s financial strength 5 out of 10. Although the company has issued new long-term debt over the past several years, it is manageable due to sufficient interest coverage. The ROIC also exceeds the WACC, indicating value creation is occurring.
The company’s profitability fared better with a 9 out of 10 rating, driven by strong margins and returns that outperform over half of its competitors. Elevance also has a high Piotroski F-Score of 8, while consistent earnings and revenue growth contributed to a five-star predictability rank. GuruFocus found companies with this rank return, on average, 12.1% annually.
Baillie Gifford (Trades, Portfolio) is Elevance’s largest guru shareholder with a 1.69% stake. The Vanguard Health Care Fund (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), Barrow, Hanley, Mewhinney & Strauss, Hotchkis & Wiley, Glenn Greenberg (Trades, Portfolio) and Ruane Cunniff (Trades, Portfolio) also have significant positions in the stock.
T-Mobile
With an impact of -2.21% on the equity portfolio, the guru curbed the T-Mobile US (TMUS, Financial) stake by 31.66%, selling 4.25 million shares. The stock traded for an average price of $130.44 per share during the quarter.
He now holds 9.17 million shares in total, which represent 5.66% of the equity portfolio and is his largest holding. GuruFocus says Halvorsen has gained an estimated 25.91% on the investment since establishing it in the first quarter of 2020.
The telecommunication services company headquartered in Bellevue, Washington has a market cap of $182.42 billion; its shares were trading around $146.07 on Friday with a price-earnings ratio of 106.18, a price-book ratio of 2.60 and a price-sales ratio of 2.28.
The GF Value Line suggests the stock is modestly overvalued currently.
T-Mobile’s financial strength was rated 4 out of 10 by GuruFocus. In addition to poor interest coverage, the low Altman Z-Score of 1.22 warns the company could be at risk of bankruptcy since its assets are building up at a faster rate than revenue is growing. The WACC also surpasses the ROIC, so the company is struggling to create value.
The company’s profitability scored a 7 out of 10 rating even though the operating margin is in decline and returns underperform around half of its industry peers. T-Mobile also has a moderate Piotroski F-Score of 4, indicating conditions are typical of a stable company, and a one-star predictability rank that is on watch as a result of a slowdown in revenue per share growth.
Of the gurus invested in T-Mobile, Dodge & Cox has the largest stake with 1.33% of its outstanding shares. Buffett, Cohen, Barrow, Hanley, Mewhinney & Strauss, Nygren, Lee Ainslie (Trades, Portfolio) and PRIMECAP Management (Trades, Portfolio) also have large holdings.
Comcast
Impacting the equity portfolio by -2.68%, Halvorsen dumped his 14.07 million-share Comcast (CMCSA, Financial) holding. During the quarter, shares traded for an average price of $42.94 each.
GuruFocus data shows he gained 4.32% on the investment over its lifetime. Last quarter, it was his 10-largest holding.
The Philadelphia-based media and technology company, which owns traditional cable businesses as well as NBCUniversal, has a $168.74 billion market cap; its shares were trading around $38.46 on Friday with a price-earnings ratio of 12.50, a price-book ratio of 1.84 and a price-sales ratio of 1.43.
According to the GF Value Line, the stock is currently modestly undervalued.
GuruFocus rated Comcast’s financial strength 4 out of 10. Despite having adequate interest coverage, the Altman Z-Score of 1.63 warns it could be in danger of bankruptcy. The ROIC is also above the WACC, so value is being created.
The company’s profitability fared better, scoring a 9 out of 10 rating. Although the operating margin is in decline, its returns outperform over half of its competitors. Comcast also has a high Piotroski F-Score of 8, while steady earnings and revenue growth contributed to a five-star predictability rank.
With a 1.93% stake, Dodge & Cox is the largest guru shareholder of Comcast. Other top guru investors include First Eagle, Barrow, Hanley, Mewhinney & Strauss, First Pacific, Hotchkis & Wiley, Romick, Nygren, the T. Rowe Price Equity Income Fund, Diamond Hill, Tom Russo (Trades, Portfolio), Brandes, the Parnassus Endeavor Fund (Trades, Portfolio) and Dalio.
Additional trades and portfolio composition
Other major trades Halvorsen made during the quarter included new positions in Intuit Inc. (INTU, Financial) and Lam Research Corp. (LRCX, Financial), a reduction in the General Electric Co. (GE, Financial) holding and boosts to the Block Inc. (SQ, Financial) and Meta Platforms Inc. (META, Financial) stakes.
The guru’s $21.79 billion equity portfolio, which is composed of 81 stocks, is largely invested in the health care and financial services sectors.
