Norwegian-born guru Andreas Halvorsen (Trades, Portfolio), founding partner and chief investing officer of Viking Global Investors LP, disclosed on Tuesday that his top five buys for the second quarter were General Electric Co. (GE, Financial), DowDuPont Inc. (DWDP, Financial), The Middleby Corp. (MIDD, Financial), Baidu Inc. (BIDU, Financial) and T-Mobile US Inc. (TMUS, Financial).
Halvorsen, a former protégé of Tiger Management founder Julian Robertson (Trades, Portfolio), invests in companies based on a thorough assessment of business models and fundamental analysis. Halvorsen’s average annual return of 22.26% since inception ranks third among gurus, according to the GuruFocus Scoreboard.
General Electric
Halvorsen invested in 68,408,502 shares of GE for an average price of $13.92 per share, dedicating 5.33% of his equity portfolio to the position.
CEO John Flannery said on July 20 that the Boston-based industrial conglomerate is “progressing on [management’s] plans to make GE simpler and stronger” since June. The company completed the Industrial Solutions and Value-Based Care transactions and announced plans to separate GE Health Care and Baker Hughes, a GE Co. (BHGE) as standalone companies.
GuruFocus ranks GE’s profitability 6 out of 10: even though profit margins have contracted over the past five years, its three-year revenue growth rate of 6.40% outperforms 66% of global diversified industrial companies.
Halverson’s investment represents the largest stake in GE among gurus as of June. The Norwegian investor joins a group of gurus that are betting on a turnaround at GE: other gurus that increased their holdings in the industrial conglomerate during the quarter include Prem Watsa (Trades, Portfolio), Richard Pzena (Trades, Portfolio) and Ken Fisher (Trades, Portfolio).
DowDuPont
Halvorsen invested in 10,191,240 shares of DowDuPont for an average price of $66.14 per share, giving the position 3.85% portfolio weight.
DowDuPont, a major diversified chemicals and materials company, represents the combination of Dow Chemical and DuPont. The company’s profitability ranks 5 out of 10: although the company has expanding profit margins, DowDuPont’s three-year revenue growth rate of -7.20% underperforms 83% of global competitors.
Third Point LLC leader Daniel Loeb (Trades, Portfolio) added 225,000 shares of DowDuPont during the quarter. Other gurus that invested in the chemical conglomerate include Michael Price (Trades, Portfolio) and PRIMECAP Management (Trades, Portfolio).
Middleby
Halvorsen invested in 3,031,662 shares of Middleby on June 13 for $104.5 per share. The investor expanded his portfolio 1.87% with the transaction.
Middleby manufactures a wide variety of foodservice equipment, food preparation and packaging supplies and premium kitchen equipment. The company’s profitability ranks 8 out of 10 on several positive investing signs, including expanding operating margins and consistent revenue growth. Additionally, GuruFocus ranks Middleby’s business predictability 4.5 stars out of five.
Shares of Middleby averaged $113.41 during the quarter.
Baidu
Halvorsen invested in 890,775 shares of Baidu for an average price of $249.09 per share. The investor dedicated 1.24% of his equity portfolio to the position.
Chinese online media giant Baidu generates over 80% of revenues from online marketing services. GuruFocus ranks Baidu’s profitability 8 out of 10: the company’s profit margins still outperform over 78% of global competitors despite languishing near a 10-year low of 14.24%. Additionally, the company’s business predictability ranks three stars out of five on consistent revenue growth over the past decade.
Ruane Cunniff (Trades, Portfolio) also invested in Baidu during the quarter.
T-Mobile US
Halvorsen invested in 3,218,025 shares of T-Mobile US, the company involved in a pending merger with Sprint Corp. (S, Financial). Shares of T-Mobile averaged $59.26 during the quarter.
GuruFocus ranks T-Mobile’s profitability 6 out of 10 and lists two positive investing signs: expanding operating margins and a strong Piotroski F-score of 8.
Disclosure: No positions.
