Legendary investor Julian Robertson (Trades, Portfolio) is known not just for his leadership of Tiger Management, but also for taking a group of protégés under his wing. These student investors, many of whom later opened their own practices, are referred to as “tiger cubs.”
As they learned from the same teacher, it is no surprise that some of these guru fund managers have similar investing styles and even invest in some of the same stocks. An example of this is Lee Ainslie (Trades, Portfolio), who now heads up Maverick Capital, and Andreas Halvorsen (Trades, Portfolio), leader of Viking Global Investors.
As of the third quarter, the two value investors have positions in Microsoft Corp. (MSFT, Financial), Walt Disney Co. (DIS, Financial), T-Mobile US Inc. (TMUS, Financial), Anthem Inc. (ANTM, Financial) and Alibaba Group Holding Ltd. (BABA, Financial).
Microsoft
In the third quarter, Ainslie trimmed his Microsoft stake by 11.65% and Halvorsen reduced his holding by 6.58%.
The California-based software company has an $840.51 billion market cap; its shares were trading around $109.99 on Thursday with a price-earnings ratio of 45.64, a price-book ratio of 9.82 and a price-sales ratio of 7.43.
The Peter Lynch chart shows the stock is trading higher than its fair value, suggesting it is overpriced.
GuruFocus rated Microsoft’s financial strength 7 out of 10. Although the company has issued roughly $36.3 billion in new long-term debt over the last three years, it is at a manageable level due to sufficient interest coverage. The Altman Z-Score of 4.5 also indicates the company is financially sound.
The company’s profitability and growth scored a 9 out of 10 rating. While the operating margin is in decline, it still outperforms 95% of competitors. The tech giant is also supported by good returns, a high Piotroski F-Score of 7, which means operations are healthy, and a business predictability rank of four out of five stars. In addition to having consistent earnings and revenue growth, GuruFocus says companies with this rank typically see their stock prices gain an average of 9.8% per year.
GuruFocus estimates Ainslie has gained 35% on his investment since the third quarter of 2017, while Halvorsen has gained roughly 40% since the second quarter of 2016.
Of the gurus invested in Microsoft, PRIMECAP Management (Trades, Portfolio) has the largest stake with 0.52% of outstanding shares. Other top investors include Dodge & Cox, Pioneer Investments (Trades, Portfolio), Bill Gates (Trades, Portfolio)’ foundation, Ken Fisher (Trades, Portfolio), Spiros Segalas (Trades, Portfolio) and Chase Coleman (Trades, Portfolio).
Disney
Halvorsen boosted his Disney stake by 88.94% in the third quarter, while Ainslie trimmed his position by 2.50%.
The entertainment company, which is headquartered in California, has a market cap of $167.92 billion; its shares were trading around $113.04 on Thursday with a price-earnings ratio of 13.53, a price-book ratio of 3.45 and a price-sales ratio of 2.86.
According to the Peter Lynch chart, the stock is undervalued.
Disney’s financial strength was rated 7 out of 10 by GuruFocus. Despite issuing approximately $4.1 billion in new long-term debt over the last three years, it is manageable as a result of adequate interest coverage. In addition, the Altman Z-Score of 4.47 suggests the company is in good fiscal standing. The company’s profitability and growth scored a 9 out of 10 rating, boosted by operating margin expansion, good revenue and earnings growth, a high Piotroski F-Score of 8 and a 4.5-star business predictability rank. According to GuruFocus, companies with this rank typically see their stock prices gain an average of 10.6% per year.
GuruFocus data shows Halvorsen has gained an estimated 6% on his investment since the first quarter of 2018. Ainslie has gained roughly 10% since the second quarter.
Halvorsen and Ainslie are the company’s two largest shareholders. Other top guru investors include PRIMECAP, Diamond Hill Capital (Trades, Portfolio), Pioneer, Mairs and Power (Trades, Portfolio), Tom Gayner (Trades, Portfolio), David Carlson (Trades, Portfolio), Jim Simons' (Trades, Portfolio) Renaissance Technologies and Smead Capital Management.
T-Mobile
Ainslie upped his T-Mobile stake by 0.88% in the third quarter, while Halvorsen curbed his holding by 9.22%.
The Bellevue, Washington-based wireless telecom company has a $56.02 billion market cap; its shares were trading around $66.03 on Thursday with a price-earnings ratio of 11.55, a price-book ratio of 2.34 and a price-sales ratio of 1.34.
Based on the Peter Lynch chart, the stock appears to be undervalued.
Weighed down by a decline in revenue per share and the issuance of new long-term debt, GuruFocus rated T-Mobile’s financial strength 5 out of 10. In addition, the Altman Z-Score of 1.31 warns the company is at risk of going bankrupt. The company’s profitability and growth fared a bit better with a 6 out of 10 rating. It is supported by an expanding operating margin, returns that outperform industry peers, a high Piotroski F-Score of 8 and a one-star business predictability rank. According to GuruFocus, companies with this rank typically see their stock prices gain an average of 1.1% per year.
Ainslie has gained roughly 8% on his investment since the third quarter of 2017. GuruFocus data shows Halvorsen has gained 11% since the second quarter.
The two gurus are also T-Mobile’s top shareholders. David Tepper (Trades, Portfolio), John Paulson (Trades, Portfolio), Diamond Hill, PRIMECAP, Pioneer, Mario Gabelli (Trades, Portfolio), Stanley Druckenmiller (Trades, Portfolio), Jerome Dodson (Trades, Portfolio) and several other gurus also own the stock.
Anthem
Halvorsen and Ainslie both added to their Anthem stakes in the third quarter, boosting them by 7.36% and 3,059.34%.
The health insurance company, which is based in Indianapolis, has a market cap of $72.39 billion; its shares were trading around $279.43 on Thursday with a price-earnings ratio of 16.24, a price-book ratio of 2.49 and a price-sales ratio of 0.81.
The Peter Lynch chart suggests the stock is overvalued.
Anthem’s financial strength and profitability and growth were both rated 5 out of 10 by GuruFocus. In addition to issuing approximately $2.9 billion in new long-term debt over the last three years, the company has seen a slowdown in revenue per share growth over the last 12 months. Despite this, the insurer has a 4.5-star business predictability rank.
According to GuruFocus, Halvorsen has gained an estimated 27% on his investment since the second quarter of 2017. Ainslied has gained roughly 9%.
With 1.85% of outstanding shares, Halvorsen is the company’s largest guru shareholder. First Eagle Investment (Trades, Portfolio), Barrow, Hanley, Mewhinney & Strauss, the Vanguard Health Care Fund (Trades, Portfolio), the T Rowe Price Equity Income Fund (Trades, Portfolio), Robbins, Hotchkis & Wiley, Grantham and Yacktman Asset Management (Trades, Portfolio), among others, also have positions in the stock.
Alibaba
During the third quarter, Halvorsen boosted his Alibaba stake by 354.21% and Ainslie reduced his position by 9.28%.
The Chinese e-commerce company has a $390.55 billion market cap; its shares were trading around $151.85 on Thursday with a price-earnings ratio of 43.77, a price-book ratio of 6.47 and a price-sales ratio of 8.42.
According to the Peter Lynch chart, the stock is overvalued.
Supported by adequate interest coverage and a high cash-debt ratio, GuruFocus rated Alibaba’s financial strength 7 out of 10. Further, the Altman Z-Score of 6.25 suggests the company is fiscally stable. The company’s profitability and growth scored an 8 out of 10 rating. Although the operating margin is in decline, it still outperforms a majority of competitors. In addition, the company has good returns, consistent earnings and revenue growth, a moderate Piotroski F-Score of 4 and a 3.5-star business predictability rank. GuruFocus says companies with this rank typically see their stock prices gain an average of 9.3% per year.
Since establishing the position in the first quarter, GuruFocus estimates Halvorsen has lost 15% on the investment. Ainslie has lost approximately 14% since the third quarter of 2017.
Of the gurus invested in Alibaba, Frank Sands (Trades, Portfolio) has the largest position with 0.6% of outstanding shares. PRIMECAP, Fisher, Steve Mandel (Trades, Portfolio), Coleman, Segalas, Daniel Loeb (Trades, Portfolio), Chris Davis (Trades, Portfolio), Pioneer and several other gurus are also shareholders.
Portfolio composition
Ainslie’s $8.04 billion portfolio, which is composed of 239 stocks, is largely invested in the technology, consumer cyclical and health care sectors. The investment team of the Dallas-based firm consists of six industry leads who are experts on one of the six major market sectors. Ainslie discusses potential investments with each of them before ultimately making final decisions for the portfolio.
Halvorsen’s $18.06 billion portfolio, which is composed of 64 stocks, is heavily invested in the consumer cyclical and health care sectors. The investor’s Greenwich, Connecticut-based firm picks stocks based on its understanding of the business’ fundamentals, management team and cyclical and secular industry trends.
Disclosure: No positions.
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