According to GuruFocus’ top holdings data, hedge fund manager Louis Moore Bacon (Trades, Portfolio)’s top five positions as of the end of the first quarter were the iShares China Large-Cap (FXI, Financial) exchange-traded fund, Alibaba Group Holding Ltd. (BABA, Financial), First BanCorp (FBP, Financial), Facebook Inc. (FB, Financial) and the iShares MSCI Emerging Index Fund ETF (EEM, Financial).
The guru’s New York-based firm, Moore Capital Management, uses a global macro strategy to identify value opportunities in the market.
iShares China Large-Cap
Bacon’s largest holding is 3.47 million units of the iShares China Large-Cap ETF, representing 4.75% of the equity portfolio. GuruFocus estimates he has gained 3.3% on the investment since the fourth quarter of 2018.
The ETF, which tracks the performance of an index composed of large-cap Chinese equities that trade on the Hong Kong Stock Exchange, has a $5.51 billion market cap; its units were trading around $42.56 on Monday with a price-earnings ratio of 9.51 and a price-book ratio of 1.15.
The 14-day relative strength index is 60.25, indicating it is approaching overbought levels.
Alibaba
The guru owns 780,000 shares of Alibaba, which represent 4.40% of the equity portfolio. According to GuruFocus, he has gained an estimated 16% on the investment since establishing it in the first quarter.
The Chinese e-commerce company has a market cap of $433.46 billion; its shares were trading around $167.39 on Monday with a price-earnings ratio of 34.05, a price-book ratio of 5.99 and a price-sales ratio of 7.86.
The Peter Lynch chart shows the stock is trading above its fair value, suggesting it is overpriced.
GuruFocus rated Alibaba’s financial strength 7 out of 10. In addition to adequate interest coverage, the company has a high Altman Z-Score of 6.18, which indicates it is in good fiscal condition.
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. Alibaba is also supported by strong returns, consistent earnings and revenue growth and a moderate Piotroski F-Score of 4, which implies business conditions are stable. It also has a business predictability rank of 2.5 out of five stars. According to GuruFocus, companies with this rank typically see their stocks gain an average of 7.3% per annum over a 10-year period.
Of the many gurus invested in Alibaba, PRIMECAP Management (Trades, Portfolio) has the largest stake with 0.59% of outstanding shares. Other top guru shareholders include Frank Sands (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Andreas Halvorsen (Trades, Portfolio), Steve Mandel (Trades, Portfolio), Spiros Segalas (Trades, Portfolio), Pioneer Investments (Trades, Portfolio), Chase Coleman (Trades, Portfolio), Chris Davis (Trades, Portfolio) and Philippe Laffont (Trades, Portfolio).
First BanCorp
The investor holds 7.53 million shares of First BanCorp, which makes up 2.67% of his equity portfolio. GuruFocus estimates he has gained 43% on the investment since the fourth quarter of 2017.
The North Carolina-based bank has a $2.19 billion market cap; its shares were trading around $10.06 on Monday with a price-earnings ratio of 10.52, a price-book ratio of 1.06 and a price-sales ratio of 3.75.
According to the Peter Lynch chart, the stock is undervalued.
Weighed down by a low cash-debt ratio of 0.63, First BanCorp’s financial strength was rated 4 out of 10 by GuruFocus. In addition, the company’s weighted average cost of capital outperforms its return on invested capital, suggesting it is destroying value as it grows.
The company’s profitability and growth fared even worse, scoring a 1 out of 10 rating despite having margins and returns that outperform over half of industry peers. First BanCorp also has a one-star business predictability rank. GuruFocus says companies with this rank typically see their stocks gain an average of 1.1% per year.
With 3.47% of outstanding shares, Bacon is the company’s largest guru shareholder. Jim Simons' (Trades, Portfolio) Renaissance Technologies, Hotchkis & Wiley, Steven Cohen (Trades, Portfolio), Mario Gabelli (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio) also own the stock.
Bacon’s fourth-largest holding is 445,000 shares of Facebook, which has an equity portfolio weight of 2.30%. GuruFocus data indicates he has made an estimated gain of 34% on the investment since the third quarter of 2013.
The social media giant, which is headquartered in California, has a market cap of $545.61 billion; its shares were trading around $191.14 on Monday with a price-earnings ratio of 28.54, a price-book ratio of 6.37 and a price-sales ratio of 9.45.
Based on the Peter Lynch chart, the stock appears to be overvalued.
Boosted by no long-term debt and comfortable interest coverage, GuruFocus rated Facebook’s financial strength 9 out of 10. In addition, the robust Altman Z-Score of 16.53 suggests it is in good fiscal health.
The company’s profitability and growth scored an 8 out of 10 rating, driven by an expanding operating margin, returns that outperform a majority of competitors and a moderate Piotroski F-Score of 6.
Coleman is Facebook’s largest guru shareholder with 0.31% of outstanding shares. Other top guru investors include Sands, Segalas, Davis, Mandel, Simons’ firm, Laffont, Pioneer, First Pacific Advisors (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), Ruane Cunniff (Trades, Portfolio) and Halvorsen.
iShares MSCI Emerging Index
Bacon holds 1.46 million units of the iShares MSCI Emerging Index ETF, which accounts for 1.95% of the equity portfolio. GuruFocus estimates he has gained 3.2% on the investment since the third quarter of 2018.
The ETF, which tracks the performance of an index composed of large- and mid-cap equities in a number of emerging markets, has a $32.2 billion market cap; its units were trading around $42.79 on Monday with a price-earnings ratio of 12.70 and a price-book ratio of 1.63.
The 14-day relative strength index is 61.88, indicating it is approaching overbought levels.
Portfolio composition
As of the end of the first quarter, Bacon’s other top holdings were GCP Applied Technologies Inc. (GCP, Financial), Synchrony Financial (SYF, Financial), GDS Holdings Ltd. (GDS, Financial), Netflix Inc. (NFLX, Financial) and Electronic Arts Inc. (EA, Financial).
The guru’s $3.23 billion equity portfolio, which is composed of 289 stocks, is largely invested in the consumer cyclical, technology, industrial and financial services sectors.
Disclosure: No positions.
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