Viking Global’s 13F Stock Holdings & Strategy

Updated on December 29th, 2020 by Nikolaos Sismanis

Viking Global Investors is a Connecticut-based hedge fund, specializing both in early-stage companies and mature equities, with around $27.6billion of Assets under Management (AUMs). The company was founded by Norwegian-born Andreas Halverson who became a billionaire growing the fund since its inception in 1999. Andreas still manages the fund as of today, with a big chunk of its funds –around $24 billion- being allocated in standard individual equities.

Investors following the company’s 13F filings over the last 3 years (from mid-November 2017 through mid-November 2020) would have generated annualized total returns of 19.3%. For comparison, the S&P 500 ETF (SPY) generated annualized total returns of 12.2% over the same time period.

Note:  13F filing performance is different than fund performance.  See how we calculate 13F filing performance here.

You can download an Excel spreadsheet with metrics that matter of Viking Global Investors.

 

Keep reading this article to learn more about Viking Global Investors

Table Of Contents

Viking Global Investors Investment strategy

Throughout the years, Viking has stayed consistent in applying a research-intensive, long-term focused investment approach. At the core of its investment selection process is a fundamental analysis to ensure that its equities are resilient and able to deliver robust long-term returns. During this process, Viking will generally assess a business’s model and financials, its management team’s caliber, and the overall industry trend of the sector it operates in.

Additionally, Viking’s investment research and decision making processes are decentralized. However, risk management is centralized. In other words, Viking is able to capitalize on several unique ideas brought in by its analysts, while the fund’s top management is to ensure that said ideas remain balanced, risk-adjusted, and accountable.

This unique operational model allows the fund’s experienced managers to navigate Viking’s portfolio and capital allocation towards market-beating returns. At the same time, its investing professionals can solely focus on identifying unique investment ideas without worrying about dealing with issues such as hedging, risk management, and overall performance.

Considering the fund’s past 3-year performance, its investment strategy has been paying off well, outperforming the overall market by a significant margin and delivering to Viking’s clear objective of proving best-in-class performance for its investors.

Viking’s top 10 most significant investments

Viking’s public-equity portfolio is comprised of a selection of 72 individual equities. While this is quite a diversified portfolio, its top 10 holdings make up around 40% of its total weight. Still, no stock accounts for more than 6%, which is likely attributable to management avoiding going overweighed in a single investment.

Source: Viking’s 13f filing, Author

Microsoft (MSFT)

Found in a number of portfolios amongst the funds we have covered, Microsoft is Viking’s largest holding, occupying around 6% of its portfolio. The fund increased its position by around 122% during its latest quarter, further betting on a prosperous future for the tech giant. Microsoft’s bullish case remains robust, as the company’s latest quarter posted an all-time high net income of $13.89 billion.

Investors that choose to buy Microsoft even at its current post-rally price levels above $200 should hardly end up regretting it. The company is a free-cash-flow generation machine, conquering the cloud industry as its Azure segment has shown little signs of deceleration, similar to Amazon Web Services. While shares may look pricy at a 20-year high P/E of around 36, potential investors are buying a quality company run by a visionary, best-in-class management team.

Adaptive Biotechnology Corp. (ADPT) & BridgeBio Pharma (BBIO)

Adaptive Biotechnologies develops an immune-medicine platform for the diagnosis and treatment of a number of diseases. The company remains unprofitable, while its sales are relatively small – below $90 million over the past four quarters -despite growing.

Considering that Viking has been holding ~30 million shares since the company’s IPO, it’s likely that the fund strives to have an active role in management, as well as board seats. The fund’s stake makes for nearly ¼ of Adaptive’s shares outstanding. It also makes for around 5% of its total holdings.

Similarly, BridgeBio Pharma is a pre-revenue company with a pipeline of 20 development programs. Viking holds a little over 20% of the $8.2billion company, in what it looks like an active-influence stake to its operations, before a potential exit from big pharma.

Fidelity National Information Services (FIS)

Viking increased its stake in Fidelity by 32%, currently holding around 14% of the company’s shares. The company is Vikig’s third-largest holding and another example of Viking’s strong-fundamentals type of investing. Fidelity enjoys highly secured revenues, as the company’s information services are of a recurring nature. Sales have grown at a 5-year CAGR of 13.6%, while the stock’s forward P/E ratio is at a reasonable of around 21.17, considering the current environment’s sky-high multiples.

Fidelity is also yielding a complementary <1%, though distributions have historically grown rapidly.

American Express (AXP)

Buffet-favorite American Express is Viking’s fourth-largest investment, as the fund holds around $1 billion in the credit card provider. While consumer spending has remained strong during the pandemic, driven by higher demand for everyday essential products, consumers have avoided credit and paid with debit instead. The jobs market remains volatile as well, which has further assisted with reducing credit undertaking. As a result, AMEX’s shares have failed to follow the overall market’s rally and have lagged behind their pre-COVID-19 levels.

To double down in its position, Viking increased its holding by around 3%, scooping up some shares on the cheap. Despite suffering some revenue declines over the past couple of quarters, American Express has remained profitable, with a well-covered dividend and a historically low valuation. Currently trading at around 18X its forward earnings, Viking’s addition to its position is likely to turn out very fruitful as soon as credit demand resumes to normality. Berkshire’s 18.8% long-term stake in the company should also inspire some extra confidence for the stock’s future.

Centene Corp. (CNC)

Centene is the leader in providing insurance programs to the under-insured and uninsured individuals in the United States. The company has been growing its revenues rapidly at a 5-year CAGR of 36%, currently offering its services to 24 million Americans in all 50 states. Centene closed WellCare’s acquisition earlier this year, which has helped transform it from ~$70 billion in annual revenues to an anticipated $110 billion by the end of 2020.

Despite the humongous revenues, the company’s net profits margins remain razor-thin and are why the company is valued at around $34.5 billion. However, both through its organic and acquisition-based growth, Centene should be able to leverage its economies of scale and significantly expand its bottom line. Evidence can already be seen in the company’s latest quarterly earnings report, which included a net income of $568 million followed by its Q2 net income of $1B, the highest in its history.

Considering that shares are trading at a forward P/E ratio of only 15.7, we can see why Viking has held strong in its position through its filings, holding around 3% of its shares.

JPMorgan Chase & Co. (JPM)

JPMorgan is currently Viking’s sixth-largest holding, as the fund increased its position by a whopping 47% since its last quarter. The company features a 5-year DPS (dividend-per-share) CAGR (compound annual growth rate) of 16.17%, while management has bought back and retired around 21% of its stock over the past decade.

The minute after the Fed’s announcement that banks could resume their buybacks was released, JPM published a new monster buyback program of $30B, which represents nearly 8% of its current market cap, which should further aid with maximizing shareholder returns in the medium term. JPM arguably showcases the most investable case amongst the US’s biggest banks, and most certainly a high-quality pick.

T –Mobile (TMUS):

Since its merger with Sprint, the company has grown into a $164 billion telecommunication giant. The company should now be able to leverage its increased network and client base to compete against AT&T, as well as Verizon actively. Viking increased its position by a huge 122%, bringing its total exposure up to around 3.5%, likely to capitalize on the company’s promising future.

Hilton Worldwide Holdings (HLT): 

Hilton is Viking’s ninth-largest holding, which was increased by 21% from its previous quarter. The company further benefits from a capital-light economic model and a strong balance sheet. The position seems to be a potential play towards the hospitality sector’s post-COVID-19 recovery. We have previously found the stock amongst Pershing Square’s holdings, run by legendary investor Mr. Bill Ackman.

Amazon (AMZN)

Viking’s largest equity stake is an almost $2 billion position in Amazon. The fund trimmed the stock by around 30%, as Amazon’s prolonged rally had caused it to go over 10% of its total holdings. Considering that the e-commerce and internet infrastructure giant remains at the top of Viking’s portfolio, management seems to remain bullish on Amazon’s future, and trimming its stake should only be attributed to risk management.

The $1.6 trillion company has shown little to no signs of slowing down, as demand for its rapid delivery services has snowballed due to the pandemic. Simultaneously, with online traffic hitting new all-time highs amid the working-from-home economy, Amazon Web Services has also been growing rapidly, providing to the increased demand for cloud, storage, and content delivery.

As COVID-19 remains active and Prime Day is approaching, Amazon is likely to continue performing greatly over the next few quarters as well. While shares are currently trading near all-time highs, investors looking to hold Amazon into the long term should still find the stock to be a juicy opportunity.

Source: Viking’s 13f filing, Author

Final Thoughts

Viking’s 72-stock portfolio is well-diversified, with a strong capital allocation towards healthcare.

The company’s research-intense philosophy and unique separation of its opportunity-identification and execution teams have been able to yield market-beating returns over the past few years.

Because a large percentage of the company’s AUMs are allocated towards individual equities, Viking is one of the easier-to-replicate funds by retail investors. Still, Viking’s stock-picking requires additional due diligence, as the fund’s investments could represent hedging techniques or other non-profit-targeting positions. Having said that, excluding Viking’s stakes in the more speculative Adaptive Biotechnology and BridgeBio Pharma, the rest of its top 10 largest investments are made of trustworthy, long-term investment operations, feature decades of long-term shareholder value creation.