Andreas Halvorsen‘s Viking Global is one of the big names in the hedge fund world and has attracted a large pool of investments owing to its track record. Assets under the fund’s management amount to $32.4 billion at the end of March. The technology sector accounts for 16% of Viking Global’s well-diversified portfolio. We decided to take a closer look at the fund’s top picks in the sector, which include Google Inc (NASDAQ:GOOGL), Micron Technology, Inc. (NASDAQ:MU), and Alibaba Group Holding Ltd (NYSE:BABA).
Halvorsen is a tiger cub owing to his association with the veteran investor Julian Robertson. He launched his own fund in 1999 with two former colleagues from Tiger Management, David Ott and Brian Olson. However, Olson left the fund in 2005 and Ott followed him in 2012. The fund returned about 89% in its maiden year and 119% between 2005 and 2010 as compared to an 11% gain for the MSCI World Index. Currently the market value of Viking’s public equity portfolio stands at $25.81 billion. Viking Global returned 4.8% in the first quarter and outperformed the S&P 500 Index by 3.8 percentage points. The fund returned 17.7% annually since inception. It also returned 14.9% annually over the last 10 years and outperformed the S&P 500 Index by 6.9 percentage points per year during this time. These are impressive numbers for a large hedge fund. What is most impressive is that Viking Global lost only 0.9% in 2008 when most investors lost their shirts as the S&P 500 declined by 37%.
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Viking initiated a position in Google Inc (NASDAQ:GOOGL)’s Class A shares during the first quarter of 2005. During the first quarter this year the fund boosted its stake in the $373 billion tech giant by 120% to 1.64 million shares valued at $908.85 million. The holding represents 3.52% of the fund’s portfolio value, up from 1.81% a quarter earlier. Halvorsen also holds a large position in Google’s Class C shares (GOOG) consisting of 841,147 shares valued at $460.97 million. Recently, rumors have surfaced that Google Inc (NASDAQ:GOOGL) might be interested in acquiring Twitter Inc (NYSE:TWTR), which have resulted in spiking the stock price of the micro-blogging website. The drivers behind this speculation include the sell-off in Twitter’s stock, the resignation of its CEO, and an array of deals that the company recently signed with Google regarding the inclusion of tweets as part of Google’s search results. As far as verified facts go, Google Inc (NASDAQ:GOOGL) is getting more serious about snatching a greater share of the mobile payments market. The company recently announced that it will not charge credit card companies any fee for payments made through its upcoming Android Pay. After Viking, Boykin Curry‘s Eagle Capital Management is the largest stockholder of Google Inc (NASDAQ:GOOGL) within our database, holding some 1.14 million Class C shares valued at $626.38 million.
Despite Micron Technology, Inc. (NASDAQ:MU)’s slumping stock price, Viking increased its stake in the $26 billion provider of semiconductor devices by 54% during the first quarter to 31.15 million shares valued at $844.99 million. The holding represents 2.88% of the company’s outstanding stock and 3.27% of the fund’s portfolio value. So far this year, Micron Technology, Inc. (NASDAQ:MU)’s stock has cratered by more than 30%. Morgan Stanley recently downgraded the stock to ‘Underweight’ from an ‘Equal Weight’ rating and revised downward its price target to $21 from $30. Concerns about Samsung willing to accept lower margins for DRAM in order to capture a greater market share have plagued Micron Technology, Inc. (NASDAQ:MU), which recently touched a new 52-week low. Among the funds that we track, David Einhorn‘s Greenlight Capital is the largest stockholder of Micron Technology, Inc. (NASDAQ:MU), owning about 33.55 million shares valued at $310.20 million. Here is what Halvorsen wrote about Micron in Viking Global’s Q1 investor letter:
“Micron, a leading manufacturer of memory semiconductors, was our biggest loser this quarter, costing VGE 0.6% and VLF 0.7%. Having ranked among our top five winners last year, Micron suffered from short-term PC DRAM pricing weakness in the first quarter, caused by a cyclical slowdown in the PC industry. We believe this weakness is temporary and of decreasing importance as industry demand will depend less on PCs and more on the high growth mobile and server end-markets. Our confidence is supported by an improved industry structure that we believe will lead to more stable margins, less volatile earnings, and higher shareholder returns. We initiated our investment in early 2013 on the back of this thesis and continue to believe strong long-term secular demand outweighs any short-term cyclical weakness. Of equal importance, we expect competitors to remain disciplined during this period of temporary weakness. As near-term pricing stabilizes and shareholder returns increase, we expect that investors will recognize the structural improvements in the industry and re-rate Micron from its current price-earnings multiple of 7.5x. We think there is significant upside to Micron’s share price and have chosen to keep it as a top 20 position in our portfolio.”
Viking increased its stake in Alibaba Group Holding Ltd (NYSE:BABA) by a hefty 87% during the first quarter to 6.94 million shares valued at $578.07 million. The stock of the $213 billion e-commerce juggernaut has fallen by over 17% year-to-date, although the specialty retail industry has gained over 4% during the same period. The hedge fund interest in Alibaba Group Holding Ltd (NYSE:BABA), among those that we track, has fallen over the course of the first quarter, as 86 firms had invested a total of $5.80 billion in the company at the end of March as compared to 90 funds with $7.11 billion invested at the end of the previous quarter. Rob Citrone‘s Discovery Capital Management is the largest stockholder of Alibaba Group Holding Ltd (NYSE:BABA) among these, holding about 8.77 million shares valued at $730.36 million.
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