In this article, we discuss 10 new stock picks of billionaire Andreas Halvorsen’s Viking Global. If you want to see more stocks in this selection, click Billionaire Andreas Halvorsen’s Viking Global Portfolio: 5 New Stock Picks.
Andreas Halvorsen is the CEO and co-founder of Viking Global, a Connecticut-based hedge fund with a Q1 2022 portfolio worth close to $25 billion. The hedge fund invests primarily in the industrials, healthcare, utilities and telecommunications, information technology, finance, consumer discretionary, and communications sectors.
So far in 2022, many prominent hedge funds, including Viking Global, failed to post gains. Andreas Halvorsen’s fund reported a 9% decline in the first four months of the year. This is because the portfolios consist mostly of growth plays and tech names, which have taken a beating in the broader market as of late, resulting in a mass selloff.
After a consistent decline in tech stocks, most hedge funds have disposed of their previously held stakes in these companies. For example, as per the 13F filings from Q1 2022, Andreas Halvorsen’s Viking Global dumped its Peloton Interactive, Inc. (NASDAQ:PTON) stake entirely, whose shares had dropped 26% in the first quarter and 41% since then, as reported on May 16.
Billionaire Andreas Halvorsen’s Viking Global purchased 16 new stocks in Q1 2022, and increased its hold on 31 existing securities. Some of the most notable securities in the billionaire’s portfolio included Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Visa Inc. (NYSE:V).
Ole Andreas Halvorsen of Viking Global
Our Methodology
We used the Q1 2022 portfolio of billionaire Andreas Halvorsen for this analysis, selecting the most prominent new stock picks of his hedge fund during the quarter.
Billionaire Andreas Halvorsen’s Viking Global Portfolio: New Stock Picks
10. Shopify Inc. (NYSE:SHOP)
Number of Hedge Fund Holders: 72
Shopify Inc. (NYSE:SHOP) is a commerce platform operating in Canada, the United States, Europe, the Middle East, Africa, the Asia Pacific, and Latin America. Billionaire Andreas Halvorsen’s Viking Global added Shopify Inc. (NYSE:SHOP) to its portfolio by purchasing 223,721 shares of the company, worth $151.2 million.
Jefferies analyst Samad Samana on May 23 maintained a Buy rating on Shopify Inc. (NYSE:SHOP) but lowered the price target on the stock to $475 from $550. The analyst has slashed numbers for several software companies given economic headwinds and the threat of recession, considering factors that include end market exposure, cash flow support, European exposure, and historical net retention. Multiple latest reports suggest that consumer behavior is shifting rapidly and there is a slowdown in e-commerce spending, the analyst said.
According to Insider Monkey’s Q1 data, 72 hedge funds were bullish on Shopify Inc. (NYSE:SHOP), compared to 86 funds in the earlier quarter. Stephen Mandel’s Lone Pine Capital is a significant shareholder of the company, with a position worth over $699 million.
In addition to Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Visa Inc. (NYSE:V), Shopify Inc. (NYSE:SHOP) is on the radar of elite investors.
Here is what Baron Global Advantage Fund has to say about Shopify Inc. (NYSE:SHOP) in its Q1 2022 investor letter:
“Shopify Inc. is a cloud-based software provider offering an operating system for multi-channel commerce. Shopify has been adopted by over two million merchants who processed $175 billion of gross merchandise volume in 2021, making it the second largest e-commerce player in the U.S. The stock corrected sharply in the first quarter, declining 51%, as a result of investor rotation out of fast-growing, long-duration stocks and after the company released quarterly results, expecting a normalization in the rapid growth it has experienced during the early stages of the pandemic. We remain shareholders as we believe Shopify has a long runway for growth addressing less than 1% of global commerce spending with a unique and competitively advantaged platform.”
9. The Progressive Corporation (NYSE:PGR)
Number of Hedge Fund Holders: 52
The Progressive Corporation (NYSE:PGR) is an Ohio-based insurance holding company that operates in three segments – Personal Lines, Commercial Lines, and Property. Securities filings for Q1 2022 reveal that billionaire Andreas Halvorsen acquired 1.03 million shares of The Progressive Corporation (NYSE:PGR), worth $118.2 million, representing 0.47% of the total 13F portfolio.
On May 18, The Progressive Corporation (NYSE:PGR) declared a $0.10 per share quarterly dividend, in line with previous. The dividend is payable on July 15, to shareholders of record on July 7. In addition, the company has gotten approval to renew a buyback program which authorizes the repurchase of up to 25 million of its common shares.
Citi analyst Michael Ward initiated coverage of The Progressive Corporation (NYSE:PGR) with a Sell rating and a $93 price target on May 23.
According to Insider Monkey’s first quarter database, 52 hedge funds were bullish on The Progressive Corporation (NYSE:PGR), with collective stakes worth over $2 billion, compared to the same number of funds in the earlier quarter, holding stakes in the company valued at $1.90 billion. William B. Gray’s Orbis Investment Management is the largest shareholder of the company, with 5.3 million shares worth $611.50 million.
Here is what LRT Capital Management has to say about The Progressive Corporation (NYSE:PGR) in its Q1 2022 investor letter:
“Progressive is a leading U.S. auto insurer that has pioneered telemetrics as a source of differentiation in its underwriting and it operates through a direct (non-agency) sales model. We believe that the company’s sales model, which is still the minority model in the industry, confers on the company a durable process-based cost advantage that has allowed the company to deliver industry leading combined ratios (a standard measure of profitability in the insurance industry).
The company has plenty of room to grow and take market share from players such as State Farm, Farmers and Nationwide. The cost advantages conferred by the direct sales model are unstoppable, and the scale advantages the company has in advertising and other customer acquisition costs furthers its strong competitive position. We believe the industry structure is going to evolve towards a duopoly with Progressive and GEICO as the two main players.
While we do not believe telemetrics itself confers any competitive advantage as it is a technology that has been copied by other players, Progressive is a very innovative company, and it has evolved from being an insurer for the highest risk drivers to one that now targets the general population. GEICO on the other hand began its life as an insurer for the best drivers and has now evolved in the direction of insuring everyone. On the surface the companies are similar, but their different pasts continue to shape their corporate cultures and are evident in subtle ways in their decision-making processes arounds expense management and claims processing.
The company has a very conservative investment portfolio with over $44 billion in fixed income securities. 75% of their portfolio is held in securities with a duration of under five years, which means that an increase in interest rates will benefit the company as the portfolio will relatively rapidly reprice into higher yielding securities.”
8. Blackstone Inc. (NYSE:BX)
Number of Hedge Fund Holders: 61
Blackstone Inc. (NYSE:BX) is a New York-based alternative asset management firm specializing in real estate, private equity, hedge fund solutions, credit, public debt and equity, and multi-asset class strategies. Billionaire Andreas Halvorsen’s hedge fund added 509,587 shares of Blackstone Inc. (NYSE:BX) to its portfolio in Q1 2022, worth $64.6 million.
On April 21, Blackstone Inc. (NYSE:BX) reported earnings for the first quarter of 2022. The company posted an EPS of $1.55, beating market estimates by $0.50. The revenue increased 71.06% year-over-year to $3.50 billion, outperforming analysts’ predictions by $988.17 million.
Blackstone Inc. (NYSE:BX) on May 26 disclosed a $1 million share purchase by board director James Breyer. He purchased 9,326 shares of the common stock priced between $106.66 and $107.75 in a transaction dated May 25, 2022.
Deutsche Bank analyst Brian Bedell reiterated a Buy recommendation on Blackstone Inc. (NYSE:BX) but lowered the price target on the stock to $180 from $182. The analyst noted that higher buying opportunities are emerging in the brokers, asset managers, and exchange sector amid the equity market decline. The stocks are pricing in an approximately 55% chance of recession, making the risk/return for 12-18 month investment horizons across most of the group “very attractive”, said the analyst.
According to Insider Monkey’s data, 61 hedge funds were bullish on Blackstone Inc. (NYSE:BX) at the end of March 2022, compared to 62 funds in the earlier quarter. D E Shaw is the leading shareholder of the company, with 2.9 million shares worth $371.15 million.
Here is what Aristotle Capital Management Value Equity has to say about Blackstone Inc. (NYSE:BX) in its Q1 2022 investor letter:
“Founded by its current CEO Stephen Schwarzman and Pete Peterson in 1985, Blackstone is one of the largest alternative asset managers in the world, with more than $880 billion of assets under management (AUM). The firm creates and manages investment vehicles that span asset classes globally and serve both institutional clients as well as high-net-worth individuals. Its core business segments include Real Estate (34% of fee-earning AUM), Credit and Insurance (31%), Private Equity (24%), and Hedge Fund Solutions (11%).
Blackstone has leveraged its broad product portfolio and enviable investment performance to not only raise substantial amounts of capital but also maintain its reputation as a one-stop shop for investors looking to gain exposure to alternative assets. In contrast to traditional asset managers that rely on investor inaction to keep redemption rates low, the products offered by alternative asset managers typically have lockup periods that prevent redemptions for a substantial amount of time (often 10+ years).
High-Quality Business
Some of the quality characteristics we have identified for Blackstone include:
-Reputable management team that has produced an admirable track record of investment performance and demonstrated its ability to raise capital (the firm is now 9x larger since its 2007 IPO);
-Stable client base and sticky asset base with 73% of its capital locked up for over 10 years; and
-Significant scale and strong brand that provides a myriad of advantages, including for distribution and new product launches.
Attractive Valuation
Based on our estimates of normalized earnings, we believe shares of Blackstone are offered at a discount relative to our estimate of intrinsic value. It is our view that current valuation does not appropriately reflect our estimated future levels of fee-based revenue.
Compelling Catalysts
Catalysts we have identified for Blackstone, which we believe will cause its stock price to appreciate over our three- to five- year investment horizon, include:
-Increased fee-based revenue as dry powder committed capital that has yet to be invested is deployed. As of the fourth quarter of 2021, there was a total of $136 billion in dry powder across the firm;
-Given its scale and sustained investment prowess, Blackstone is uniquely positioned to benefit from the secular shift in investor allocation away from traditional managers and toward less liquid and higher expected return strategies in the alternative asset management sector; and
-Further penetration in the retail and private wealth channel, a segment of investors that has historically been excluded from participating in alternative assets. Blackstone has a first-mover advantage in providing institutional-quality products across its expanding distribution teams that focus on financial advisors.”
7. Dollar General Corporation (NYSE:DG)
Number of Hedge Fund Holders: 53
Dollar General Corporation (NYSE:DG) is a Tennessee-based discount retailer. Securities filings for Q1 2022 reveal that Andreas Halvorsen’s Viking Global added Dollar General Corporation (NYSE:DG) to its portfolio by purchasing 388,317 shares of the company, worth $86.45 million.
Dollar General Corporation (NYSE:DG) on May 26 reported its Q1 2022 results, posting earnings per share of $2.41, beating consensus estimates by $0.10. The revenue of $8.75 billion outperformed analysts’ predictions by $38.44 million.
On April 27, Truist analyst Scot Ciccarelli raised the price target on Dollar General Corporation (NYSE:DG) to $227 from $178 and kept a Hold rating on the shares after its Q1 results. Dollar General Corporation (NYSE:DG)’s earnings were “solid” and while inflationary pressures continue to increase, customers spending is intact as employment remains healthy, the analyst told investors in a research note.
According to Insider Monkey’s Q1 data, 53 hedge funds were bullish on Dollar General Corporation (NYSE:DG), up from 44 funds in the earlier quarter. Tim Hurd and Ed Magnus’ BlueSpruce Investments is a prominent shareholder of the company, with more than 1 million shares worth $223.5 million.
Here is what LRT Capital Management has to say about Dollar General Corporation (NYSE:DG) in its Q3 2021 investor letter:
“Executive Summary
At LRT Capital Management we are continuously searching the market for great investment opportunities. Our favorite finds are companies with moats and growth opportunities that justify a higher price than what the stock is trading for. One of our holdings (approximately 1.5% of our long exposure) is Dollar General (DG), so today, we wanted to tell you a bit about this great company.
Company Overview
Dollar General is a discount retailer with the largest brick-and-mortar presence in the United States by store count. The company’s largest concentration of stores can be found in the southern, southwestern, midwestern, and eastern parts of the United States.10 Dollar General was founded in 1939 by J.L. Turner, who originally named the company “J.L. Turner and Son, Wholesale”. As the name suggests, the company began its life as a wholesaler, but quickly turned to a retailer of general store goods. By the early 1950s, the company had annual sales of $2 million per year,12 which is the equivalent of $22.95 million in 2021 dollars when adjusted for inflation.
The first Dollar General store opened on June 1st, 1955 in Springfield Kentucky. The simple concept was that no item in the store would cost more than one dollar. The company changed its name to Dollar General Corporation in 1968 when Dollar General became publicly traded. At the time of its initial public offering, the business generated more than $40 million in annual sales. The company’s common stock was publicly traded from 1968 until July 2007, when it was taken private by KKR. The company went public again in November 2009, under the ticker DG.
Today, Dollar General is an evolved, and phenomenal business with more room for growth. Annual sales reached a record $33.7 billion in fiscal year 2021 after consecutively growing the top line for many years. The company’s main products are every-day necessities and consumables purchased by lower income consumers on tight budgets…”
6. Inspire Medical Systems, Inc. (NYSE:INSP)
Number of Hedge Fund Holders: 30
Inspire Medical Systems, Inc. (NYSE:INSP) is a Minnesota-based medical technology company focused on the development of minimally invasive solutions for patients with obstructive sleep apnea. Inspire Medical Systems, Inc. (NYSE:INSP) is a new arrival in Andreas Halvorsen’s Q1 portfolio, with his hedge fund buying 310,881 shares of the company, worth $79.80 million.
On May 4, Piper Sandler analyst Adam Maeder raised the price target on Inspire Medical Systems, Inc. (NYSE:INSP) to $310 from $305 and maintained an Overweight rating on the shares after the “beat-and-raise” quarter. While COVID-19 pressured the business in the first six weeks of the quarter, Inspire Medical Systems, Inc. (NYSE:INSP) saw a good volume recovery throughout the remainder of Q1, the analyst told investors in a research note. The analyst noted that the business continues to perform well and the management is increasing the fiscal year guidance by $18 million.
According to Insider Monkey’s Q1 data, 30 hedge funds were bullish on Inspire Medical Systems, Inc. (NYSE:INSP), compared to 31 funds in the prior quarter. Richard Driehaus’ Driehaus Capital is the leading shareholder of the company, with 315,387 shares worth about $81 million.
Like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), and Visa Inc. (NYSE:V), Inspire Medical Systems, Inc. (NYSE:INSP) is a notable stock pick of billionaire Andreas Halvorsen.
Here is what Headwaters Capital has to say about Inspire Medical Systems, Inc. (NYSE:INSP) in its Q1 2022 investor letter:
“Inspire Medical (“INSP”) +12%. Inspire Medical sells an implantable neurostimulation device to treat sleep apnea (detailed discussion in Q4 ’20 letter). Inspire outperformed during the quarter as the company continues to add new implant centers at a faster pace than management initially expected. Additionally, given that Inspire’s devices are an alternative to CPAP treatment, the company is expected to benefit from a recall of Phillips Respironics’ CPAP devices, which is driving increased interest in the Inspire device.”
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Disclosure: None. Billionaire Andreas Halvorsen’s Viking Global Portfolio: 10 New Stock Picks is originally published on Insider Monkey.
