Billionaire Halvorsen’s Viking Global Grabs Big Stakes in Dow Chemical Co. (DOW), Deere & Co. (DE), More During Q4

Viking Global Investors is a Greenwich, Connecticut-based hedge fund started in 1999 by billionaire Andreas Halvorsen. The fund, one of the 140 Biggest and Most Famous Activist Hedge Funds, invests in both the equity and fixed income markets across the globe, and uses fundamental analysis to make investments in a wide variety of sectors. Halvorsen previously worked at Julian Robertson’s Tiger Management and is one of the most successful “Tiger Cubs”.

Tiger Global is coming off an uncharacteristically down year, as its investors lost 4% net in 2016 according to the fund’s Q4 investor letter. In fact, the Viking Long fund failed to beat the MSCI World Index for the first time since the fund’s inception, gaining 3.9% in 2016 compared to that index’s 5.1% gains. The recent investor letter stated that the fund’s concentrated sector bets did not fare well and that it was “very disappointed by these results”. It has since restructured its stock picking team and plans to invest more money in financial and consumer stocks. Those two sectors accounted for just 5% of the value of the fund’s 13F portfolio on September 30, with that figure rising to over 10% by the end of 2016. In this article, we’ll analyze some of the top holdings and moves of the fund during the fourth quarter.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 39.7%, topping the 24.1% gain registered by S&P 500 ETFs. Insider Monkey’s enhanced small-cap strategy registered gains of more than 45% over the last 12 months and outperformed SPY by more than 30 percentage points in the last 4.5 years (see the details here).

Facebook Inc. (NASDAQ:FB) was the top holding of Viking Global on December 31, accounting for almost 10% of the value of the fund’s 13F portfolio. The hedge fund bought an additional 228,753 shares of the stock during the fourth quarter, taking its holding to 18.98 million shares valued at $2.18 billion. Arrowstreet Capital was also bullish on Facebook Inc. (NASDAQ:FB) in Q4, opening a new position of 2.7 million shares valued at $312.5 million. Facebook Inc. (NASDAQ:FB) has been a great bet for investors, returning more than 15% in 2017 and trades at its all-time high price of ~$135 with a market capitalization of $385 billion. Facebook Inc. (NASDAQ:FB) recently reported earning $1.41 per share in the fourth quarter, beating analyst estimates of $1.31. Revenue also rose by 35% year-over-year to $8.81 billion, beating the consensus estimate of $8.5 billion. Facebook recently announced a new video app that will allow users to stream videos in their news feed through set-top boxes.

Viking Global Investors increased its stake in Microsoft Corporation (NASDAQ:MSFT) by 60% during the fourth quarter, to 21.95 million shares valued at $1.36 billion, making it the fund’s third-largest holding at the end of the fourth quarter. Chase Coleman‘s Tiger Global, another former “Tiger Cub”, initiated a new position in Microsoft Corporation (NASDAQ:MSFT) by buying more than 2 million shares worth $131 million during the year-end quarter. Microsoft Corporation (NASDAQ:MSFT) is trading near its all-time highs like many other mega-cap technology stocks and has climbed by 28% over the last year. The company reported adjusted quarterly earnings of $0.83 a share with revenue of $26.07 billion for its fiscal year 2017 second quarter. The results were better than analyst estimates of earnings of $0.79 a share on revenue of $25.28 billion.

We’ll check out three more positions held by Viking Global at the end of 2016 on the next page.

Amazon.com, Inc. (NASDAQ:AMZN) was the fourth-largest holding of Viking Global as of the end of December, despite the fund selling 1.3 million shares during the period and reducing its overall stake to 1.6 million shares valued at $1.2 billion. D.E Shaw & Co. almost halved its own stake in Amazon.com, Inc. (NASDAQ:AMZN), selling 541,398 shares to reduce its holding to 539,476 shares. The online retail leader has given a tremendous return of 66% to investors over the last year and currently has a market capitalization of $402 billion. Not only has the company diversified successfully to become a leader in the cloud computing industry, it has also taken a big lead over others in the voice assistance technology segment, with Echo selling like hot cakes during the holiday season. The company plans to further backward integrate into supply chain management by entering the air freight business.

American Chemicals giant Dow Chemical Co. (NYSE:DOW) was Viking Global Investors’ biggest new stock purchase during the fourth quarter, as the fund bought 19.6 million shares worth $1.1 billion. It is not only the fifth-largest holding of the hedge fund, but also the only materials stock amongst its top-10 holdings. Larry Robbins‘ Glenview Capital bought 2.89 million Dow shares in Q4, increasing its position to 8.79 million shares valued at $503 million. Dow Chemical Co. (NYSE:DOW) reported adjusted fourth quarter earnings of $0.99 per share, beating the consensus of $0.88. Revenue of $13 billion also beat the consensus of $12.38 billion. The stock is up by almost 7% in the 2017 and trades near its 52-week high of $61.85. Dow Chemical Co. (NYSE:DOW) pays out a quarterly dividend of $0.46 a share, which equates to a handsome forward yield of 3%.

Deere & Company (NYSE:DE) was another new purchase of Viking Global’s during the fourth quarter, as the fund bought 9.3 million shares valued at $959 million. This made the industrial equipment maker the sixth-largest holding of the hedge fund at the end of 2016. Quant hedge fund D E Shaw was the third-largest buyer of the stock in Q4, initiating a new position in Deere & Company (NYSE:DE) of 1.43 million shares valued at $147 million. The company has heavily outperformed the broader market by gaining almost 40% over the last year. A majority of the analysts covering the stock have rated it as a ‘Hold’ and its mean target price of $103 is almost 5% lower than its current market price. Deere & Company (NYSE:DE) should perform better under the new Trump administration, with its policy focus on the U.S industrial sector.

Disclosure: None