Kerr Neilson’s Platinum Asset Management has filed its 13F with the SEC for the reporting period of March 31. Neilson founded Platinum Asset Management in 1994 with financial support from George Soros. The investment manager specializes in international equities and has a US-traded equity portfolio valued at $5.01 billion as of the reporting period. The top ten stock holdings of Platinum Asset Management account for 49.37% of its portfolio value and the fund manager is primarily invested in the technology sector, which accounts for more than 60% of the value of his portfolio. As Neilson has a major part of his portfolio dedicated towards tech, we’ll discuss his top picks in that sector within this article, which includes companies like Intel Corporation (NASDAQ:INTC), Baidu Inc (ADR) (NASDAQ:BIDU), and Google Inc (NASDAQ:GOOG).
Intel Corporation (NASDAQ:INTC) is the second largest stock investment of the fund manager and his top tech stock. Neilson owns 11.99 million shares of the chipmaker with a market value of $375.08 million and it accounts for 7.49% of his overall portfolio. According to a recent report in The New York Times, Intel has re-initiated its takeover talks with Altera Corporation (NASDAQ:ALTR) despite its previous failure in reaching an agreement on a deal. It could be a crucial deal for Intel as it will allow the company to diversify its operations in consumer electronics. Another reason to resume these talks could be the decline in demand for PCs over the last couple of years. According to market experts, Altera has resumed these talks out of investor pressure and it is important to know that the smaller semiconductor company declined Intel Corporation (NASDAQ:INTC)’s bid of $54 per share last time. First Eagle Investment Management and Ken Fisher‘s Fisher Asset Management hold large positions in Intel Corporation.
Baidu Inc (ADR) (NASDAQ:BIDU) comes in at number three overall in the equity portfolio of the investment manager, who owns 1.23 million shares of the Chinese search engine at a market value of $256.37 million. The Chinese tech company is known to explore investment opportunities in the U.S, and Taboola is its latest strategic alliance partner. Under the current deal, Baidu will contribute $30 million towards the financial funding of Taboola, which has already raised $157 million in its series E funding round in February. This is the fourth time that the Chinese online player has made an investment in a U.S firm, with previous investments involving Uber and IndoorAtlas. Some of the major investors of Baidu Inc (ADR) (NASDAQ:BIDU) include Stephen Mandel‘s Lone Pine Capital, Coatue Management, and Viking Global.
eBay Inc (NASDAQ:EBAY) is the third largest technology investment of Platinum Asset Management. Neilson strengthened his position to 4.26 million shares with a market value of $245.81 million after purchasing 193,500 shares of the e-commerce company during the first quarter. After the announcement of the future spinoff of PayPal last year, the California-based e-commerce company has announced board members for the new independent company. As per the announcement, most of the positions of PayPal will be filled by the existing board members of eBay Inc (NASDAQ:EBAY), who would either migrate to the company or share both positions. The split is likely to be completed by the third quarter of 2015 and the independent company would trade publicly on the NASDAQ with the “PYPL” ticker. Carl Icahn was one of the active forces behind the split and his Icahn Capital LP holds 46.27 million shares of eBay with a market value of $2.67 billion.
Cisco Systems, Inc. (NASDAQ:CSCO) is another leading technology pick of Platinum Asset Management, which owns 8.46 million shares of the company with a market value of $232.90 million. The networking giant slightly outperformed market expectations of its quarterly revenue and earnings per share for its fiscal third quarter of 2015. Against market expectations of 4.5% growth in quarterly revenue, Cisco Systems, Inc. (NASDAQ:CSCO) reported 5% year-over-year growth with revenue of $12.1 billion. At the same time, the company announced non-GAAP earnings per share of $0.54 against the market estimates of $0.53. Despite the new makeover plans of the networking giant, its traditional networking segment was the largest contributor to its revenue. Value investor Donald Yacktman‘s Yacktman Asset Management is the largest shareholder of Cisco among the funds we track with nearly 49 million shares.
Neilson has positions in both the Class A and Class C shares of the world’s leading search engine company, Google Inc (NASDAQ:GOOG). In Google’s Class A stock he owns 374,840 shares with a market value of $205.41 million, while in the company’s Class C stock (NASDAQ:GOOGL) he owns 353,080 shares with a value of $195.85 million. Individually the positions rank sixth and seventh overall in his portfolio, though they collectively rank second behind only Neilson’s top pick Carnival Corp (NYSE:CCL), and rank as his top tech pick. In an announcement made today, the search engine giant will lower its cloud computing prices by 30% to accommodate the short-term needs of its customers. The company conveyed a desire to improve its cloud services instead of making money as its primary motive and said that this move would help the company grow its smaller-scale clientele. According to Google Inc (NASDAQ:GOOG), the price of its cloud computing services have dropped by 50% since the launch of Google Compute Engine in 2013. Billionaire Andreas Halvorsen of Viking Global owns the largest stake in Google among the investors we track, with large positions in both the company’s Class A and Class C shares.
Hedge funds and other big money managers like Neilson tend to have the largest amounts of their capital invested in large and mega-cap stocks like eBay and Google because these companies allow for much greater capital allocation. That’s why if we take a look at the most popular stocks among funds, we won’t find any mid- or small-cap stocks there. However, our backtests of hedge funds’ equity portfolios between 1999 and 2012 revealed that the 50 most popular stocks among hedge funds underperformed the market by seven basis points per month. On the other hand, their top small-cap picks performed considerably better, outperforming the market by 95 basis points per month. This was confirmed through backtesting and in forward tests of our small-cap strategy since 2012. The strategy, which involves imitating the 15 most popular small-cap picks among hedge funds has provided gains of more than 139%, beating the broader market by over 80 percentage points (see the details).
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