Viking Global has been launched around 15 years ago by Tiger Cub Andreas Halvorsen, a former employee of Julian Robertson‘s Tiger Management and it managed to grow to over $25 billion in assets under management. The long-short hedge fund has had an impressive run during this time, its flagship fund’s average return amounting to 19% per year since inception, while last year it returned around 23% and during the first six months its return amounted to slightly over 6%. In addition, Viking also manages a long-only fund that posted returns of 38% last year and 9.5% during the first half of 2014.
The historical data shows that during the 2000-2012 period the value-weighted average returns of Viking Global’s 13F portfolio amounted to 0.67% per month, which is above the S&P 500 total return of 0.30% per month. However, if we focus on top five equity positions from Viking’s 13F portfolio we see that they returned, on average, 0.84% per month during the same period. Even though these stocks are not the best performing in the fund’s equity portfolio, they still managed to outrun the S&P 500 by more than six percentage points per year between 2000 and 2012. So, what are the top positions in Andreas Halvorsen’s portfolio these days? At the end of the third quarter, the top five holdings in terms of value in Viking Global’s equity portfolio were represented by Illumina, Inc. (NASDAQ:ILMN), Pioneer Natural Resources (NYSE:PXD), Valeant Pharmaceuticals Intl Inc (NYSE:VRX), Walgreen Company (NYSE:WAG), and Lowe’s Companies, Inc. (NYSE:LOW). Let’s take a closer look at these stocks.
In Illumina, Inc. (NASDAQ:ILMN), Viking Global inched up its position by 9% during the third quarter to 8.65 million shares. The $1.42 billion position represented around 5.7% of the fund’s total equity portfolio value. Viking initiated a position during the fourth quarter of 2013 and initially held around 1.70 million shares, but it raised its exposure by more than 400% during the first three months of 2014. Meanwhile, Illumina advanced by more than 73% year-to-date.
Overall, Illumina, Inc. (NASDAQ:ILMN) witnessed an increase in bullish sentiment from investors during the third quarter, as our data show. Out of more than 700 funds that we track, 55 funds reported long positions in the company, up from 46 funds in the previous quarter. However, the aggregate value of the positions held by these funds declined by $87 million to $2.80 billion, which can be explained by the stock’s appreciation that led to investors trimming their positions to collect some profits and rebalance their portfolios. Nevertheless, Viking Global still owns the largest long position in Illumina, Inc. (NASDAQ:ILMN), while other funds reported less significant stakes. Samuel Isaly’s Orbimed Advisors disclosed holding 1.34 million shares in its latest 13F filing, while David E. Shaw’s D.E. Shaw upped its position by 60% to 748,400 shares.
Pioneer Natural Resources (NYSE:PXD) is Viking Global’s second-largest position and the largest equity play of Mr. Halvorsen. In its latest 13F filing, the fund reported holding 6.78 million shares of the company with an aggregate value of $1.34 billion, which represent around 5.4% of the equity portfolio. During the third quarter, Viking increased its exposure to Pioneer Natural Resources (NYSE:PXD) by 2.71 million shares, being one of the most bullish investors if we can say so.
Pioneer Natural Resources (NYSE:PXD) is a newcomer in Viking Global’s equity portfolio this year. The fund added the company to its 13F portfolio during the first quarter, and during the second it raised the stake by 150% on the quarter to 4.07 million shares, versus 1.64 million shares it held initially. The stock has had a pretty good run during the first half of the year, appreciating by approximately 25%, however, in the past six months it slid and currently its year-to-date return amounts to 21% in red.
The independent oil & gas exploration and production company has a market cap of more than $22 billion, which makes it one of the largest companies in the industry. Nevertheless, oil can be considered a rather risky bet, since the price of the commodity slid due to a big surplus in the supply. A recent meeting of the OPEC countries did not help, as the parties agreed not to reduce their supply, a move that was considered by many experts an attempt to squeeze out US shale producers. However, the US producers are expected to further increase their capacity next year, which is currently the largest in the last 30 years, but companies will probably cut down on their investments in new wells.
In this way, we can assume that Mr. Halvorsen is betting on oil prices to rebound in the future, so he keeps raising Viking’s position in Pioneer Natural Resources (NYSE:PXD) while the stock is getting cheaper. Or, the company might pursue the sale of some of its assets like it is doing currently with its 50.1% interest in Eagle Ford Shale Midstream business. However, overall investors don’t look so optimistic as the number of funds holding shares of Pioneer dropped by 7 to 51 funds. John H. Scully’s SPO Advisory Corp is another shareholder of Pioneer which owns 5.48 million shares as of the end of September.
Valeant Pharmaceuticals Intl Inc (NYSE:VRX) is the second healthcare company that appears on the list of Viking’s top five largest holdings. In fact, the healthcare sector amasses the largest portion of the fund’s equity portfolio (around 30%). In Valeant, however, Viking cut its stake by 19% during the July-September period to some 9.97 million shares which have a total value of $1.31 billion and represent 5.3% of the total equity portfolio value. The fund has been a long-term investor in Valeant Pharmaceuticals Intl Inc (NYSE:VRX); it first disclosed holding shares in the company as of the end of the second quarter of 2010, while the stock gained more than 600% since then. The largest shareholder in the specialty pharmaceutical company among the funds that we track is Jeffrey Ubben’s Valueact Capital, which owned 18.92 million shares of the company at the end of September, and increased its stake to 19.13 million shares around a week ago. Mr. Ubben has been recently appointed to Valeant Pharmaceuticals Intl Inc (NYSE:VRX)’s board of directors.
In Walgreen Company (NYSE:WAG) and Lowe’s Companies, Inc. (NYSE:LOW), Viking disclosed holding around 20.71 million shares and 19.42 million shares respectively. Both positions amass between 4% and 5% of the fund’s equity portfolio.
Disclosure: none
