Below are Melvin Capital’s top 5 stock holdings. For a comprehensive list please see Melvin Capital’s Top 10 Stock Holdings.
5. L Brands, Inc. (NYSE: LB)
Gabriel Plotkin is bullish on L Brands (NYSE: LB) since the beginning of this year and the hedge fund has benefited from its big bet. Shares of woman’s specialty retailer rose 107% in the last twelve months. LB is Melvin’s fifth-largest stock holding, accounting for 3.82% of the portfolio.
L Brands’ stock price rally is backed by strong revenue growth. The company has generated 14% year over year revenue growth in the September quarter. Andrew Meslow, Chief Executive Officer of L Brands, stated “L Brands reported a record third quarter, driven by exceptional results and continued strength at Bath & Body Works, and a significant improvement in performance at Victoria’s Secret.”
4. Booking Holdings Inc. (NASDAQ: BKNG)
Booking Holdings Inc. (NASDAQ: BKNG) underperformed in the last twelve months due to pandemic related challenges. It is the fourth largest stock holding of Melvin Capital’s 13F portfolio, accounting for 4.36% of the overall portfolio. Despite the underperformance, Gabriel Plotkin increased its existing position by 14% during the September quarter.
MPE Capital, which has generated a 23.5% return for 2020, highlighted few stocks including Booking Holdings in an investor’s letter. Here is what MPE Capital stated:
“I also made some sizeable additions to previous holdings as the market offered us deep discounts to my estimates of fair value. One notable example being Booking Holdings. During the depths of the market panic of March, the market price reflected a half-off deal (very conservatively valued) for a well-capitalized leading accommodation travel platform run by a talented CEO. Booking Holdings had and continues to have plenty of cash on their balance sheet, a highly variable cost structure where they can shut-off advertising spend to save tons of cash (advertising was 33% of revenues in 2019), and a leading accommodations platform with deep network effects predominantly amongst independent hotel operators in Europe. There are risks that business travel may never recover to pre-covid peaks, but I don’t think leisure travel will follow that same lead.”
3. Expedia Group, Inc. (NASDAQ: EXPE)
Online travel company Expedia Group, Inc. (NASDAQ: EXPE) also struggled in 2020 due to restrictions on international traveling and tourism. However, Melvin Capital saw the underperformance as buying opportunity. The hedge fund has raised its position in online traveling company by 32% in the September quarter to 4.66% of the overall portfolio.
Shares of Expedia recovered strongly during the final quarter of 2020 amid the coronavirus vaccine discovery. The market analysts believe international traveling will take a longer time for complete stabilization.
2. Alibaba Group Holding (NYSE: BABA)
The hedge fund has also raised its position in Alibaba Group Holding (NYSE: BABA) by 37% in the September quarter to 4.75% of the overall portfolio. It is the second-largest stock holding of Melvin’s 13F portfolio. Shares of Alibaba underperformed compared to its competitors amid regulatory related challenges.
Alger Spectra Fund stated in an investor’s letter that Alibaba is a smart long-term investment. Here is what Alger Spectra Fund stated:
“Alibaba is the dominant e-commerce platform in the Chinese economy. where e-commerce remains underpenetrated and fast-growing. It is also a leading player in China’s cloud computing, big data analytics. digital media and entertainment markets. The performance of shares of Alibaba reflects investor excitement about its ability to exploit the large addressable market opportunities in e-commerce and cloud computing because of state-enacted barriers blocking foreign competitive entry.
Additionally, the accelerating pace of consumer spending in China is one of the world’s greatest growth stories and Alibaba is a prime beneficiary.”
1. Fiserv, Inc. (NASDAQ: FISV)
Melvin Capital has also been holding a long position in Fiserv, Inc. (NASDAQ: FISV) since 2019. It is the largest stock holding of its 13F portfolio, accounting for 5.40% of the overall portfolio. The shares of fintech underperformed in the last twelve months. Despite that, Melvin has raised a stake by 26% in Fiserv during the September quarter. Fiserv has generated 21% revenue growth in the latest quarter.
“Fiserv again delivered excellent financial results and free cash flow in an environment that continues to be impacted by a global pandemic,” said Frank Bisignano, President and Chief Executive Officer of Fiserv. “Our focus on serving clients with excellence has never been more important and has translated to another strong quarter of robust sales growth and continuing revenue momentum.”
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Disclosure: None.
