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Here's Why Praesidium Sold Its $200 Million Stake In Progress Software (PRGS)

in INVESTING IDEAS by

Here's Why Praesidium Sold Its $200 Million Stake In Progress Software (PRGS)

A new filing with the SEC revealed that Praesidium Investment Management sold the majority of its Progress Software Corporation (NASDAQ: PRGS) stake over the last two months.


Praesidium Exits Progress Software

On February 14th, Praesidium Investment Management filed its quarterly Form 13F regulatory filing. The filing showed that the investment firm held 4,328,476 shares of Progress Software worth $184.3 million as of December 31st. This was also the firm’s largest stock position which represented 14.3% of its listed holdings.

The following table summarizes the firm’s largest holdings as of December 31st:

Praesidium Largest Holdings
Ticker Name Holding ($mil) % Of Portfolio
PRGS PROGRESS SOFTWARE CORP $184.3 14.3%
PTC PTC INC $126.6 9.8%
ACN ACCENTURE PLC IRELAND $120.2 9.3%
AXTA AXALTA COATING SYS LTD $114.3 8.9%
CSOD CORNERSTONE ONDEMAND INC $104.3 8.1%
DOOR MASONITE INTL CORP NEW $94.6 7.3%
OTEX OPEN TEXT CORP $94.5 7.3%

However, a new filing this evening revealed that the investment firm sold 4,327,479 shares worth a total of $195 million over the last two months. This reduced Praesidium’s position in the company to virtually 0%.

Recent Progress Software Corporation Insider Transactions
Transaction Date #Shares Value ($)
sale Jan 11 134,192 $6,810,244
sale Jan 12 250,822 $12,759,315
sale Jan 31 3,270 $163,729
sale Feb 05 5,480 $263,259
sale Feb 06 40,100 $1,924,399
sale Feb 07 7,200 $345,384
sale Feb 14 4,767 $228,673
sale Feb 15 33,940 $1,628,102
sale Feb 16 7,700 $369,369
sale Feb 21 70,000 $3,432,800
sale Feb 22 12,176 $589,805
sale Mar 05 3,757,832 $166,810,162
TOTAL 4,327,479 $195,325,242

Progress Software’s shares last traded at $44.41 as of Wednesday’s close, down -8.3% over the last month but still up 51.6% over the last year. Could the recent selling activity signal a troubling road ahead for shareholders?

Here's Why Praesidium Sold Its $200 Million Stake In Progress Software (PRGS)


Potential Reasons For Selling Shares

According to its website, Praesidium Investment Management is a value-oriented investment management firm based in New York City. The firm’s strategy consists of performing “an intense, fundamental, grassroots research process on each potential investment to identify the key long-term business drivers of the company and its industry.”

Progress Software provides software solutions for various industries worldwide. It sells its products directly to end users, as well as indirectly to application partners, original equipment manufacturers, and system integrators.

Analysts covering the stock often compare the company to a peer group that includes Quantum (NYSE: QTM), Red Hat (NYSE: RHT), Pegasystems (Nasdaq: PEGA) and Qualys (Nasdaq: QLYS). Analyzing Progress Software’s financial metrics and ratios relative to this peer group offers insight into why Praesidium sold its ownership stake.

Return on Equity (ROE) measures a company’s profitability in relation to the book value of Shareholders’ Equity. ROE is a measure of how effectively management makes investments to generate earnings for shareholders.

The company’s latest ROE of 9.8% is only above Quantum (6.8%) and below Red Hat (24.9%), Pegasystems (13.0%) and Qualys (15.3%).

Here's Why Praesidium Sold Its $200 Million Stake In Progress Software (PRGS)source: finbox.io

Another helpful metric is Return on Assets (ROA) which represents the dollars in earnings or Net Income a company generates per dollar of assets. ROA is typically used to gauge the efficiency of the company and its management at deploying capital to generate income for shareholders. In general, a higher return on assets suggests management is utilizing the asset base efficiently. Progress Software’s ROA of 5.2% is also below the majority of its peers.

In addition, the company’s top-line is expected to underperform this same peer group moving forward. Projected 5-year revenue CAGR is the average annual growth rate of revenue over a five year period. It’s calculated as follows:

5yr CAGR = [ Revenue FY+5 / Revenue FY ] ^ (1/5 years) - 1

The chart below plots the five-year revenue compounded annual growth rate for Progress Software and it’s peers. The company’s projected 5-year revenue CAGR of 0.4% is only above QTM (-1.1%) and below RHT (13.8%), PEGA (13.8%) and QLYS (13.7%).

Here's Why Praesidium Sold Its $200 Million Stake In Progress Software (PRGS)source: finbox.io

Note that the company’s historical 5-year revenue CAGR of 4.6% is also generally below its selected peers.

Finally, a number of future cash flow models imply that the stock’s overvalued. The median fair value estimate of $32.16 implies -27.6% downside and is calculated from 8 separate analyses as shown in the table above. Note that each model uses consensus Wall Street estimates for the forecast when available.

Progress Software Valuation Detail
Analysis Model Fair Value Upside (Downside)
10-yr DCF Revenue Exit $32.39 -27.1%
5-yr DCF Revenue Exit $31.93 -28.1%
Peer Revenue Multiples $29.41 -33.8%
10-yr DCF EBITDA Exit $55.25 24.4%
Peer EBITDA Multiples $60.90 37.2%
10-yr DCF Growth Exit $31.52 -29.0%
5-yr DCF Growth Exit $30.41 -31.5%
Peer P/E Multiples $47.79 7.6%
Median $32.16 -27.6%

Even though Progress Software shares have traded lower over the last month, the stock is still way up from its 52-low and appears to be trading at a premium to its intrinsic value. This could be a reason why Praesidium virtually exited its position in the company. The firm’s analysts may have looked at similar analyses as the ones above.

Keeping an eye on the buying and selling activity of large institutional funds can help smaller investors make more informed decisions.


Author: Matt Hogan

Expertise: Valuation, financial statement analysis

Matt Hogan is a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.

His work is frequently published at InvestorPlace, Benzinga, ValueWalk, AAII, Barron’s, Seeking Alpha and investing.com.

Matt can be reached at matt@finbox.io.

As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.

Here's Why Praesidium Sold Its $200 Million Stake In Progress Software (PRGS)

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Source: finbox.io mavericks analysis
Here’s Why Praesidium Sold Its 0 Million Stake In Progress Software (PRGS)

Here’s Why Praesidium Sold Its $200 Million Stake In Progress Software (PRGS)

in INVESTING IDEAS by

Here's Why Praesidium Sold Its $200 Million Stake In Progress Software (PRGS)

A new filing with the SEC revealed that Praesidium Investment Management sold the majority of its Progress Software Corporation (NASDAQ: PRGS) stake over the last two months.


Praesidium Exits Progress Software

On February 14th, Praesidium Investment Management filed its quarterly Form 13F regulatory filing. The filing showed that the investment firm held 4,328,476 shares of Progress Software worth $184.3 million as of December 31st. This was also the firm’s largest stock position which represented 14.3% of its listed holdings.

The following table summarizes the firm’s largest holdings as of December 31st:

Praesidium Largest Holdings
Ticker Name Holding ($mil) % Of Portfolio
PRGS PROGRESS SOFTWARE CORP $184.3 14.3%
PTC PTC INC $126.6 9.8%
ACN ACCENTURE PLC IRELAND $120.2 9.3%
AXTA AXALTA COATING SYS LTD $114.3 8.9%
CSOD CORNERSTONE ONDEMAND INC $104.3 8.1%
DOOR MASONITE INTL CORP NEW $94.6 7.3%
OTEX OPEN TEXT CORP $94.5 7.3%

However, a new filing this evening revealed that the investment firm sold 4,327,479 shares worth a total of $195 million over the last two months. This reduced Praesidium’s position in the company to virtually 0%.

Recent Progress Software Corporation Insider Transactions
Transaction Date #Shares Value ($)
sale Jan 11 134,192 $6,810,244
sale Jan 12 250,822 $12,759,315
sale Jan 31 3,270 $163,729
sale Feb 05 5,480 $263,259
sale Feb 06 40,100 $1,924,399
sale Feb 07 7,200 $345,384
sale Feb 14 4,767 $228,673
sale Feb 15 33,940 $1,628,102
sale Feb 16 7,700 $369,369
sale Feb 21 70,000 $3,432,800
sale Feb 22 12,176 $589,805
sale Mar 05 3,757,832 $166,810,162
TOTAL 4,327,479 $195,325,242

Progress Software’s shares last traded at $44.41 as of Wednesday’s close, down -8.3% over the last month but still up 51.6% over the last year. Could the recent selling activity signal a troubling road ahead for shareholders?

Here's Why Praesidium Sold Its $200 Million Stake In Progress Software (PRGS)


Potential Reasons For Selling Shares

According to its website, Praesidium Investment Management is a value-oriented investment management firm based in New York City. The firm’s strategy consists of performing “an intense, fundamental, grassroots research process on each potential investment to identify the key long-term business drivers of the company and its industry.”

Progress Software provides software solutions for various industries worldwide. It sells its products directly to end users, as well as indirectly to application partners, original equipment manufacturers, and system integrators.

Analysts covering the stock often compare the company to a peer group that includes Quantum (NYSE: QTM), Red Hat (NYSE: RHT), Pegasystems (Nasdaq: PEGA) and Qualys (Nasdaq: QLYS). Analyzing Progress Software’s financial metrics and ratios relative to this peer group offers insight into why Praesidium sold its ownership stake.

Return on Equity (ROE) measures a company’s profitability in relation to the book value of Shareholders’ Equity. ROE is a measure of how effectively management makes investments to generate earnings for shareholders.

The company’s latest ROE of 9.8% is only above Quantum (6.8%) and below Red Hat (24.9%), Pegasystems (13.0%) and Qualys (15.3%).

Here's Why Praesidium Sold Its $200 Million Stake In Progress Software (PRGS)source: finbox.io

Another helpful metric is Return on Assets (ROA) which represents the dollars in earnings or Net Income a company generates per dollar of assets. ROA is typically used to gauge the efficiency of the company and its management at deploying capital to generate income for shareholders. In general, a higher return on assets suggests management is utilizing the asset base efficiently. Progress Software’s ROA of 5.2% is also below the majority of its peers.

In addition, the company’s top-line is expected to underperform this same peer group moving forward. Projected 5-year revenue CAGR is the average annual growth rate of revenue over a five year period. It’s calculated as follows:

5yr CAGR = [ Revenue FY+5 / Revenue FY ] ^ (1/5 years) - 1

The chart below plots the five-year revenue compounded annual growth rate for Progress Software and it’s peers. The company’s projected 5-year revenue CAGR of 0.4% is only above QTM (-1.1%) and below RHT (13.8%), PEGA (13.8%) and QLYS (13.7%).

Here's Why Praesidium Sold Its $200 Million Stake In Progress Software (PRGS)source: finbox.io

Note that the company’s historical 5-year revenue CAGR of 4.6% is also generally below its selected peers.

Finally, a number of future cash flow models imply that the stock’s overvalued. The median fair value estimate of $32.16 implies -27.6% downside and is calculated from 8 separate analyses as shown in the table above. Note that each model uses consensus Wall Street estimates for the forecast when available.

Progress Software Valuation Detail
Analysis Model Fair Value Upside (Downside)
10-yr DCF Revenue Exit $32.39 -27.1%
5-yr DCF Revenue Exit $31.93 -28.1%
Peer Revenue Multiples $29.41 -33.8%
10-yr DCF EBITDA Exit $55.25 24.4%
Peer EBITDA Multiples $60.90 37.2%
10-yr DCF Growth Exit $31.52 -29.0%
5-yr DCF Growth Exit $30.41 -31.5%
Peer P/E Multiples $47.79 7.6%
Median $32.16 -27.6%

Even though Progress Software shares have traded lower over the last month, the stock is still way up from its 52-low and appears to be trading at a premium to its intrinsic value. This could be a reason why Praesidium virtually exited its position in the company. The firm’s analysts may have looked at similar analyses as the ones above.

Keeping an eye on the buying and selling activity of large institutional funds can help smaller investors make more informed decisions.


Author: Matt Hogan

Expertise: Valuation, financial statement analysis

Matt Hogan is a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.

His work is frequently published at InvestorPlace, Benzinga, ValueWalk, AAII, Barron’s, Seeking Alpha and investing.com.

Matt can be reached at matt@finbox.io.

As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.

Here's Why Praesidium Sold Its $200 Million Stake In Progress Software (PRGS)

//load.sumome.com/
Source: finbox.io mavericks analysis
Here’s Why Praesidium Sold Its 0 Million Stake In Progress Software (PRGS)

Insiders Just Bought $62.1 Million Worth Of Tesaro (TSRO) Shares. Time To Buy?

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Insiders Just Bought $62.1 Million Worth Of Tesaro (TSRO) Shares. Time To Buy?

A number of TESARO Inc (Nasdaq: TSRO) insiders has bought 1.1 million shares since Friday. While the stock has lost more than half its value in six months, it’s worth taking a closer look at the company.


Insider Buying: Tesaro

Insiders have been buying shares of Tesaro according to recent form 4 filings with the SEC. The notable insiders include Leon Moulder (Co-founder and CEO) as well as a number of general partners of New Enterprise Associates (10% owner), as shown in the table below. Total insider buying has totaled $62.1 million since last Friday which is approximately 1.8% of Tesaro’s total market capitalization.

Recent TESARO, Inc. Insider Transactions
Insider Trading Relationship Date #Shares Value ($)
BARRETT M JAMES 10% Owner Mar 2-6 116,445 $6,684,477
BARRIS PETER J 10% Owner Mar 2-6 145,532 $8,354,185
BASKETT FOREST 10% Owner Mar 2-6 145,532 $8,354,185
KERINS PATRICK J 10% Owner Mar 2-6 116,445 $6,684,477
MOTT DAVID M Director Mar 2-6 145,532 $8,354,185
MOULDER LEON Co-Founder and CEO Mar 02 5,000 $284,640
NEW ENTERPRISE ASSOCIATES 13 L 10% Owner Mar 2-6 116,445 $6,684,477
SANDELL SCOTT D 10% Owner Mar 2-6 145,532 $8,354,185
Viswanathan Ravi 10% Owner Mar 2-6 145,532 $8,354,185
TOTAL 1,081,995 $62,108,996

Peter Barris, who is the Managing General Partner at New Enterprise Associates, most recently bought $8.4 million worth of shares on March 6th. This is what propelled me to take a closer look at the company’s insider activity.


Potential Reasons For Insider Activity

Tesaro is an oncology-focused biopharmaceutical company that identifies, acquires, develops, and commercializes cancer therapeutics and oncology supportive care products in the United States.

The company’s shares last traded at $62.18 as of Wednesday, down -64.9% over the last year and 26.8% in the last three months. While the stock has lost significant value, the recent insider transactions could signal a bottom has been reached.

Insiders Just Bought $62.1 Million Worth Of Tesaro (TSRO) Shares. Time To Buy?source: finbox.io

In addition, finbox.io’s average fair value estimate of $74.47 implies 19.8% upside and is calculated from 4 valuation models as shown in the table below. Each analysis uses consensus Wall Street estimates for the projections when available.

Tesaro Valuation Detail
Analysis Model Fair Value Upside (Downside)
Peer Revenue Multiples $40.84 -34.3%
5-yr DCF EBITDA Exit $94.58 52.1%
10-yr DCF Growth Exit $100.08 60.9%
5-yr DCF Growth Exit $62.39 0.3%
Average $74.47 19.8%
Median $78.48 26.2%

How Should You Interpret this?

While executives and insiders are always happy to tell you all the reasons why their stock is a buy, their actions can tell a different story about the company’s future prospects. A trend of buying activity may indicate that insiders think the stock is going up over the upcoming time period, and are trying to buy before the price rises.

Keep in mind that insider activity is only one aspect of stock research and that there are other important items to consider. I recommend you continue to research Tesaro to get a more comprehensive view of the company’s fundamentals by looking at:

Valuation: how much upside do shares of Tesaro have based on Wall Street’s consensus price target? Take a look at our analyst upside data explorer that compares the company’s upside relative to its peers.

Risk Metric: what is Tesaro’s cash ratio which is used to assess a company’s short-term liquidity. View the company’s cash ratio here.

Risk Metric: what is Tesaro’s Altman Z score? It’s a famous formula used to predict the probability that a firm will go into bankruptcy within two years. View the company’s Altman Z score here.


Author: Brian Dentino

Expertise: financial technology, analyzing market trends

Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors.

Brian can be reached at brian@finbox.io.

As of this writing, Brian did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.

Insiders Just Bought $62.1 Million Worth Of Tesaro (TSRO) Shares. Time To Buy?

//load.sumome.com/
Source: finbox.io insider analysis
Insiders Just Bought .1 Million Worth Of Tesaro (TSRO) Shares. Time To Buy?

Largest Stock Holdings Of Andreas Halvorsen's New-Look Viking Global

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Largest Stock Holdings Of Andreas Halvorsen's New-Look Viking Global

Following the departure of its CIO, the hedge fund manager failed to outperform the market in Q4’17. I take a closer look at Viking Global’s $16.3 billion portfolio and trading activity below.


From Norway To Wall Street

Ole Andreas Halvorsen is the CEO and co-founder of Viking Global Investors. He was born in Norway where he attended the Norwegian Naval Academy, after which he attended Williams College and Stanford Business School. One of his professors at Stanford described him as one of his “brightest students ever.”

He began his investment career with Morgan Stanley where he worked on mergers and acquisitions. In 1992 he joined Julian Robertson’s hedge fund, Tiger Management Corporation. He served on Tiger’s advisory board and on the supervisory board of the firm’s largest fund.

In 1999, Halvorsen and two other fund managers at Tiger Management, David Ott and Brian Olson, left to start Viking Global Investors. Viking manages long-short global equities funds, a long only fund, and a fund that invests in illiquid stocks and private companies. The firm is based in Greenwich, Connecticut and as of 2017, manages close to $24 billion.

Halvorsen has built a personal fortune of $3.3 billion and uses that money to support causes he believes in. He is a trustee of the Halvorsen Family Foundation and the Sterling and Francine Clark Art Institute.


A Bottom-up Stock Picker

Andreas Halvorsen is a bottom up stock picker and looks for fundamental factors and catalysts when selecting stocks. He encourages analysts to become industry specialists and to get to understand the companies they cover intimately.

In a 2013 interview, Halvorsen said that good management teams “are extremely underappreciated” for their ability to grow market share. He said that when analysing a company, he likes to speak to competitors and suppliers to understand the competitive landscape. He then speaks to the management team to see if their understanding of the competitive environment is similar to his.

His analysts cover about 75 percent of the world’s stocks that average at least $50 million a day in trading volumes. The firm is happy to invest in any sector, though technology, retail and pharmaceutical stocks seem to come up most often. Over the last decade the company has held large positions in most of the large tech stocks like Alphabet Inc Class A (NASDAQ: GOOGL), Facebook, Inc. Common Stock (NASDAQ: FB), JD.Com Inc (ADR) (NASDAQ: JD) and Apple Inc. (NASDAQ: AAPL).

The firm did experiment with credit investing, but reassigned the credit team after its positions dragged the fund’s performance down in 2008.

In the case of the long-short funds, long exposure is usually around 150 to 170 percent, while short exposure is 40 to 50 percent. The overall exposure of the portfolio is based on the individual positions, and not on a top-down market view. Viking typically holds much bigger positions in their highest conviction ideas, with the largest ten holdings making up around 40 percent of the fund as seen in my portfolio review below.

Like many hedge funds, Viking struggled between 2015 and 2017 when it was difficult to find stocks to sell short. In 2016, Viking’s long-short fund posted a 4 percent loss, its worst year ever. The long only fund returned 3.9 percent, but also lagged the MSCI world index by 5 percent, also making it the fund’s worst year since inception.

In 2017, Viking returned $8 billion to investors when its CIO, Daniel Sundheim, left the firm. Sundheim personally managed a large portion of the flagship fund, and Halvorsen decided it would smooth the transition if this money was returned to investors rather than being reallocated.

Ben Jacobs and Ning Jin have since taken over as co-CIOs upon Sundheim’s departure. Both are long-time portfolio managers at the hedge fund. I take a closer look below at Viking Global’s trading activity in Q4’17 while under new leadership.


Viking Global’s Largest Holdings

On February 14th, Andreas Halvorsen’s firm filed its quarterly Form 13F regulatory filing. I reviewed the filing to gain a glimpse into Viking Global’s large portfolio.

Viking Global’s stock portfolio totals $16.3 billion according to the latest filing. The list value of stock holdings is up 5.3% when compared to the last quarter. As a benchmark, the S&P 500 was up 6.1% over the same period.

Quarter-over-Quarter Turnover (QoQ Turnover) measures the level of trading activity in a portfolio. The hedge fund’s QoQ Turnover for the latest quarter was 27.6%, so the firm was trading a significant percent of its portfolio in Q4’17.

The Ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed below at the Viking Global page. The following table summarizes the firm’s largest holdings reported in the last filing:

Viking Global Largest Holdings
Ticker Name Holding ($mil) % Of Portfolio
ECA ENCANA CORP $1,244.8 7.7%
GOOGL ALPHABET INC $1,045.6 6.4%
V VISA INC $869.3 5.3%
UTX UNITED TECHNOLOGIES CORP $760.7 4.7%
MSFT MICROSOFT CORP $757.4 4.7%
NFLX NETFLIX INC $716.2 4.4%
FB FACEBOOK INC $681.2 4.2%

The seven positions above represent 37.4% of the fund’s total portfolio. It was not surprising to see the majority of its top holdings in the tech space.


Viking Global’s 7 Largest Purchases

I also used finbox.io to find Viking Global’s largest buys last quarter. Here’s the list of the biggest stock purchases determined by comparing the last two filings:

Viking Global 7 Largest Purchases
Ticker Name Purchased ($mil) % Of Portfolio
TWX TIME WARNER INC $420.4 2.6%
ANTM ANTHEM INC $374.4 3.5%
NTES NETEASE INC $339.2 2.1%
DPZ DOMINOS PIZZA INC $321.2 2.4%
PE PARSLEY ENERGY INC $301.6 3.3%
UTX UNITED TECHNOLOGIES CORP $227.6 4.7%
EFX EQUIFAX INC $212.1 1.7%

The largest stock purchase for the quarter was Time Warner Inc (NYSE: TWX). Viking Global purchased a new $420.4 million position in the company. The stock now represents 2.6% of the firm’s portfolio.

The next largest stock purchase was Anthem Inc (NYSE: ANTM). The investment manager increased its position in the company by $374.4 million with the stock now representing 3.5% of the firm’s portfolio.

The third largest stock purchase was NetEase Inc (ADR) (Nasdaq: NTES) which was also a new position. Halvorsen’s firm added 983.1K shares worth $339.2 million.


Viking Global’s 7 Biggest Sells

Here’s the list of biggest position reductions determined by comparing the last two filings:

Viking Global 7 Biggest Sells
Ticker Name Sold ($mil) % Of Portfolio
GOOGL ALPHABET INC $508.4 6.4%
DE DEERE & CO $385.7 2.5%
MA MASTERCARD INCORPORATED $303.6 2.0%
V VISA INC $296.1 5.3%
FOXA TWENTY FIRST CENTY FOX INC $270.2 1.7%
RICE RICE ENERGY INC $210.4 1.4%
BAC BANK AMER CORP $185.9 1.2%

The largest stock sale for the quarter was Alphabet (Nasdaq: GOOGL). Viking Global reduced its position in the company by $508.4 million and the stock now represents 6.4% of the firm’s portfolio.

The second largest stock sale was Deere & Company (NYSE: DE). Viking Global exited its $385.7 million position in the company.


Viking Global’s Best 1-Month Performance Stocks

To find stocks in the firm’s portfolio that may be popular at the moment or have tailwinds moving forward, I ranked the firm’s holdings by price appreciation. The ranking table below lists the stocks in Viking Global’s portfolio by stock price performance over the last 30 days.

Viking Global Best 1-Month Performance Stocks
Ticker Name Price 1-mo Ago Current Price % Change 1-mo
NFLX NETFLIX INC $265.72 $325.11 22.4%
PE PARSLEY ENERGY INC $23.36 $26.82 14.8%
CRM SALESFORCE COM INC $109.57 $124.34 13.5%
AVXS AVEXIS INC $115.14 $127.70 10.9%
PGR PROGRESSIVE CORP OHIO $52.87 $58.59 10.8%
RSPP RSP PERMIAN INC $37.57 $40.97 9.0%
EDIT EDITAS MEDICINE INC $35.07 $38.15 8.8%

Shares of Netflix, Inc. (Nasdaq: NFLX) have increased by 22.4% over the last month. Investors may want to take a closer look at the stock, especially with ‘smart money’ backing it.

Managers with more than $100 million in qualifying assets under management are required to disclose their holdings to the SEC each quarter via 13F filings. Qualifying assets include long positions in U.S. equities and ADRs, call/put options, and convertible debt securities. Shorts, cash positions, foreign investments and other assets are not included. It is important to note that these filings are due 45 days after the quarter end date. Therefore, Viking Global’s holdings above represent positions held as of December 31st and not necessarily reflective of the fund’s current stock holdings.

However, most can agree that with thousands of stocks traded on U.S. exchanges, doing thorough research on each one is nearly impossible for smaller investors. Leveraging the resources of the largest hedge funds on Wall Street can be a powerful way to narrow down the list.


Author: Andy Pai

Expertise: financial modeling, mergers & acquisitions

Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights:

  • Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores.
  • Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets.

Andy can be reached at andy@finbox.io.

As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.

Largest Stock Holdings Of Andreas Halvorsen's New-Look Viking Global

//load.sumome.com/
Source: finbox.io mavericks analysis
Largest Stock Holdings Of Andreas Halvorsen’s New-Look Viking Global

Largest Stock Holdings Of Andreas Halvorsen’s New-Look Viking Global

in INVESTING IDEAS by

Largest Stock Holdings Of Andreas Halvorsen's New-Look Viking Global

Following the departure of its CIO, the hedge fund manager failed to outperform the market in Q4’17. I take a closer look at Viking Global’s $16.3 billion portfolio and trading activity below.


From Norway To Wall Street

Ole Andreas Halvorsen is the CEO and co-founder of Viking Global Investors. He was born in Norway where he attended the Norwegian Naval Academy, after which he attended Williams College and Stanford Business School. One of his professors at Stanford described him as one of his “brightest students ever.”

He began his investment career with Morgan Stanley where he worked on mergers and acquisitions. In 1992 he joined Julian Robertson’s hedge fund, Tiger Management Corporation. He served on Tiger’s advisory board and on the supervisory board of the firm’s largest fund.

In 1999, Halvorsen and two other fund managers at Tiger Management, David Ott and Brian Olson, left to start Viking Global Investors. Viking manages long-short global equities funds, a long only fund, and a fund that invests in illiquid stocks and private companies. The firm is based in Greenwich, Connecticut and as of 2017, manages close to $24 billion.

Halvorsen has built a personal fortune of $3.3 billion and uses that money to support causes he believes in. He is a trustee of the Halvorsen Family Foundation and the Sterling and Francine Clark Art Institute.


A Bottom-up Stock Picker

Andreas Halvorsen is a bottom up stock picker and looks for fundamental factors and catalysts when selecting stocks. He encourages analysts to become industry specialists and to get to understand the companies they cover intimately.

In a 2013 interview, Halvorsen said that good management teams “are extremely underappreciated” for their ability to grow market share. He said that when analysing a company, he likes to speak to competitors and suppliers to understand the competitive landscape. He then speaks to the management team to see if their understanding of the competitive environment is similar to his.

His analysts cover about 75 percent of the world’s stocks that average at least $50 million a day in trading volumes. The firm is happy to invest in any sector, though technology, retail and pharmaceutical stocks seem to come up most often. Over the last decade the company has held large positions in most of the large tech stocks like Alphabet Inc Class A (NASDAQ: GOOGL), Facebook, Inc. Common Stock (NASDAQ: FB), JD.Com Inc (ADR) (NASDAQ: JD) and Apple Inc. (NASDAQ: AAPL).

The firm did experiment with credit investing, but reassigned the credit team after its positions dragged the fund’s performance down in 2008.

In the case of the long-short funds, long exposure is usually around 150 to 170 percent, while short exposure is 40 to 50 percent. The overall exposure of the portfolio is based on the individual positions, and not on a top-down market view. Viking typically holds much bigger positions in their highest conviction ideas, with the largest ten holdings making up around 40 percent of the fund as seen in my portfolio review below.

Like many hedge funds, Viking struggled between 2015 and 2017 when it was difficult to find stocks to sell short. In 2016, Viking’s long-short fund posted a 4 percent loss, its worst year ever. The long only fund returned 3.9 percent, but also lagged the MSCI world index by 5 percent, also making it the fund’s worst year since inception.

In 2017, Viking returned $8 billion to investors when its CIO, Daniel Sundheim, left the firm. Sundheim personally managed a large portion of the flagship fund, and Halvorsen decided it would smooth the transition if this money was returned to investors rather than being reallocated.

Ben Jacobs and Ning Jin have since taken over as co-CIOs upon Sundheim’s departure. Both are long-time portfolio managers at the hedge fund. I take a closer look below at Viking Global’s trading activity in Q4’17 while under new leadership.


Viking Global’s Largest Holdings

On February 14th, Andreas Halvorsen’s firm filed its quarterly Form 13F regulatory filing. I reviewed the filing to gain a glimpse into Viking Global’s large portfolio.

Viking Global’s stock portfolio totals $16.3 billion according to the latest filing. The list value of stock holdings is up 5.3% when compared to the last quarter. As a benchmark, the S&P 500 was up 6.1% over the same period.

Quarter-over-Quarter Turnover (QoQ Turnover) measures the level of trading activity in a portfolio. The hedge fund’s QoQ Turnover for the latest quarter was 27.6%, so the firm was trading a significant percent of its portfolio in Q4’17.

The Ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed below at the Viking Global page. The following table summarizes the firm’s largest holdings reported in the last filing:

Viking Global Largest Holdings
Ticker Name Holding ($mil) % Of Portfolio
ECA ENCANA CORP $1,244.8 7.7%
GOOGL ALPHABET INC $1,045.6 6.4%
V VISA INC $869.3 5.3%
UTX UNITED TECHNOLOGIES CORP $760.7 4.7%
MSFT MICROSOFT CORP $757.4 4.7%
NFLX NETFLIX INC $716.2 4.4%
FB FACEBOOK INC $681.2 4.2%

The seven positions above represent 37.4% of the fund’s total portfolio. It was not surprising to see the majority of its top holdings in the tech space.


Viking Global’s 7 Largest Purchases

I also used finbox.io to find Viking Global’s largest buys last quarter. Here’s the list of the biggest stock purchases determined by comparing the last two filings:

Viking Global 7 Largest Purchases
Ticker Name Purchased ($mil) % Of Portfolio
TWX TIME WARNER INC $420.4 2.6%
ANTM ANTHEM INC $374.4 3.5%
NTES NETEASE INC $339.2 2.1%
DPZ DOMINOS PIZZA INC $321.2 2.4%
PE PARSLEY ENERGY INC $301.6 3.3%
UTX UNITED TECHNOLOGIES CORP $227.6 4.7%
EFX EQUIFAX INC $212.1 1.7%

The largest stock purchase for the quarter was Time Warner Inc (NYSE: TWX). Viking Global purchased a new $420.4 million position in the company. The stock now represents 2.6% of the firm’s portfolio.

The next largest stock purchase was Anthem Inc (NYSE: ANTM). The investment manager increased its position in the company by $374.4 million with the stock now representing 3.5% of the firm’s portfolio.

The third largest stock purchase was NetEase Inc (ADR) (Nasdaq: NTES) which was also a new position. Halvorsen’s firm added 983.1K shares worth $339.2 million.


Viking Global’s 7 Biggest Sells

Here’s the list of biggest position reductions determined by comparing the last two filings:

Viking Global 7 Biggest Sells
Ticker Name Sold ($mil) % Of Portfolio
GOOGL ALPHABET INC $508.4 6.4%
DE DEERE & CO $385.7 2.5%
MA MASTERCARD INCORPORATED $303.6 2.0%
V VISA INC $296.1 5.3%
FOXA TWENTY FIRST CENTY FOX INC $270.2 1.7%
RICE RICE ENERGY INC $210.4 1.4%
BAC BANK AMER CORP $185.9 1.2%

The largest stock sale for the quarter was Alphabet (Nasdaq: GOOGL). Viking Global reduced its position in the company by $508.4 million and the stock now represents 6.4% of the firm’s portfolio.

The second largest stock sale was Deere & Company (NYSE: DE). Viking Global exited its $385.7 million position in the company.


Viking Global’s Best 1-Month Performance Stocks

To find stocks in the firm’s portfolio that may be popular at the moment or have tailwinds moving forward, I ranked the firm’s holdings by price appreciation. The ranking table below lists the stocks in Viking Global’s portfolio by stock price performance over the last 30 days.

Viking Global Best 1-Month Performance Stocks
Ticker Name Price 1-mo Ago Current Price % Change 1-mo
NFLX NETFLIX INC $265.72 $325.11 22.4%
PE PARSLEY ENERGY INC $23.36 $26.82 14.8%
CRM SALESFORCE COM INC $109.57 $124.34 13.5%
AVXS AVEXIS INC $115.14 $127.70 10.9%
PGR PROGRESSIVE CORP OHIO $52.87 $58.59 10.8%
RSPP RSP PERMIAN INC $37.57 $40.97 9.0%
EDIT EDITAS MEDICINE INC $35.07 $38.15 8.8%

Shares of Netflix, Inc. (Nasdaq: NFLX) have increased by 22.4% over the last month. Investors may want to take a closer look at the stock, especially with ‘smart money’ backing it.

Managers with more than $100 million in qualifying assets under management are required to disclose their holdings to the SEC each quarter via 13F filings. Qualifying assets include long positions in U.S. equities and ADRs, call/put options, and convertible debt securities. Shorts, cash positions, foreign investments and other assets are not included. It is important to note that these filings are due 45 days after the quarter end date. Therefore, Viking Global’s holdings above represent positions held as of December 31st and not necessarily reflective of the fund’s current stock holdings.

However, most can agree that with thousands of stocks traded on U.S. exchanges, doing thorough research on each one is nearly impossible for smaller investors. Leveraging the resources of the largest hedge funds on Wall Street can be a powerful way to narrow down the list.


Author: Andy Pai

Expertise: financial modeling, mergers & acquisitions

Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights:

  • Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores.
  • Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets.

Andy can be reached at andy@finbox.io.

As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.

Largest Stock Holdings Of Andreas Halvorsen's New-Look Viking Global

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Source: finbox.io mavericks analysis
Largest Stock Holdings Of Andreas Halvorsen’s New-Look Viking Global

Why Chase Coleman Just Increased His TransDigm Position By 45%

in INVESTING IDEAS by

Why Chase Coleman Just Increased His TransDigm Position By 45%

A schedule 13G filed with the SEC this evening revealed that Tiger Global Management increased its stake in TransDigm Group Incorporated (NYSE: TDG) by roughly $245 million.


Tiger Global Management Adds To Its TransDigm Holding

On February 14th, Chase Coleman’s firm Tiger Global Management filed its quarterly Form 13F regulatory filing. The filing showed that the investment firm held 1,919,605 shares of TransDigm worth $527.2 million as of December 31st.

The table below summarizes the firm’s seven largest holdings reported in the filing. TransDigm was not among Mr. Coleman’s top holdings.

Tiger Global Management’s Largest Holdings
Ticker Name Holding ($mil) % Of Portfolio
JD JD COM INC $1,699.1 13.4%
PCLN PRICELINE GRP INC $1,394.7 11.0%
AMZN AMAZON COM INC $1,305.3 10.3%
APO APOLLO GLOBAL MGMT LLC $1,145.4 9.0%
DESP DESPEGAR COM CORP $830.0 6.6%
MSFT MICROSOFT CORP $820.1 6.5%
BABA ALIBABA GROUP HLDG LTD $655.5 5.2%

However, a new filing today revealed that Tiger Global Management purchased an additional 862,395 shares bringing the hedge fund’s total ownership stake to 2,782,000 shares worth roughly $790 million as of today’s closing price. Assuming no other position changes, TransDigm is now Chase Coleman’s seventh largest stock holding.

The company’s shares last traded at $284.00 as of Tuesday, down -3.8% over the last month but still up 15.5% over the last year. Could the recent buying activity signal a promising road ahead for shareholders?

Why Chase Coleman Just Increased His TransDigm Position By 45%source: finbox.io


Potential Reasons For Adding Shares

TransDigm Group designs, produces, and supplies aircraft components in the United States. Analysts covering the stock often compare the company to a peer group that includes Spirit AeroSystems Holdings, Inc. (NYSE: SPR), Triumph Group Inc (NYSE: TGI), Rockwell Collins, Inc. (NYSE: COL) and Hexcel Corporation (NYSE: HXL). Analyzing Transdigm Group’s valuation metrics and ratios relative to peers provides further insight into why Tiger Global Management purchased shares.

Return on Invested Capital (ROIC) is used to evaluate the ability of a company to create value for all its stakeholders, debt and equity. The company’s ROIC of 12.9% is above all of its peers except for SPR (13.4%).

Why Chase Coleman Just Increased His TransDigm Position By 45%source: finbox.io

Return on Assets (ROA) is another helpful metric that represents the dollars in earnings or Net Income a company generates per dollar of assets. ROA is typically used to gauge the efficiency of the company and its management at deploying capital to generate income for shareholders. It is calculated as follows:

ROA = Adjusted Net Income / Average Total Assets

In general, a higher return on assets suggests management is utilizing the asset base efficiently. The company’s ROA of 6.7% is also above the majority of its peers.

The consensus 12-month price target is the average of each individual sell-side Wall Street analyst. The consensus analyst upside or downside equals the percentage difference between the price target and the current stock price. The calculation is simply:

Upside = (Analyst Price Target / Stock Price) - 1

The company’s consensus analyst upside of 14.7% is above selected comparable public companies TGI (13.7%), COL (-1.6%) and HXL (2.1%) and only below SPR (22.0%).

Why Chase Coleman Just Increased His TransDigm Position By 45%source: finbox.io

In addition, a number of finbox.io’s valuation models imply that the stock’s undervalued. The average fair value estimate of $309.93 implies a 9.1% margin of safety and is calculated from 3 separate analyses as shown in the table below.

Transdigm Group Valuation Detail
Analysis Model Fair Value Upside (Downside)
10-yr DCF EBITDA Exit $305.19 7.5%
5-yr DCF EBITDA Exit $310.73 9.4%
Peer P/E Multiples $313.87 10.5%
Average $309.93 9.1%

Even though TransDigm shares have traded higher over the last year, the stock still appears to be trading at a discount to its intrinsic value. This could be a reason why Chase Coleman’s adding to his stake in the company.

It is important to note that investors should never blindly copy the trading activity of illustrious money managers such as Mr. Coleman. However, keeping an eye on their buying and selling activity will help in making a more informed decision.

I recommend investors continue their research on TransDigm to get a more comprehensive view of the company.


Author: Brian Dentino

Expertise: financial technology, analyzing market trends

Brian is a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to research stock fundamentals. Brian’s background is in physics & computer science and previously worked as a software engineer at GE Healthcare. He enjoys applying his expertise in technology to help find market trends that impact investors.

Brian can be reached at brian@finbox.io.

As of this writing, Brian did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.

Why Chase Coleman Just Increased His TransDigm Position By 45%

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Source: finbox.io mavericks analysis
Why Chase Coleman Just Increased His TransDigm Position By 45%

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