Up to date on July third, 2022 by Nikolaos Sismanis
Viking International Traders is a Connecticut-based hedge fund, specializing each in early-stage firms and mature equities, with round $24.7 billion of Belongings beneath Administration (AUMs).
The corporate was based by Norwegian-born Andreas Halverson, who grew to become a billionaire rising the fund since its inception in 1999. Andreas nonetheless manages the fund as of right this moment, with nearly all of the funds being allotted in customary particular person equities.
Traders following the corporate’s 13F filings over the past 3 years (from mid-Might 2019 by mid-Might 2022) would have generated annualized whole returns of 4.7%. For comparability, the S&P 500 ETF (SPY) generated annualized whole returns of 16.1% over the identical time interval.
Be aware: 13F submitting efficiency is totally different than fund efficiency. See how we calculate 13F submitting efficiency right here.
You’ll be able to obtain an Excel spreadsheet (with metrics that matter) of Viking International Traders by clicking on the hyperlink under:
Hold studying this text to be taught extra about Viking International Traders.
Desk Of Contents
Viking International Traders’ Funding Technique
All through the years, Viking has stayed constant in making use of a research-intensive, long-term targeted funding strategy. On the core of its funding choice course of is prime evaluation to make sure that its equities are resilient and capable of ship sturdy long-term returns.
Throughout this course of, Viking will typically assess a enterprise’s mannequin and financials, its administration caliber, and the general business pattern of its sector.
Moreover, Viking’s funding analysis and decision-making processes are decentralized. Nevertheless, threat administration is centralized. In different phrases, Viking is ready to capitalize on a number of distinctive concepts introduced in by its analysts, whereas the fund’s high administration is to make sure that mentioned concepts stay balanced, risk-adjusted, and accountable.
This distinctive operational mannequin permits the fund’s skilled managers to navigate Viking’s portfolio and capital allocation in direction of market-beating returns. On the identical time, its investing professionals can solely give attention to figuring out distinctive funding concepts with out worrying about coping with points akin to hedging, threat administration, and total efficiency.
Contemplating the fund’s previous 3-year efficiency, its funding technique has been paying off decently, even when it has underperformed the general market. Traditionally, Viking’s goal of delivering best-in-class efficiency for its buyers has been principally profitable.
Viking’s Prime 10 Most Important Investments
Viking’s public-equity portfolio is comprised of a collection of 84 particular person equities. Whereas that is fairly a diversified portfolio, its high 10 holdings make up simply over 43.9% of its whole weight. The fund’s largest holding is T-Cell U.S. (TMUS), to which the corporate has allotted round 9.4% of its whole capital.
Supply: Viking’s 13F submitting, Writer
T-Cell US, Inc. (TMUS)
T-Cell has had a spot in Maverick’s portfolio since early Q3-2017. With T-Cell buying Dash final yr, the corporate ought to have the ability to actively compete with AT&T (T) and Verizon (VZ). On account of the synergies to be unlocked, the corporate ought to endure a progress section over the following few quarters. Revenues rose by 1.6% to $20.1 billion in the latest quarter, with service revenues rising to $15.1 billion.
Administration raised its merger synergy forecasts following the continuing integration progress. Round 50% of Dash’s buyer site visitors is now carried on the T-Cell community, whereas the corporate is on monitor to finish Dash buyer community migration mid-year and decommissioning by finish of the yr.
The corporate introduced that the merger synergies amounted to $3.8 billion in full-year 2021, practically 3x increased year-over-year, exceeding administration’s steering. In its newest outcomes, T-Cell raised its merger synergies steering vary to $5.2 billion to $5.4 billion for fiscal 2022, up from the earlier vary of $5.0 billion to $5.3 billion. On account of elevated investor expectations, the inventory’s valuation a number of has expanded, at present at a ahead EV/EBITDA a number of of 10.2.
The inventory at present occupies round 9.4% of Viking’s portfolio. The fund elevated its place within the firm by 2% throughout the earlier quarter. T-Cell is now the fund’s largest holding.
Microsoft (MSFT)
Discovered amongst the highest holdings of nearly all of the funds we’ve got lined, Microsoft is Viking’s second-largest holding, occupying 4.8% of its portfolio. The fund boosted its place by 13% throughout the quarter.
Microsoft is a mega-cap inventory with a market capitalization of $1.85 trillion.
Supported by the corporate’s robust profitability, administration has been constantly elevating buybacks over the previous decade to additional reward its shareholders. The quantity allotted to inventory repurchases has reached new all-time highs over the previous 4 quarters, at practically $31.1 billion.
Income progress stays within the double-digits, so it’s prone to see capital returns accelerating transferring ahead. The corporate can also be rising the dividend at a double-digit charge, although on the present yield, which stands under 1%, buyers ought to count on nearly all of their future returns within the type of capital features.
Regardless of that, Microsoft’s money place has been rising frequently, with the corporate at present sitting on high of a large $104.6 billion money pile.
Additional, whereas many firms had chosen to make the most of the ultra-low rate of interest atmosphere over the previous a number of years to boost low-cost debt and purchase again inventory, Microsoft’s remained prudent and considerate. Not solely are present earnings extensively protecting buybacks (~60% buyback “payout ratio”), however long-term debt has been considerably lowered from $76 billion in mid-2017 to round $48.1 billion as of its final report.
It’s spectacular {that a} inventory with a market capitalization of $1.85 trillion nonetheless has such a powerful progress momentum. Shares are additionally buying and selling at a ahead P/E ratio of round 23.3, which may sign a chance towards the corporate’s robust progress velocity, particularly from Azure. On account of Microsoft’s sturdy progress and financials, it’s seemingly that buyers received’t let shares commerce at a lot of a reduction going ahead, regardless of the underlying shaky macroeconomic atmosphere.
Parker-Hannifin Company (PH)
Parker-Hannifin is a diversified industrial producer specializing in movement and management applied sciences. The corporate was based in 1917 and has grown to a market capitalization of $31.9 billion with annual revenues of over $14 billion.
Parker-Hannifin has paid a dividend for 72 years and has elevated that dividend for a exceptional 66 consecutive years.
The corporate is on the unique Dividend Kings listing.
Since 2010, Parker-Hannifin has greater than tripled its earnings-per-share. The expansion trajectory of the corporate slowed final yr because of the international pandemic. Nevertheless, Parker-Hannifin has recovered somewhat swiftly.
Parker-Hannifin is Viking’s third-largest holding, comprising 4.6% of its public fairness portfolio. The place was boosted by 3% throughout the earlier quarter.
Brookfield Asset Administration (BAM)
Brookfield Asset Administration (BAM) is a number one international different asset supervisor and one of many largest international buyers in actual property – which incorporates actual property, renewable energy, infrastructure, and personal fairness. The corporate is headquartered in Toronto, Canada, and manages a portfolio of private and non-private funding merchandise for each institutional and retail purchasers.
BAM additionally manages 4 publicly traded listed partnerships: Brookfield Property Companions (BPY), Brookfield Infrastructure Companions (BIP), Brookfield Renewable Companions (BEP), and Brookfield Enterprise Companions (BBU). Brookfield turns into extra useful over time because it will increase the earnings from its asset administration actions and the worth of its invested capital.
Brookfield’s long-term progress has been nothing in need of exceptional, based mostly on the next compounded progress metrics from 1999 to 2021: e book worth, 11%; FFO per share, 16%; property beneath administration, 18%; stability sheet property, 15%; shareholders’ fairness, 18%; charges and annualized carry, 24%. Importantly, this progress has been executed with little or no dilution.
Brookfield Asset Administration is Viking’s fourth-largest holding, comprising 4.3% of its public fairness portfolio. The place was trimmed by 7% throughout the earlier quarter.
Fortive Company (FTV)
Fortive Company designs, and providers skilled and engineered merchandise and software program worldwide. The corporate’s Clever Working Options division delivers related reliability instruments, together with atmosphere, well being, security, and high quality enterprise software program merchandise. Different of its instruments embody asset lifecycle software program, pre-construction planning, and development procurement options, and ruggedized skilled check instruments.
The corporate’s financials have lagged over the previous few years, however profitability has remained comparatively strong. Solely a modest chunk is being paid out nonetheless. The payout ratio stands near 17.5% whereas shares yield near 0.5%.
Fortive has had a spot in Viking’s portfolio since Q3-2019 and isn’t the fund’s fifth-largest holding. Viking boosted its place within the inventory by 41% throughout the earlier quarter.
Chubb Ltd. (CB)
Chubb Ltd is a worldwide supplier of insurance coverage and reinsurance providers headquartered in Zurich, Switzerland. The corporate supplies insurance coverage providers together with property & casualty insurance coverage, accident & medical insurance, life insurance coverage, and reinsurance. The present model of Chubb was created in 2016, when Ace Restricted acquired the ‘outdated’ Chubb and adopted its identify. American buyers can provoke an possession place in Chubb by shares listed on the New York Inventory Change, the place they’re traded with the ticker image CB.
We imagine that the extra essential metric to concentrate to is the corporate’s e book worth per share, because of the cyclicality of the insurance coverage business. Chubb has compounded its e book worth per share at greater than 7% per yr since 2009. In 2018, Chubb’s e book worth per share lagged on account of mark-to-market losses, however e book worth began to rise once more in 2019 and hit new document ranges in each 2020 and 2021, regardless of the pandemic. We forecast a small e book worth enhance for 2022.
Viking trimmed its place in Chubb by 13% throughout the earlier quarter. It’s now the fund’s sixth-largest holding.
Centene Company (CNC)
Centene Company serves as a worldwide healthcare enterprise that primarily presents applications and providers to under-insured and uninsured people in the USA. The corporate has managed to develop its high and backside line notably through the years each organically and thru acquisitions. This has resulted in a rising widespread fairness worth and thus in the next share worth. Nevertheless, potential buyers must be cautious of the corporate’s internet revenue margins, that are extraordinarily factor and normally hover within the very low single digits.
Centene has had a spot in Viking’s portfolio since Q2-2018 and is now the fund’s seventh-largest holding. Viking trimmed its place within the firm by 9% throughout the earlier quarter.
MasterCard, Inc (MA)
MasterCard is a world chief in digital funds. The corporate companions with 25,000 monetary establishments all over the world to offer an digital cost community. MasterCard has practically 3 billion credit score and debit playing cards in use. The corporate is Viking’s eighth-largest holding, making up round 3.3% of the fund’s portfolio.
MasterCard’s newest outcomes got here in fairly robust. Revenues rose 23.8% to $5.2 billion, which was $300 million higher than anticipated. Adjusted earnings-per-share got here in at $2.76 in contrast very favorably to $1.74 within the prior yr and was $0.60 forward of estimates. Gross greenback volumes improved 17% worldwide to $1.9 trillion, with the U.S. rising 14% whereas the remainder of the world elevated 19%. Cross-border volumes surged 53%, whereas switched transactions additionally rose by 22%.
Quarter-to-date, MasterCard repurchased a further 1.7 million shares at a median worth of $352. The corporate has $8.9 billion remaining on its share repurchase authorization. Analysts count on that the corporate will earn $10.51 per share in 2022.
MasterCard is a wholly new place in Viking’s portfolio, initiated by the fund in Q1-2022.
Comcast (CMCSA)
Comcast is a media, leisure, and communications firm. Its enterprise items embody Cable Communications (Excessive-Pace Web, Video, Enterprise Companies, Voice, Promoting, Wi-fi), NBCUniversal (Cable Networks, Theme Parks, Broadcast TV, Filmed Leisure), and Sky, a number one leisure firm in Europe that gives Video, Excessive-speed web, Voice, and Wi-fi Cellphone Companies on to shoppers. Comcast was based in 1963, is headquartered in Philadelphia, PA.
Rising competitors might stress on margins and rising rates of interest can dampen progress as the corporate largely funds from debt with its debt-to-equity ratio at 1.9 occasions on the finish of Q1 2022. Concurrently, Comcast generates tons of money stream. From 2018 to 2020, it allotted about 48% of its working money stream for capital spending for the long-term progress of the enterprise, which left ample free money stream to cowl the dividend. Capital spending was 41% of working money stream final yr.
Moreover, administration sees natural progress alternatives throughout its companies, together with growing the capability of its U.S. broadband community, producing extra premium content material that may enhance engagement at its Peacock streaming service, and constructing its new theme park, Epic Universe, which is scheduled to open in the summertime of 2025 in Orlando. Comcast has had a compelling earnings-growth historical past that was helped by share repurchases. From 2012 to 2021, its EPS elevated at a compound annual progress charge (CAGR) of 12.3%. Comcast resumed share buybacks in late Q2 2021 after normalizing from COVID impacts.
The fund’s place in Comcast remained comparatively unchanged in comparison with the earlier quarter. Comcast is now Viking’s ninth-largest holding accounting for 3.3% of its holdings.
APi Group Company (APG)
APi Group Company presents security, specialty, and industrial providers internationally. The corporate’s security providers section supplies security options specializing in end-to-end built-in occupancy techniques, akin to fireplace safety options, and heating, air flow, and air con options. the Minnesota-based firm was based in 1926, but went public simply solely two years in the past. APi Group Company generates near $4 billion in annual revenues.
Whereas revenues have principally recovered and even exceeded their pre-pandemic ranges, the corporate has been unable to submit sustainable income throughout its lifetime as a public firm. That mentioned, gross margins grew from 21.9% to 24.6% year-over-year in its newest report, which is definitely a step in the best route with regards to the corporate’s future profitability prospects.
The fund has had a place within the inventory most likely since its pre-IPO stage. It nonetheless holds round 13.4% of its whole shares excellent. The fairness stake was left principally unchanged within the earlier quarter. APi Group Company is Viking’s tenth-largest holding, accounting for 3.1% of its excellent shares.
Remaining Ideas
Viking’s 84-stock portfolio is well-diversified, with a powerful capital allocation in direction of healthcare.
Supply: Viking’s 13F submitting, Writer
The corporate’s research-intense philosophy and distinctive separation of its opportunity-identification and execution groups have been capable of yield robust returns traditionally, regardless of the latest underperformance.
As a result of a big proportion of the corporate’s AUMs are allotted in direction of particular person equities, Viking is without doubt one of the easier-to-replicate funds by retail buyers. Nonetheless, Viking’s stock-picking requires extra due diligence, because the fund’s investments may symbolize hedging strategies or different non-profit-targeting positions.
Having mentioned that, Viking’s high 10 investments are manufactured from reliable, long-term funding companies, most of which have demonstrated many years of shareholder worth creation.
Further Sources
See the articles under for evaluation on different main funding corporations/asset managers:
In case you are excited by discovering extra high-quality dividend progress shares appropriate for long-term funding, the next Positive Dividend databases might be helpful:
The key home inventory market indices are one other strong useful resource for locating funding concepts. Positive Dividend compiles the next inventory market databases and updates them month-to-month:
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