Up to date on July third, 2022 by Nikolaos Sismanis
Viking International Buyers is a Connecticut-based hedge fund, specializing each in early-stage firms and mature equities, with round $24.7 billion of Belongings underneath 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 as we speak, with nearly all of the funds being allotted in customary particular person equities.
Buyers following the corporate’s 13F filings during the last 3 years (from mid-Could 2019 via mid-Could 2022) would have generated annualized complete returns of 4.7%. For comparability, the S&P 500 ETF (SPY) generated annualized complete returns of 16.1% over the identical time interval.
Word: 13F submitting efficiency is completely 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 Buyers by clicking on the hyperlink beneath:
Preserve studying this text to be taught extra about Viking International Buyers.
Desk Of Contents
Viking International Buyers’ Funding Technique
All through the years, Viking has stayed constant in making use of a research-intensive, long-term centered funding method. On the core of its funding choice course of is prime evaluation to make sure that its equities are resilient and in a position to ship strong long-term returns.
Throughout this course of, Viking will usually assess a enterprise’s mannequin and financials, its administration caliber, and the general business development of its sector.
Moreover, Viking’s funding analysis and decision-making processes are decentralized. Nevertheless, danger 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 prime 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 the direction of market-beating returns. On the similar time, its investing professionals can solely deal with figuring out distinctive funding concepts with out worrying about coping with points akin to hedging, danger administration, and general 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 Vital Investments
Viking’s public-equity portfolio is comprised of a number of 84 particular person equities. Whereas that is fairly a diversified portfolio, its prime 10 holdings make up simply over 43.9% of its complete weight. The fund’s largest holding is T-Cell U.S. (TMUS), to which the corporate has allotted round 9.4% of its complete capital.
Supply: Viking’s 13F submitting, Creator
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). Because of the synergies to be unlocked, the corporate ought to bear a development section over the following few quarters. Revenues rose by 1.6% to $20.1 billion in the newest 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 observe 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 larger year-over-year, exceeding administration’s steerage. In its newest outcomes, T-Cell raised its merger synergies steerage 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. Resulting from elevated investor expectations, the inventory’s valuation a number of has expanded, at the moment at a ahead EV/EBITDA a number of of 10.2.
The inventory at the moment 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 now we have 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 persistently 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 development stays within the double-digits, so it’s prone to see capital returns accelerating shifting ahead. The corporate can also be rising the dividend at a double-digit price, although on the present yield, which stands beneath 1%, buyers ought to count on nearly all of their future returns within the type of capital good points.
Regardless of that, Microsoft’s money place has been rising regularly, with the corporate at the moment sitting on prime of an enormous $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 robust development momentum. Shares are additionally buying and selling at a ahead P/E ratio of round 23.3, which may sign a possibility in opposition to the corporate’s robust development velocity, particularly from Azure. Resulting from Microsoft’s strong development and financials, it’s possible that buyers gained’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 checklist.
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 reasonably 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 shoppers.
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 development has been nothing in need of exceptional, primarily based on the next compounded development metrics from 1999 to 2021: guide worth, 11%; FFO per share, 16%; property underneath administration, 18%; steadiness sheet property, 15%; shareholders’ fairness, 18%; charges and annualized carry, 24%. Importantly, this development has been accomplished 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 stable. 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 offers 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 ‘previous’ Chubb and adopted its title. American buyers can provoke an possession place in Chubb via shares listed on the New York Inventory Change, the place they’re traded with the ticker image CB.
We consider that the extra necessary metric to concentrate to is the corporate’s guide worth per share, because of the cyclicality of the insurance coverage business. Chubb has compounded its guide worth per share at greater than 7% per yr since 2009. In 2018, Chubb’s guide worth per share lagged on account of mark-to-market losses, however guide worth began to rise once more in 2019 and hit new report ranges in each 2020 and 2021, regardless of the pandemic. We forecast a small guide 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 provides packages and providers to under-insured and uninsured people in the US. The corporate has managed to develop its prime and backside line notably through the years each organically and thru acquisitions. This has resulted in a rising frequent fairness worth and thus in the next share value. Nevertheless, potential buyers ought to be cautious of the corporate’s internet revenue margins, that are extraordinarily factor and often 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 supply 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 an extra 1.7 million shares at a median value 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 models embody Cable Communications (Excessive-Pace Web, Video, Enterprise Providers, 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 Providers on to shoppers. Comcast was based in 1963, is headquartered in Philadelphia, PA.
Growing competitors could strain on margins and rising rates of interest can dampen development 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 circulate. From 2018 to 2020, it allotted about 48% of its working money circulate for capital spending for the long-term development of the enterprise, which left ample free money circulate to cowl the dividend. Capital spending was 41% of working money circulate final yr.
Moreover, administration sees natural development alternatives throughout its companies, together with rising 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 development price (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 provides security, specialty, and industrial providers internationally. The corporate’s security providers section offers security options specializing in end-to-end built-in occupancy programs, 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 publish sustainable earnings 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 actually a step in the fitting path on the subject of the corporate’s future profitability prospects.
The fund has had a place within the inventory in all probability since its pre-IPO stage. It nonetheless holds round 13.4% of its complete 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 robust capital allocation in the direction of healthcare.
Supply: Viking’s 13F submitting, Creator
The corporate’s research-intense philosophy and distinctive separation of its opportunity-identification and execution groups have been in a position to yield robust returns traditionally, regardless of the latest underperformance.
As a result of a big proportion of the corporate’s AUMs are allotted in the direction of particular person equities, Viking is likely one of the easier-to-replicate funds by retail buyers. Nonetheless, Viking’s stock-picking requires further due diligence, because the fund’s investments may symbolize hedging strategies or different non-profit-targeting positions.
Having mentioned that, Viking’s prime 10 investments are manufactured from reliable, long-term funding companies, most of which have demonstrated many years of shareholder worth creation.
Extra Assets
See the articles beneath for evaluation on different main funding companies/asset managers:
If you’re concerned with discovering extra high-quality dividend development shares appropriate for long-term funding, the next Positive Dividend databases will probably be helpful:
The most important home inventory market indices are one other stable useful resource for locating funding concepts. Positive Dividend compiles the next inventory market databases and updates them month-to-month:
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