Pershing Square Management

I like how Pershing Square manages its capital base. This is a $13.7 billion fund concentrated in just 7 stocks. The names everybody knows: Amazon, Brookfield, Uber Technologies and Microsoft lead the pack. You’d expect big changes in market valuation here, namely $1.8 billion of its $13.7 billion in market value. Its static ratio is on the high side at 29.3%. Basically, if you want to play with fireworks, the cost can run too high. Portfolio names are all easily recognized, but maybe the wrong time to be a big bull swishing your tail.

Glenview Capital Management at $3.6 billion in assets concentrated in growth stocks. But lost a billion bucks which I'd term unacceptably high on its asset base. The portfolio is growth oriented but exposure and concentration too high for what I consider acceptable. These stocks, CVS Health, Global Payments and Tenet Healthcare comprise 35% of assets while Amazon is at 1%. Over-all the fund chopped a billion on its base with the turnover ratio in the clouds. The issue for me is whether money should be managed with so much inherent volatility involved. 

Then, I turned to Carl Icahn’s fund, an $8.5 billion portfolio which gained approximately $108 million in the quarter as oil stocks were mainly positive. Carl is in small capitalization goods, not the Exxon biggies. Its static ratio stood at 75 percent of assets which is higher than many operators. If I had to be in an energy fund, Carl is an easy choice to stay with. 

I turned to Lone Pine Capital which ended the quarter at $12.5 billion. There was total turnover here with the loss of a billion bucks. I hardly recognized any of its portfolio holdings. What are Vistra, Asml Holdings, Carpenter Tech and LPL Financial? Am I in a different business not to know about them? This $12 billion fund is where I have hardly any name recognition. Portfolio turnover reached 100% in the quarter and they chopped off a billion in performance on its $12.5 billion base. 

Finally, I got to this operator of $133 billion. With a very low static ratio of just 5.7%. Millennium Management, a $133 billion fund, sold out 16% of its fund assets in the quarter. Often, I’m seeing static ratios around 5%. Contrast this with how Warren Buffett ran assets. His fund turnover ratio was minimal. Coca-Cola lasts and lasts along with American Express. 

All portfolio names are recognizable. Nvidia and Norfolk Southern are top holdings. Even Apple pops up as number 6 on its list. This is a broadly diversified portfolio. Apple is under a 1% holding along with Norfolk Southern.

Omega Advisors, a $3 billion fund run by Lee Cooperman actually showed a positive fund value change for the quarter. Lee did all this with a 31% change in buys and sells. Not many big cap stocks held. I recognized only a few of the holdings, namely mid-cap sized properties like Energy Transfer, Vertiv Holdings and Apollo Global. This is a portfolio where security analysis made the difference. No shooting from the hip. 

T. Rowe Price, awash with assets, $865 billion, couldn’t escape the market’s swoon in the March quarter, down $62 billion, some 7%. A lot of scratch with Nvidia, Apple and Microsoft 18% of portfolio assets. Investment concentration descends to 1 percent on positions. All names are recognizable, but descend to under 1% positions, rapidly. Tesla for example, along with Conoco and General Electric. You buy a slice of America here, but so what? I’m unimpressed in terms of stock picking and overdiversification. A teenager could do just as well or rather comparably mediocre.