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Lee Ainslie's Top 5 Buys for the 4th Quarter

- By James Li

Lee Ainslie (Trades, Portfolio), manager of Maverick Capital, disclosed last week his top five buys for fourth-quarter 2018 were Alphabet Inc. (GOOG), Centene Corp. (CNC), Eagle Materials Inc. (EXP), Alibaba Group Holding Ltd. (BABA) and Charles Schwab Corp. (SCHW).

Ainslie, a former protege of Tiger Management founder Julian Robertson (Trades, Portfolio), employs six experts, one for each of six major market sectors. The manager first discusses with his industry heads about the stock picks and then adds them to the equity portfolio.


According to current portfolio statistics, Ainslie's top three sectors in terms of portfolio weight are technology, consumer cyclical and health care. The equity portfolio contains 257 stocks as of quarter-end, of which 86 represent new holdings.


Ainslie added 207,749 Class C shares of Google-parent Alphabet, expanding the position 4,089.55% and his equity portfolio 3.16%. Class C shares of the Mountain View, California-based online media giant averaged $1,066.33 during the quarter.


Alphabet provides a wide variety of internet content through brands like Search, Android and YouTube. Chief Financial Officer Ruth Porat said on Feb. 4 the company reported revenues of $39.3 billion for fourth-quarter 2018 and $136.8 billion for full-year 2018, both up over 20% from comparable periods in 2017. The strong revenue growth over the past 12 months contributes to a three-year revenue growth rate of 19%, a rate that outperforms 64% of global competitors.


GuruFocus ranks Alphabet's profitability 9 out of 10 on several positive investing signs, which include consistent revenue growth and a strong Piotroski F-score of 7. Even though profit margins have contracted over the past five years, Alphabet's operating margin is still outperforming 85% of global competitors.


Other gurus that increased their holdings in Alphabet include Wallace Weitz (Trades, Portfolio) and Robert Olstein (Trades, Portfolio).


Ainslie invested in 2,803,915 shares of Centene for an average price of $66.73 per share, increasing the position 348.71% and his equity portfolio 2.37%.


Centene offers health care plans to U.S. government-sponsored health care programs, with a focus on uninsured individuals. The company's profitability ranks 8 out of 10 primarily due to a three-star business predictability rank and a three-year revenue growth rate that outperforms 96% of global competitors. Despite this, GuruFocus lists several warning signs, which include decelerating revenue growth and contracting profit margins.


Eagle Minerals

Ainslie invested in 1,909,554 shares of Eagle Minerals for an average price of $71.15 per share, giving the holding 1.71% equity portfolio space.


Eagle Minerals produces and supplies construction products, building materials and materials used for oil and gas extraction. GuruFocus ranks the company's profitability 8 out of 10 on several positive indicators, which include expanding operating margins and returns that are outperforming over 86% of global competitors.



Ainslie invested in 823,968 shares of Alibaba for an average price of $147.56 per share, increasing the position 79.98% and his equity portfolio 1.66%.


The Chinese e-commerce giant operates popular online marketplaces like Taobao, Tmall and Juhuasuan. GuruFocus ranks the company's profitability 9 out of 10: even though profit margins have contracted over the past five years, Alibaba's operating margin still outperforms 98% of global competitors. Additionally, the company's business predictability ranks 3.5 stars out of five on consistent revenue growth over the past 10 years.


Charles Schwab

Ainslie invested in 2,634,961 shares of Charles Schwab for an average price of $45.02 per share, expanding the position 52.82% and his equity portfolio 1.61%.


The San Francisco-based company operates in the brokerage, banking and asset management businesses. GuruFocus ranks the company's financial strength 4 out of 10: although the debt-to-equity ratio outperforms 60% of global competitors, Charles Schwab's equity-to-asset ratio underperforms 95% of global capital markets.


Disclosure: No positions.

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This article first appeared on GuruFocus.