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Lee Ainslie's Top 6 Buys of the 1st Quarter

- By James Li

Lee Ainslie (Trades, Portfolio), manager of Dallas-based Maverick Capital, disclosed this month his top six buys for the first quarter included four new positions and increased bets in the following two companies: Google parent Alphabet Inc. (GOOG) and sports apparel giant Nike Inc. (NKE).


Ainslie, a protege of Tiger Management founder Julian Robertson (Trades, Portfolio), launched Maverick Capital in 1993 with $38 million. The firm has approximately $14.9 billion in assets under management as of February 2019.

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The fund manager employs six experts, each covering one of the following market industries: consumer, health care, cyclical, retail, financial and telecommunications. Ainslie discusses the portfolio holdings with his industry heads throughout the day and then makes the final decisions for the portfolio. As of quarter-end, the $7.40 billion equity portfolio's top three sectors in terms of weight are technology, consumer cyclical and health care. Eighty-eight of the 273 stocks are new holdings; the top four new holdings are Fiserv Inc. (FISV), Humana Inc. (HUM), SS&C Technologies Inc. (SSNC) and US Foods Holding Co. (USFD).

Alphabet

Ainslie added 104,682 Class C shares of Alphabet, increasing the position 49.19% and his equity portfolio 1.66%. The shares averaged $1,120.29 during the March quarter.

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The Mountain View, California-based company operates online media platforms like Google and YouTube. GuruFocus ranks Alphabet's financial strength and profitability 9 out of 10 on several positive investing signs, which include robust interest coverage, a strong Piotroski F-score of 7, a 3.5-star business predictability rank and operating margins that are outperforming approximately 85% of global competitors despite contracting 2.3% per year over the past five years.

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Other gurus riding Alphabet's profitability include Al Gore (Trades, Portfolio) and Ken Fisher (Trades, Portfolio).

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Nike

Ainslie added 1,345,529 shares of Nike, increasing the stake 579.79% and his equity portfolio 1.53%. Shares of the Beaverton, Oregon-based sports apparel giant averaged $82.38 during the quarter.

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Nike said on March 21 that revenues for the quarter ending Feb. 28 were $9.6 billion, up 7% from the prior-year quarter, driven primarily by double-digit growth across footwear and apparel. GuruFocus ranks the company's profitability 8 out of 10 on several positive signs, which include a strong Piotroski F-score of 7 and a five-star business predictability rank.

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Spiros Segalas (Trades, Portfolio) also increased his position in Nike during the quarter.

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Fiserv

Ainslie purchased 3,214,646 shares of Fiserv, giving the stake 3.83% weight in the equity portfolio. Shares averaged $82.35 during the quarter.

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The Brookfield, Wisconsin-based company provides core processing and complementary services like electric funds transfers (EFT), payment processing and loan processing for U.S. banks and credit unions. GuruFocus ranks Fiserv's profitability 8 out of 10 on several positive signs, which include expanding profit margins and returns on assets that outperform 90% of global competitors. Additionally, the website gives Fiserv a four-star business predictability rank.

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Humana

Ainslie purchased 617,948 shares of Humana, giving the holding 2.22% equity portfolio space. Shares averaged $288.61 during the quarter.

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The Louisville, Kentucky-based company provides government-sponsored insurance plans like Medicare and Medicaid across the U.S. GuruFocus ranks Humana's financial strength 5 out of 10: Although the company's debt-to-Ebitda ratio of 2.19 outperforms 72.22% of global competitors, its Beneish M-score of -1.61 suggests possible earnings manipulation.

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SS&C Technologies

Ainslie purchased 2,228,910 shares of SS&C Technologies, giving the stake 1.92% equity portfolio weight. Shares averaged $55.41 during the quarter.

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The Windsor, Connecticut-based company provides software and software-enabled services for financial services providers in asset management, wealth management and alternative-investment management. GuruFocus ranks the company's financial strength 4 out of 10 on several weak indicators, which include a Sloan ratio that suggests poor earnings quality, an Altman Z-score that suggests possible financial distress and a Beneish M-score that suggests possible earnings manipulation. Despite this, SS&C Technologies' profitability ranks 8 out of 10 primarily due to a four-star business predictability rank and three-year revenue and earnings growth rates outperforming over 82.5% of global competitors.

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US Foods

Ainslie purchased 3,419,975 shares of US Foods, giving the position 1.61% weight in the equity portfolio. Shares averaged $34.27 during the quarter.

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The Rosemont, Illinois-based company distributes fresh, frozen and dry food products to foodservice customers. GuruFocus ranks the company's financial strength 6 out of 10: Although it has strong Piotroski F and Altman Z-scores, US Foods' debt ratios are underperforming over 70% of global competitors.

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Disclosure: No positions.

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This article first appeared on GuruFocus.