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Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

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- By Margaret Moran

Louis Moore Bacon (Trades, Portfolio)'s Moore Capital Management recently disclosed its portfolio updates for the first quarter of 2021, which ended on March 31.


New York-based Moore Capital Management was founded by Bacon in 1986. The firm uses a bold and global macro-based approach to investing. After 30 years of operation, the hedge fund closed itself to outside investors in late 2019 and consolidated its three flagship funds into one proprietary fund. Regarding the new arrangement, Bacon wrote, "now I am once again concentrating on my personal investment account while overseeing a large multi-asset alternatives platform."

Based on its investing criteria, the firm's biggest trades for the quarter were its sales of the iShares iBoxx USD High Yield Corporate Bond Exchange-Traded Fund (HYG) and the iShares MSCI Emerging Markets ETF (EEM). It also reduced its holdings in JD.com Inc. (NASDAQ:JD) and Bunge Ltd. (NYSE:BG) and added to its stakes in Fisker Inc. (NYSE:FSR) and Microsoft Corp. (NASDAQ:MSFT).

ETF sales

The firm's common stock holding of the iShares iBoxx USD High Yield Corporate Bond ETF (HYG) was reduced by 9,976,000, or 99.75%, leaving a remainder of 25,000 shares. The trade had a -9.63% impact on the equity portfolio. During the quarter, shares traded for an average price of $86.12.

Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft
Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

The firm sold out of its 8,862,500-share investment in the iShares MSCI Emerging Markets ETF (EEM), which had a -5.06% impact on the equity portfolio. Shares traded for an average price of $54.75 during the quarter.

Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft
Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

JD.com

The firm reduced its stake in JD.com (NASDAQ:JD) by 2,076,012 shares, or 82.99%, for a remaining holding of 425,412 shares. The trade had a -2.02% impact on the equity portfolio. During the quarter, shares traded for an average price of $91.81.

Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft
Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

JD.com, also known as Jingdong and formerly called 360buy, is one of the two largest business-to-consumer e-commerce companies in China in terms of transaction volume and revenue, the other being Alibaba's (NYSE:BABA) Tmall. The majority of its revenue is derived from online direct sales.

On May 24, shares of JD.com traded around $71.66 for a market cap of $111.72 billion. According to the GuruFocus Value chart, the stock is modestly overvalued.

Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft
Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

The company has a financial strength rating of 7 out of 10 and a profitability rating of 4 out of 10. The Altman Z-Score of 4.63 and Piotroski F-Score of 6 out of 9 indicate the company has a strong balance sheet. The three-year revenue growth rate is 24.8%, while the three-year Ebitda growth rate is 118.1%.

Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft
Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

Bunge

The firm also cut its Bunge (NYSE:BG) holding by 2,705,130 shares, or 89.85%, for a remainder of 305,478 shares. The trade had a 1.96% impact on the equity portfolio. Shares traded for an average price of $74.38 during the quarter.

Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft
Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

Bunge is an American agribusiness and food company that is headquartered in Missouri but incorporated in Bermuda to avoid U.S. taxes. It is an international soybean exporter and is also involved in the food processing, grain trading and fertilizer industries.

On May 24, shares of Bunge traded around $86.80 for a market cap of $12.28 billion. According to the GF Value chart, the stock is significantly overvalued.

Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft
Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

The company has a financial strength rating of 5 out of 10 and a profitability rating of 5 out of 10. The cash-debt ratio of 0.07 is lower than 83% of industry peers, but the Piotroski F-Score of 5 out of 9 suggests financial stability. On average, the return on invested capital keeps up with the weighted average cost of capital, indicating that growth is not particularly profitable but it is also not destroying the value of the company.

Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft
Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

Fisker

The firm added 6,259,572 shares, or 174.68%, to its investment in Fisker (NYSE:FSR) during the first quarter. It also added another 1,985,235 shares, or 20.17%, on May 17. The position is now the largest in the equity portfolio with a 2.15% weight. Shares traded for an average price of $18.31 during the first quarter and $10.50 on May 17.

Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft
Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

Based in Manhattan Beach, California, Fisker is an American electric vehicle automaker that plans to launch its first vehicle, the Ocean SUV, in the fourth quarter of 2022. It is not expected to hit mass production until the fourth quarter of 2023.

On May 24, shares of Fisker traded around $12.54 for a market cap of $3.70 billion. Since the company went public near the end of 2020, the stock has gained 39%.

Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft
Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

The company has a financial strength rating of 5 out of 10 and a profitability rating of 1 out of 10. Following its successful public listing, the company has a strong cash-debt ratio of 386.12. Since the company has yet to produce a vehicle for sale, it is of course not profitable.

Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft
Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

Microsoft

The firm upped its stake in Microsoft (NASDAQ:MSFT) by 438,683 shares, or 1,405.22%, for a total of 469,901 shares. The trade had a 1.32% impact on the equity portfolio. During the quarter, shares traded for an average price of $232.23.

Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft
Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

Microsoft is a multinational tech giant headquartered in Redmond, Washington. The company develops, manufactures, licenses, sells and supports PCs, consumer software, consumer electronics and related services.

On May 24, shares of Microsoft traded around $250.78 for a market cap of $1.89 trillion. According to the Peter Lynch chart, the stock is trading above both its intrinsic value and its median historical valuation.

Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft
Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

The company has a financial strength rating of 7 out of 10 and a profitability rating of 8 out of 10. The PIotroski F-Score of 8 out of 9 and Altman Z-Score of 8.19 indicate a fortress-like balance sheet. The operating margin of 37.03% and net margin of 30.96% are outperforming than 96% of industry peers.

Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft
Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

Portfolio overview

As of the quarter's end, the firm's common stock equity portfolio consisted of 615 holdings valued at $7.87 billion. The top positions were Fisker with 2.15% of the equity portfolio, Magna International Inc. (NYSE:MGA) with 1.89% and Cerence Inc. (NASDAQ:CRNC) with 1.63%.

In terms of sector weighting, the firm was most invested in financial services, consumer cyclical and industrials.

Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft
Louis Moore Bacon's Firm Sells ETFs, Ups Stake in Microsoft

Disclosure: Author owns no shares in any of the stocks mentioned. The mention of stocks in this article does not at any point constitute an investment recommendation. Portfolio updates reflect only common stock positions as per the regulatory filings for the quarter in question and may not include changes made after the quarter ended.

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This article first appeared on GuruFocus.