Lee Ainslie
, founder of Dallas-based Maverick Capital, is rebounding nicely
from last year's almost 15% loss - his second down year in 16,
and a year in which global hedge funds lost 8.87% on average. His
biggest fund gained 20% through July, according to Bloomberg.
Ainslie founded Maverick in 1993 with $38 million, after working
at
Julian Robertson
's Tiger Management Corp., qualifying him along with the rest of
the firm's alumni as a "tiger cub." Now, Ainslie's firm has about
$9 billion in assets under management.
An all-time-high stock price correlation accounted at least in
part for the down year, Ainslie explained in his 2011 letter.
While the pattern broke in January 2012, he said "equities have
maintained correlation above the long-term average for almost six
years now, creating a sustained, unfavorable headwind for
fundamental investors." Unprecedented macro conditions such as
globalization, high levels of debt, uncertain regulatory
environments, extreme monetary policies, unsustainable fiscal
policies and resulting currency uncertainties were also unlikely
to desist, he said, creating an environment ripe for further
volatility.
In 2012's second quarter, Ainslie bought 19 stocks from an array
of industries. Each of the five new additions to the portfolio
has gained since he bought them, except Yahoo (
YHOO
). They are: Schlumberger Ltd. (
SLB
), Ralph Lauren Corp (
RL
), Visa (
V
), NVR (
NVR
) and Yahoo.
Ainslie purchased 2,566,940 shares of
Schlumberg Ltd. (
SLB
)
at an average price of $67 as his largest new holding of the
quarter, giving it a 2.4% weighting. The stock ventured to a few
dollars shy of its 52-week low in the second quarter, and has
gained 12% from his average purchase price.
Schlumberger Limited is a global technology services company
consisting of two business segments, Schlumberger Oilfield
Services and SchlumbergerSema. Schlumberger Ltd. has a market cap
of $99.73 billion; its shares were traded at around $74.5 with a
P/E ratio of 18.2 and P/S ratio of 2.5. The dividend yield of
Schlumberger Ltd. stock is 1.5%. Schlumberger Ltd. had an annual
average earnings growth of 1.9% over the past five years.
In the second quarter, the company's revenue increased to $10.5
billion from $9.9 billion the prior year, amid downward revisions
of GDP growth and oil demand, and inventory builds from higher
OPEC production that brought oil prices lower. Schlumberger
repurchased 7.5 million shares of its stock at an average price
of $66.30, for a total of $499 million, during the quarter.
Ainslie purchased 973,184 shares of
Ralph Lauren Corp (
RL
)
at an average price of $157 during the quarter.
Ralph Lauren Corporation is engaged in designing, marketing, and
distributing men's, women's and children's apparel, accessories,
fragrances, and home furnishings. Ralph Lauren Corp has a market
cap of $14.81 billion; its shares were traded at around $159.58
with a P/E ratio of 22 and P/S ratio of 2.2. The dividend yield
of Ralph Lauren Corp stocks is 1%. Ralph Lauren Corp had an
annual average earnings growth of 11.4% over the past 10 years.
GuruFocus rated Ralph Lauren Corp
the business predictability rank of 5-star
.
Ralph Lauren shares dropped about 20% in May, from what the Baron
Funds called "concerns surrounding its products' exposure to
European consumers." The firm also commented in its
second-quarter letter, "The company's first quarter results were
otherwise strong - highlights included 14% growth in sales and
32% growth in earnings. We believe that Ralph Lauren continued to
reap benefits from its ongoing investments in sourcing,
distribution, and e-commerce initiatives."
Ralph Lauren doubled its dividend in the second quarter and on
August 9 announced a $500 million stock repurchase program, in
addition to the $277 million available at the end of the first
quarter of 2013 under its old program.
Ainslie purchased 966,275 shares of
Visa (
V
)
at an average price of $119 during the quarter. The stock has
gained 6% since.
Visa operates the world's largest retail electronic payments
network and is one of the most recognized global financial
services brands. Visa Inc has a market cap of $104.39 billion;
its shares were traded at around $126.66 with a P/E ratio of 21.7
and P/S ratio of 11.4. The dividend yield of Visa Inc stocks is
0.7%.
Robert Susman of Baron Funds commented on Visa in the firm's
second quarter letter: "The outperformance was driven by its
strong fiscal second quarterly earnings report in April and
increasing expectation of a favorable legal settlement with
merchants (which did occur in July after the quarter ended).We
remain long-term believers in Visa, as it is the dominant
payments network in the world (over 55% of all credit/debit card
transactions) with high barriers to entry and a long organic
growth runway as plastic continues to gain transaction/volume
share from cash and/or checks."
Visa may face increased competition as PayPal announced Wednesday
that it will team up with Discover to enable consumers to use
PayPal at the point of sale at physical locations. The service
will be available to millions of participating merchant locations
through their existing relationship with Discover.
Ainslie purchased 111,335 shares of
NVR (
NVR
)
at an average price of $783 in the second quarter.
NVR Inc. is a holding company that operates in two business
segments; the construction and marketing of homes and in
financial services. The company's home construction units are
Ryan Homes, NVHomes and Fox Ridge Homes.
NVR Inc. has a market cap of $4.28 billion; its shares were
traded at around $819.42 with a P/E ratio of 31.1 and P/S ratio
of 1.6.
NVR announced solid second quarter results, with new home orders
up 6% and mortgage loan production up 9% from the sale period
last year. The company's net income increased 22%, and
consolidated revenues increased 11% in the same period.
NVR's stock plunged over $120 in July, the day the Commerce
Department announced U.S. housing starts declined 5% in June to
their lowest level since October 2009. It has since been
rebounding and is up almost 20% year to date.
Ainslie purchased 5,562,932 shares of
Yahoo (
YHOO
)
at an average price of $15 during the quarter. The stock is down
1% from his buy price and 7.5% year to date.
Yahoo! Inc. is a global Internet communications, commerce and
media company that offers a comprehensive branded network of
services. Yahoo! Inc. has a market cap of $18.39 billion; its
shares were traded at around $14.91 with a P/E ratio of 15.5 and
P/S ratio of 3.7.
Yahoo's second quarter revenue slipped 1% year over year, and net
earnings per share increased 2% in the same period. The
struggling company also named former Google executive Marissa
Mayer chief executive officer and investor
Daniel Loeb
of Third Point capital as a board member during the quarter.
Share of the company fell more than 3 percent in August when the
company disclosed in SEC documents that the new CEO was
rethinking the decision to return cash from the sale of its stake
in Chinese Internet company Alibaba Group to shareholders.
Instead, Mayer is reviewing the possibility of spending cash on
acquisitions or other strategies to "enhance long-term
shareholder value."
The company bought back 30 million of its shares during the
quarter at a total cost of $456 million.
See Ainslie's portfolio here. Also check out the Undervalued
Stocks, Top Growth Companies and High Yield stocks of Lee
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