Tracking Michael Dell’s MSD Capital Portfolio – Q2 2017 Update

• Michael Dell’s portfolio value decreased this quarter from $275M to $255M.
• The PVH Cop positon saw a minor reduction.
• MSD Capital 13F portfolio has just five positions.

Michael Dell’s MSD Capital 13F portfolio value dropped ~7% this quarter from $275M to $255M: The PVH Corp position was reduced. Regulatory filings after the quarter ended show a small reduction in Asbury Automotive and a small increase in DineEquity.

To know more about Michael Dell, check-out the book Direct from Dell: Strategies that Revolutionized an Industry.

Below is a summary:

Asbury Automotive Group (ABG): ABG is currently the largest 13F position at ~44% of the portfolio. It is a long-term stake that has been in the portfolio since 2008. MSD’s cost-basis is very low as they picked up the original position during the market lows of 2008 when ABG traded in the low-single-digits. Q2 2016 saw a ~10% trimming at prices between $52 and $63 and the stock is now at $52.15.

Note: MSD Capital owns ~9% of ABG.

PVH Corporation (PVH): PVH is a ~16% of the portfolio position. It saw a ~16% reduction in Q2 2016 at prices between $83 and $103 and that was followed with another ~28% selling the following quarter at prices between $92 and $110. Q4 2016 also saw another ~23% reduction at prices between $90 and $114. There was a ~15% further selling last quarter at prices between $85 and $104 and that was followed with a ~7% trimming this quarter. The last significant buying happened in Q4 2015 when there was a one-third increase at prices between $73 and $103. The original position was established in 2012: they had convertible notes ($47.74 strike) as PVH issued them to raise capital for their Tommy Hilfiger Group acquisition in 2010. The stock is now at $126.

Below is a spreadsheet that highlights the changes to Michael Dell's MSD Capital US long stock portfolio. For a look at how his portfolio has progressed, see our previous update:

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Tracking Bill & Melinda Gates Foundation Portfolio – Q2 2017 Update

• The huge ~$23B portfolio has just 17 positions.
• The largest position, Berkshire Hathaway is at a whopping ~44% of the portfolio.
• Last six quarters have seen only very minor adjustments. This quarter saw Bill Gates donating 64M shares of Microsoft Corporation to the foundation.

Gates Foundation portfolio value increased this quarter from $18.86B to $23B. Over the years, the portfolio has become extremely concentrated. In their first 13F filing in 2002, they had about 27 positions and the total portfolio value was ~$1.8B. Currently, the portfolio is well over ten times that while the number of positions has gone down to just 17.

To know more about Gates and the Foundation, check-out the book Bill Gates: The Inspirational Life Story of Bill Gates; Businessman, Inventor, and the World's Most Remarkable Philanthropist.

Below is a summary:

Berkshire Hathaway (BRK.B): BRK.B is by far the largest stake at 43.53% of the portfolio. The original position is from Q3 2006 at a cost-basis in the mid-60s. The size of the stake peaked at ~87M shares in Q4 2012 and the current position is at ~64M shares. Q3 2016 saw a ~15% stake increase at prices between $143 and $151 while the following quarter saw a ~7% trimming at prices between $143 and $167. Last two quarters have seen ~7% trimmings at prices between $159 and $177. The previous significant buying was in Q3 2015 when around 11M shares were purchased at prices between $129 and $144. The stock currently trades at ~$180.

Waste Management (WM):  WM was a very small ~1.2M share position during their first 13F filing in Q3 2002. The current position is at ~18.6M shares (5.92% of the portfolio). The bulk of the position is from Q3 2009 when around 8M shares were purchased at a cost-basis in the high-20s. 2010 also saw a ~3M share increase in the mid-30s. Since then, the position has been left untouched. The stock has doubled and currently goes for $76.95.

Canadian National Railway (CNI): CNI is the third-largest stake at ~6% of the portfolio. Since 2008, the position has remained remarkably steady at ~17M shares. The bulk of the stake was built during the period from 2006 to 2008 at a cost-basis in the low-20s. CNI currently trades at $79.76.

The spreadsheet below shows Gates Foundation’s holdings as of Q2 2017. Please visit our previous updates to get an idea on how the portfolio has progressed:

To learn more about how to profit from a strategy of cloning hedge fund picks, check out our book Profiting from Hedge Funds: Winning Strategies for the Little Guy.   

Tracking Francis Chou’s Chou Associates Portfolio – Q2 2017 Update

• Chou’s 13F portfolio increased from $301M to $324M during the quarter.
•  Chou increased Valeant and Teva Pharmaceuticals.
• Valeant at ~16% of the portfolio is the largest position.

Francis Chou’s Chou Associates Portfolio increased 7.42% from $301M to $324M during the quarter. The portfolio continues to be very concentrated with just 27 positions. Below is a summary:

1. Berkshire Hathaway (BRK.A): The ~12% portfolio position is the second-largest 13F equity stake. The last major activity was a 50% reduction in Q1 2016 at prices between $187,000 and $214,000. The stock is now at $270,420.  

2. JPMorgan Chase Warrants (JPM-WT): The 9.76% stake in JPMorgan TARP Warrants was acquired in 2011 at much lower prices. The position had remained relatively steady since. Last quarter saw a ~44% selling as the underlying traded between $83 and $94. JPM currently goes for $91.31.

3. Resolute Forest Products (RFP): The ~7% RFP position has been in the portfolio since 2010 (Abitibibowater at the time) and the cost-basis is much higher compared to the current price. Q2 2013 saw a one-third increase at prices between $13 and $16. The five quarters through Q1 2016 also saw a ~20% combined increase at progressively lower prices between $4 and $19. The stock is now at $4.90.

4. Valeant Pharmaceuticals (VRX): VRX is now the largest position at 16.38% of the portfolio. The position was established in Q1 2016 at prices between $26 and $102 and increased by ~48% the following quarter at prices between $19 and $36. There was another ~35% increase in Q4 2016 at prices between $13.50 and $24.50 and that was followed with a ~20% increase last quarter at prices between $10.50 and $17. This quarter saw another ~30% increase at prices between $8.50 and $17.30. The stock currently trades at $13.19.

Below is a spreadsheet that highlights the changes to the portfolio as of Q2 2017. Please check out our previous update to have an idea on how the portfolio is progressing:

To learn more about how to profit from a strategy of cloning hedge fund picks, check out our book Profiting from Hedge Funds: Winning Strategies for the Little Guy .