By: Manisha Sethi Sep. 20, 2018
Palestra Capital Management LLC reported its SEC 13F filings on May 15, 2018, for the first quarter of the calendar year, showing the value of its portfolio as $1804.72 million. The investor has a top 10 holdings concentration of 61.79%, with its largest holding being Dow Chemical Co. (DOW) with 21,37,700 shares. The firm also increased its number of shares in Facebook by 32% to 5,46,000. It thus clearly invests across sectors, with its largest shareholding being in the technology sector at 42.14%. Palestra Capital Management LLC, based in New York, was founded in 2011 and provides services to pooled investment vehicles and heavily invests in public equity markets. The firm has a fundamentally driven bottom-up approach to determine investment opportunities across diversified sectors.
Raltin analyzed Palestra’s new purchases from Q1 2014 to Q1 2018 and calculated their annual internal rate of return. Of the investor’s 87 new purchases, 52 stocks have outperformed the S&P 500, while 14 have underperformed the S&P 500 by more than 20%. A detailed background on Raltin’s methodology is given here. The table below shows the number of new purchases according to their S&P 500 performance.
|S&P performance category||No. of new Stock Purchases||Total new purchases (%)|
|-20 to -10%||8||9.2|
In this quarter, the firm bought 6 new stocks across sectors. SS&C Technologies Holdings (SSNC) and Metro One Telecommunications (INFO), both in the information technology space, constitute its largest holdings among its new purchases, with 5.78% and 5.60% of the firm’s portfolio, respectively. Its remaining new stocks are from the consumer discretionary and communications sectors. The following table lists the investor’s new purchases in Q1 2018.
|Stocks||No. of shares||Holding value ($1,000)|
|SS&C Technologies Holdings, Inc. (SSNC)||1,945,000||104,330|
|Metro One Telecommunications, Inc. (INFO)||2,095,000||101,063|
|Dollar Tree, Inc. (DLTR)||840,872||79,799|
|Alibaba Group Holdings Ltd. (BABA)||410,000||75,251|
|Electronic Arts Inc. (EA)||610,000||73,956|
|Delphi Technologies PLC (DLPH)||1,515,000||72,190|
The following table shows the portfolio value of the fund for 5 quarters starting from Q1 2017 to Q1 2016. In addition, it also shows the top holdings in each quarter that have outperformed the S&P 500.
|Period||Total portfolio value ($Mn)||Top holdings (ticker, % of IRR difference from S&P 500)|
|Q1 2017||1,320.05||Vivendi Universal Ads (1 ORD ) (V, 23.05), FleetCor Technologies, Inc. (FLT, 22.17), Union Pacific Corp. (UNP, 15.34)|
|Q4 2016||1,779.01||Microsoft Corp. (MSFT, 18.34), Adient plc (ADNT, 14.97), Alphabet Inc. (GOOGL, 13.59)|
|Q3 2016||1,051.7||Take-Two Interactive Software, Inc. (TTWO, 111.09), TD AmeriTrade Holding Corp. (AMTD, 22.41),|
|Q2 2016||1,245.32||First Data Corporation (FDC, 48.98), Restaurant Brands International Inc. (QSR, 34.91), Expedia, Inc. (EXPE, 24.69)|
|Q1 2016||1,056.67||Semgroup Corp. (SEMG, 46.01), Autodesk, Inc. (ADSK, 33.59), Netflix, Inc. (NFLX, 29.88)|