By: Manisha Sethi Jul. 30, 2018

In its SEC 13F filings for Q1 2018 dated May 15, 2018, Vulcan Value Partners LLC report a portfolio value of $12.415 billion, with its top 10 holdings accounting for 48.72%. Vulcan Value Partners LLC’s top holdings include Oracle Corp. (ORCL), National Oilwell Varco, Inc. (NOV), CVS Health Corporation (CVS), MasterCard Inc. (MA), and Skyworks Solutions, Inc. (SWKS). Vulcan Value Partners is an employee-owned investment manager based in Birmingham, Alabama. It was founded in 2007 by C.T. Fitzpatrick. The firm primarily provides its services to high net worth individuals. In addition, it caters to investment companies, pooled investment vehicles, institutions, individuals, firms offering pension and profit sharing plans, trusts, estates, business entities, charitable organizations, corporations, state or municipal government entities, and insurance companies. The firm manages separate client-focused equity portfolios. It also launches and manages equity mutual funds for its clients. It invests in the value stocks of small-, large-, and all-cap companies. Further, Vulcan Value Partners employ a fundamental bottom-up stock-picking approach and internal research to make its investments. It benchmarks the performance of its portfolios against the S&P 500, Russell 1000 Value, Russell 2000, and Russell 2000 Value indexes.

According to a Raltin study, 57.93% of Vulcan Value Partners’ new purchases outperform S&P 500. More specifically, 25.52% or about 37 new stock purchases (between Q1 2014 and Q1 2018) underperform S&P 500 by more than 10%, whereas 24 out of 145 new purchases underperform by more than 20%. A detailed description of Raltin’s methodology can be found here. The following table mentions the various categories of new purchases relative to their performance against S&P 500.

S&P outperformance categoryNumber of new stock purchasesTotal new purchases (%)
>20%2819.31
10 to 20%2617.93
0 to 10%3020.69
-10 to 0%2416.55
-20 to -10%138.97
<-20%2416.55
Total stocks145

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The firm bought 3 new stocks from different sectors: Facebook, Inc. (FB) and Despegar.com, Corp. (DESP) from the communications sector and Tempur Sealy International, Inc. (TPX) from the consumer discretionary sector. The table below lists new purchases by the firm as well as their holding value and the number of shares purchased.

StocksNumber of sharesHolding value ($1,000)
Facebook, Inc. (FB)698,2471,11,572
Despegar.com, Corp. (DESP)1,543,54648,236
Tempur Sealy International, Inc. (TPX)590,06326,724

The following table presents the investor’s portfolio value from Q1 2017 to Q1 2016 and the top holdings that outperform S&P 500 in each quarter. Clearly, S&P Global Inc. (SPGI), InterContinental Hotels Group (IHG), Chemed Corp. (CHE), Sotheby’s (BID), and Zayo Group Holdings, Inc. (ZAYO) outperform the index by more than 20%.

PeriodTotal portfolio value ($Mn)Top holdings (ticker, % of IRR difference from S&P 500)
Q1 201711,581.66S&P Global Inc. (SPGI, 34.63), Moody’s Corp. (MCO, 32.45), (NTRS, 7.51)
Q4 201611,225.95InterContinental Hotels Group (IHG, 23.97), Choice Hotels International, Inc. (CHH, 19.13), CBRE Group, Inc. (CBG, 18.21)
Q3 201610,887.36Chemed Corp. (CHE, 27.17), UnitedHealth Group Inc. (UNH, 23.83), Skyworks Solutions, Inc. (SWKS, 17.74)
Q2 201610,167.66Sotheby’s (BID, 80.45), Marriott International, Inc. (MAR, 35.5), Jones Lang LaSalle Inc. (JLL, 12.84)
Q1 201611,127.91Zayo Group Holdings, Inc. (ZAYO, 21.02), Pioneer Natural Resources Co. (PXD, 17.62), Hilton Worldwide Holdings Inc. (HLT, 11.8)