Viking Global’s Andreas Halvorsen is closing his Viking Long Fund to new investors at the end of the year.
However, he will allow funding of committed amounts in 2013, according to his second-quarter letter recently sent to clients.
Meanwhile, the Tiger Cub says he continues to market the Long Fund and is working with a group of potential investors who are proceeding with their due diligence.
“We are committed to growing the long fund and must balance this with the demands on the investment staff involved in marketing our funds,” Halvorsen states in the letter.
The fund lost 3.8 percent in the second quarter but is up 10.8 percent in the first six months of the year.
The firm’s flagship fund — Viking Global Equities — made 1.5 percent in the second quarter and 7 percent in the first half.
Halvorsen points out in the letter that in the second quarter, Viking Global Equities’ long portfolio declined 3.2 percent and the short portfolio fell 8.4 percent, resulting in a positive 5.2 percent long-short spread. “Positive alpha from stock picking allowed us to generate absolute profits in a down market,” he states.
The manager points out that for the past eight consecutive quarters, his longs have appreciated more than his shorts. He stresses that the difference between the annualized return of the long portfolio and short portfolio during that period was a positive 16 percent. “Our effort to create a positive long-short spread over time is at the core of our investment process and the recent trend reinforces our confidence that our approach to stock-picking is sound,” Halvorsen explains.
Drilling down, Halvorsen says information technology was the best performing sector in the second quarter, accounting for nearly two thirds of his short profits, and included the top four short winners.
The biggest profit contributor for the Long Fund was the Consumer Discretionary sector.
Financials were the worst performer for both funds. In fact, long positions in Invesco and Citigroup were among the firm’s top 5 losers and combined cost each fund at least 1 percent.
At the end of the second quarter, the ten largest longs in Global Equities’ portfolio accounted for 32.2 percent of capital and the ten largest shorts accounted for 17.4 percent of capital, according to the letter. In the Long Fund, the ten largest positions accounted for 34.5 percent of capital.
Interestingly, the top of the portfolio had a big shake-up in the second quarter, with six of the top 10 positions new to the list or requalified. They are Apple, Crown Castle, News Corp., Schlumberger, TripAdvisor and Visa. The rest of the top 10 included Priceline.com, MasterCard, News Corp. and European Aeronautic Defense and Space.
