Andreas Halvorsen — Viking Global
Andreas Halvorsen launched Viking Global Investors in 1999. The firm now manages $30 billion in assets. The Norwegian-born Halvorsen is based in Greenwich, Connecticut. Prior to Viking, Halvorsen was a senior managing director at Tiger Management Corp. as well as an analyst and director of equities, and a member of the Management Committee. He sat on Tiger’s Advisory Board and on the Supervisory Board of Jaguar Fund N.V., the firm’s largest fund. Prior to joining Tiger, Halvorsen worked in the Investment Banking Division of Morgan Stanley. An officer on the Seal Team in the Royal Norwegian Navy, Halvorsen is a graduate of Williams College and the Stanford Graduate School of Business, where he was an Arjay Miller Scholar and received the Alexander A. Robichek Award.
Viking Global returned 13.4% net of fees in 2014. By the middle of 2014, Viking managed $20.6 billion in long-short hedge fund assets and more than $8 billion in long-only strategies. Viking Global returned an astonishing 89% after fees in its first full year in business (1999).Viking is a long/short global equity fund with a bottom-up stock picking approach.
Andreas Halvorsen’s performance during 2011 helped him claim the title of one of the world’s highest earning hedge fund managers. Halvorsen earned $200 million during 2011 and is considered to be one of the best Tiger alumni.
During 2014, led by Andreas Halvorsen, Viking Global sought to raise up to $2 billion for the Viking Global Opportunities fund, a new fund set to focus on illiquid investments. Investing in private companies and public ones that are difficult to trade quickly isn’t new for Viking. It has previously invested in First Data and Alibaba, for example. The new fund reflects Viking’s desire to have a vehicle structured specifically for illiquid assets and increased opportunities in the sector.
Andreas Halvorsen: Investment philosophy
Like many of the Tiger Cubs, Andreas Halvorsen is a stock picker. He believes that thoughtful analysis and disciplined valuation over time yield a diversified portfolio of longs and shorts, whose stock price developments will deviate from each other and provide a profitable spread. Since inception, Viking Global’s average annual long-short spread has been 24%, although there is significant quarterly variability underlying this average ranging from a high of 24% to a low of -15%.
Andreas Halvorsen notes that his greatest alpha generation has been in his highest conviction ideas. Of 921 long and short investments made by Viking over a five-year period — from 2006 to 2011 — 59% were profitable. Of the 56 investments that resulted in a profit or a loss exceeding 100 basis points, 75% were profitable. The top ten longs returned 28% per annum, outperforming the remaining longs by over 12 percentage points per annum on an unlevered basis. Over the same period, the MSCI World and S&P 500 indices returned 1.5% and 0.4%, respectively, per annum. During 2014, Viking’s top 20 longs appreciated by 26.5%.
Andreas Halvorsen likes to place large bets on high conviction companies. At the end of 2014 across Viking’s funds, the ten largest holding comprised nearly 40% of capital. The largest position, Illumina accounted for 5% of this. Gross exposure was 153%, and net exposure came in at 40%. Average gross and net exposures for the year were 173% and 48%, respectively.
Viking focuses on fundamental business factors to find companies to short or buy. Young analysts are encouraged to become industry specialists so they can be intimately involved in picking stocks, not relegated to writing reports.
As a starting point or “base case,” the fund typically tilts its portfolio 40% percent more to the long side than to the short side. But the size of the long-side tilt ebbs and flows based on Viking’s individual stock picks, not based on an overarching view of the market.
The following were Viking’s top ten longs, in order of size, at the end of 2014:
- Illumina Inc. (ILMN.O)
- AstraZeneca PLC (AZN.L)
- Walgreens Boots Alliance Inc. (WBA.O)
- Valeant Pharmaceuticals International Inc. (VRX.N)
- Actavis plc (ACT.N)
- Pioneer Natural Resources Company (PXD.N)
- China Mobile Ltd. (0941.HK)
- Intesa Sanpaolo SpA (ISP.MI)
- Canadian Pacific Railway Ltd. (CP.N)
- Air Products & Chemicals Inc. (APD.N)