Tracking Robert Karr's Joho Capital Portfolio - Q1 2020 Update

by

Summary

This article is part of a series that provides an ongoing analysis of the changes made to Robert Karr’s 13F stock portfolio on a quarterly basis. It is based on Karr’s regulatory 13F Form filed on 05/15/2020. Please visit our Tracking Robert Karr’s Joho Capital Portfolio article for an idea on his investment philosophy and our last update for the fund’s moves during Q4 2019.

This quarter, Karr’s 13F stock portfolio value decreased ~43% from $671M to $386M. The number of holdings decreased from 11 to 10. The top three positions represent ~85% of the 13F assets: Alibaba Group Holding (NYSE:BABA), Microsoft (NASDAQ:MSFT), and Floor & Decor Holdings (NYSE:FND).

Karr was one of the most successful among the “tiger cubs” (protégés of Julian Robertson & his legendary Tiger Fund). Although Karr’s main expertise is in Asian equities, ~30% of the assets are typically in the US-listed 13F securities. The fund (1996 inception) closed to outside money and became a Family Office in 2014. To know more about Robert Karr and "tiger cubs," check out the book Julian Robertson: A Tiger in the Land of Bulls and Bears.

New Stakes:

Euronet Worldwide (EEFT) and Ceridian HCM Holding (CDAY): These two small new positions were established during the quarter. EEFT is a 0.93% of the portfolio position purchased at prices between $69 and $167 and the stock currently trades at $95.56. The 0.79% CDAY stake was purchased at prices between $44 and $78 and it is now at $67.92.

Stake Disposals:

Spotify Technology (SPOT): The ~3% of the portfolio SPOT stake was established in Q1 2019 at prices between $109 and $151. Q3 2019 saw a one-third selling at prices between $112 and $158. The elimination this quarter was at prices between $117 and $159. The stock is now at ~$177.

Farfetch Ltd. (FTCH): FTCH was a ~17% of the portfolio stake established in Q4 2018. Farfetch had an IPO on September 21, 2018. Q1 2019 saw a ~30% stake increase at prices between $16.40 and $29.70. That was followed with a ~90% increase next quarter at prices between $19 and $27. The pattern reversed in Q3 2019: position sold down by ~80% to a very small 1.55% portfolio stake at prices between $7.75 and $22. Last quarter saw a further 60% selling to a 0.66% portfolio stake at prices between $7.50 and $11. The remainder stake was disposed this quarter. The stock currently trades at $13.22.

ServiceNow, Inc. (NOW): NOW was a 2.78% of the portfolio stake established last quarter at prices between $220 and $290 and disposed this quarter at prices between $255 and $358. The stock currently trades at $378.

Stake Increases:

None.

Stake Decreases:

Microsoft Corp.: MSFT is a large (top three) ~30% of the portfolio position purchased in Q1 2019 at prices between $97 and $120 and increased by ~90% next quarter at prices between $119 and $138. The stock currently trades well above those ranges at ~$181. Q3 2019 saw a ~14% stake increase while this quarter there was similar selling.

Floor & Decor Holdings: FND is currently the third-largest 13F stake at ~20% of the portfolio. It was established in Q1 2018 at prices between $44 and $52 and increased by ~60% next quarter at prices between $45 and $58. There was a stake doubling in Q3 2018 at prices between $30 and $52 and that was followed with a ~90% increase next quarter at prices between $24 and $34.50. Last year had seen a ~40% selling at prices between $27 and $51. This quarter also saw a ~28% reduction at prices between $27 and $58. The stock currently trades at $51.45.

Global Payments (GPN): GPN is a large ~8% of the portfolio stake established in Q2 2019 at prices between $136 and $163. It was increased by ~200% next quarter at prices between $154 and $175. There was a ~71% selling this quarter at prices between $116 and $209. The stock currently trades at ~$178.

Livent Corp. (LTHM): LTHM is a ~5% of the portfolio stake established in Q3 2019 at prices between $5.50 and $7.75 and increased by ~60% last quarter at prices between $6.45 and $8.95. Livent is a spinoff from FMC Corporation (FMC) that started trading in October 2018 at ~$16.25 per share. The stock currently trades at $6.70. This quarter saw a ~7% trimming.

Estée Lauder (EL): EL is a very small 0.41% stake established during H1 2018 at prices between $128 and $158 and reduced by ~25% in Q4 2018 at prices between $122 and $153. Q1 2019 saw a ~55% stake increase at prices between $125 and $166 while next quarter there was a ~25% selling at prices between $161 and $184. There was one-third increase last quarter at prices between $182 and $208. This quarter saw a ~40% reduction at prices between $144 and $220. The stock currently trades at ~$193.

Cognex Corporation (CGNX): Cognex stake was first purchased in Q3 2015. It was increased by ~340% the following quarter at prices between $17 and $19. The position had since wavered. Q3 2019 saw the large ~9% portfolio stake sold down by ~90% to a very small position at prices between $42 and $51. The stock is now at ~$63. Karr harvested gains from this position. This quarter saw another ~75% selling.

Note: The prices quoted above are adjusted for the two-for-one stock split in December 2017.

Four Seasons Edu (Cayman) (FEDU): FEDU is now a very small ~0.15% of the portfolio stake. It was first purchased in Q1 2018 at prices between $6 and $10. Q2 2019 saw a ~5% trimming and that was followed with a ~12% trimming in Q3 2019. There was a ~63% selling last quarter at prices between $1.55 and $2.20. The stock is now at $1.23. Karr realized losses. This quarter saw a ~13% trimming.

Kept Steady:

Alibaba Group ADR: BABA is Karr’s largest position at ~35% of the portfolio. It was established in Q2 2015 at prices between $79.50 and $94 and almost doubled the following quarter at prices between $57 and $84. Q1 2016 saw another ~50% increase at prices between $60.50 and $81.50. The next two quarters had also seen a ~21% combined increase at prices between $74 and $109. There was a ~8% trimming in Q2 2017 and that was followed with a ~20% selling the following quarter at prices between $141 and $180. There was another similar trimming in Q4 2017 at prices between $169 and $191. The stock currently trades at ~$199. Last two years have seen only minor activity.

The spreadsheet below highlights changes to Karr’s 13F stock holdings in Q1 2020:

https://static.seekingalpha.com/uploads/2020/5/28/106657-1590711220002061.jpg

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.