TOST - Tracking Al Gore's Generation Investment Management Portfolio - Q4 2022 Update

2023-03-23 22:25:10 ET

Summary

• Generation Investment Management’s 13F portfolio value increased from $16.86B to $17.32B this quarter.
• They increased Cooper Companies, Texas Instruments, Toast, and Twilio while reducing Becton Dickinson, Salesforce, Alibaba Group Holding, and H World Group. They also dropped Alphabet.
• The top three positions are Charles Schwab, Amazon.com, and Henry Schein, and they add up to ~19% of the portfolio.

This article is part of a series that provides an ongoing analysis of the changes made to Generation Investment Management's 13F portfolio on a quarterly basis. It is based on Al Gore's regulatory 13F Form filed on 2/13/2023. Please visit our Tracking Al Gore's Generation Investment Management Portfolio series to get an idea of their investment philosophy and our previous update for the fund's moves in Q3 2022.

This quarter, Al Gore's 13F portfolio value increased ~3% from $16.86B to $17.32B. The number of positions decreased from 45 to 41. The top five stakes are Charles Schwab, Amazon.com, Henry Schein, Microsoft, and Equifax. They account for around ~29% of the total 13F portfolio value. Generation Investment Management's whitepapers and Al Gore's books are good precursors for anyone interested in investing based on sustainability analysis.

New Stakes:

Dentsply Sirona ( XRAY ): XRAY is a 0.87% of the portfolio position purchased this quarter at prices between ~$27 and ~$34 and the stock currently trades above that range at $36.76.

Note: XRAY is a frequently traded stock in Generation IM's portfolio.

Stake Disposals:

Abiomed Inc. ( ABMD ): ABMD was a ~2% of the portfolio stake established during Q1 2022. Johnson & Johnson ( JNJ ) acquired ABMD in a $380 per share all-cash deal that closed in December.

Alphabet Inc. ( GOOG ): The bulk of the 1.68% stake in GOOG was established in the three quarters through Q1 2019 at prices between ~$49 and ~$63. Q2 & Q3 2019 also saw a ~45% stake increase at prices between ~$56 and ~$63. The five quarters through Q4 2020 saw the stake reduced by ~60% at prices between ~$53 and ~$91. Q4 2021 saw another ~20% selling at prices between ~$133 and ~$151. That was followed with a ~50% reduction in Q2 2022 at prices between ~$106 and ~$145. Last quarter also saw a ~27% selling at prices between ~$96 and ~$123. The disposal this quarter was at prices between ~$83.50 and ~$105. The stock currently trades at ~$106. They harvested gains.

Note: the prices quoted above are adjusted for the 20-for-1 stock split last July.

Coupang ( CPNG ), Shopify ( SHOP ), and Taiwan Semi ( TSM ): These small (less than ~0.60% of the portfolio each) stakes were disposed during the quarter.

Stake Increases:

Charles Schwab ( SCHW ): SCHW is currently the largest position at ~7% of the portfolio. The stake was first purchased in Q4 2016 at prices between $31 and $40.50. Since then, the position was increased substantially at prices between ~$30 and ~$50. Q1 2021 saw a ~37% selling at prices between ~$51.50 and ~$68. That was followed with a ~20% reduction next quarter at prices between ~$63.50 and ~$76. The stock is now at $52.89. There was a ~15% stake increase last quarter and that was followed with a marginal further increase this quarter.

Note: SCHW has seen a previous round-trip. A large ~7.2M share stake purchased in 2013 in the high-teens price-range was disposed the following year at much higher prices.

Amazon.com ( AMZN ): AMZN is currently the second largest position at ~6% of the portfolio. It was purchased during H1 2021 at prices between ~$158 and ~$175 and the stock currently trades well below that range at $98.71. There was a ~40% stake increase during H1 2022 at prices between ~$104 and ~$170. The last two quarters have also seen minor increases.

Microsoft Corporation ( MSFT ): The large (top five) 5.59% MSFT stake was primarily built during Q2 2022 at prices between ~$242 and ~$315 and the stock currently trades at ~$278. There was a ~9% trimming last quarter while this quarter saw a ~5% increase.

Analog Devices ( ADI ): ADI position is now at 4.84% of the portfolio. It was established in Q2 2018 at prices between $87 and $102 and doubled next quarter at prices between $91 and $100. The stake has wavered. Recent activity follows. Q3 2020 saw a stake doubling at prices between ~$112 and ~$125. Q2 to Q4 2021 had seen the position reduced by ~47% at prices between ~$146 and ~$189. There was a ~80% stake increase in Q2 2022 at prices between ~$144 and ~$169. The stock currently trades at ~$189. The last two quarters have also seen ~15% further increase.

Applied Materials ( AMAT ): The 3.91% AMAT stake was established in Q2 2019 at prices between ~$39 and ~$45. There was a ~45% increase during Q2 2022 at prices between ~$86 and ~$129. The stock currently trades at ~$123. There was a ~15% further increase over the last two quarters.

MercadoLibre ( MELI ): The 3.45% of the portfolio stake in MELI was built during the last five quarters at prices between ~$635 and ~$1950. The stock is now at ~$1192. This quarter also saw a minor ~3% further increase.

Nutanix ( NTNX ): The 3.32% NTNX stake was established in Q2 2019 at prices between ~$25 and ~$43. The stock currently trades at $25.05. The last several quarters have seen only minor adjustments.

Note: they have a ~9.6% ownership stake in the business.

Cooper Companies ( COO ): The bulk of the ~3% position in COO was purchased in Q4 2016 at prices between $159 and $183. The original stake was doubled in Q1 2018 at prices between $218 and $251 and that was followed with a ~37% increase next quarter at prices between $218 and $237. There was a ~25% reduction in Q2 2021 at prices between ~$372 and ~$412. Q1 2022 also saw a ~15% selling at prices between ~$380 and ~$428. This quarter saw a ~30% stake increase at prices between ~$249 and ~$334. The stock currently trades at ~$345.

Texas Instruments ( TXN ): The bulk of the 2.58% stake in TXN was established this quarter at prices between ~$148 and ~$180. The stock is now at the top end of that range at ~$180.

Twilio Inc. ( TWLO ): TWLO is a ~2% of the portfolio position primarily built during Q2 2022 at prices between ~$79 and ~$175. The stock is now well below that range at $62.38. There was a two-thirds stake increase in the last two quarters at prices between ~$43 and ~$98.

Toast, Inc. ( TOST ): The ~2% TOST stake saw a ~45% stake increase this quarter at prices between ~$17 and ~$22. The stock currently trades below that range at $16.11.

Note: Generation IM's original investment in Toast goes back to a funding round in 2017. They have a 6.19% ownership stake in the business.

Freshworks Inc. ( FRSH ) , Gogoro Inc. ( GGR ) and Trimble Inc. ( TRMB ): These small (less than ~0.60% of the portfolio each) stakes were increased this quarter.

Stake Decreases:

Henry Schein ( HSIC ): HSIC became the largest position in Q4 2017 as it saw a ~550% stake increase at prices between $50.50 and $68.50. There was another ~22% increase next quarter at prices between $47 and $63.50. The five quarters through Q3 2019 saw a combined ~30% reduction at prices between $58 and $71 while Q1 2020 there was a similar increase at prices between ~$43 and ~$74. The stock is now at ~$78 and the stake at ~5% of the portfolio. The last eleven quarters have seen only minor adjustments.

Note: The prices quoted above are adjusted for the spinoff of Covetrus Inc. last January. Also, HSIC split 2-for-1 in September 2017. Generation IM has a ~9% ownership stake in Henry Schein.

Equifax Inc. ( EFX ): The 5.38% EFX stake was purchased in Q1 2019 at prices between $91 and $115. Q4 2020 saw a whopping ~175% stake increase at prices between ~$137 and ~$195. Q2 to Q4 2021 saw the position sold down by ~70% at prices between ~$181 and ~$297. The stake was doubled next quarter at prices between ~$208 and ~$286. The stock is now at ~$196. The last three quarters have seen only minor adjustments.

Trane Technologies plc ( TT ): TT is now a large 5.30% of the portfolio position. The stake saw a ~150% stake increase in Q1 2022 at prices between ~$143 and ~$195. That was followed with a ~40% increase next quarter at prices between ~$121 and ~$155. The stock currently trades at ~$183. The last two quarters have seen only minor adjustments.

Jones Lang LaSalle Inc. ( JLL ): JLL is a 4.11% long-term position first purchased in 2008. By 2013, that original position was doubled to a fairly large ~5% stake through consistent buying every year. The next two years saw selling: ~75% overall reduction at prices between $103 and $178. The pattern reversed in 2016: ~500% increase at prices between $91 and $141. That was followed with a ~30% increase in Q2 2017 at prices between $103 and $125. Since then, the activity has been minor. The stock currently trades at ~$137.

Note: Generation IM has a ~9% ownership stake in Jones Lang LaSalle.

Gartner Inc. ( IT ): The ~4% of the portfolio IT stake was built in 2020 at prices between ~$83 and ~$164. The five quarters through Q4 2021 had seen a ~60% selling at prices between ~$120 and ~$340. The stock is now at ~$309. The last few quarters have seen minor trimming.

Mastercard Inc. ( MA ): MA is a 3.76% of the portfolio position purchased during Q2 2022 at prices between ~$309 and ~$379 and the stock currently trades at ~$354. There was minor trimming in the last two quarters.

Baxter International ( BAX ): BAX is now at 3.20% of the portfolio. It was established in Q4 2019 at prices between $76.50 and $88.50 and increased by ~50% next quarter at prices between ~$72 and ~$93. Q1 2021 saw another ~20% stake increase at prices between ~$76 and ~$86. There was a ~50% selling over the last four quarters at prices between ~$50 and ~$87. The stock currently trades at $38.12.

Becton, Dickinson ( BDX ): The 2.84% BDX position was built in 2020 at prices between $201 and $284. There was a ~30% stake increase in Q4 2021 at prices between ~$236 and ~$257. Q2 2022 saw a similar reduction at prices between ~$235 and ~$275. That was followed with a ~40% further selling this quarter at prices between ~$218 and ~$257. The stock currently trades at ~$236.

Thermo Fisher Scientific ( TMO ): TMO is a 2.82% portfolio position first purchased in Q3 2016 and more than doubled the following quarter at prices between $141 and $159. Q2 2017 saw another ~20% increase at prices between $152 and $176. There was a one-third selling in 2019 at prices between $221 and $327. 2020 had seen another ~60% selling at prices between ~$255 and ~$528. The stake was rebuilt in Q2 2021 at prices between ~$441 and ~$509. There was a ~50% reduction over the two quarters through Q1 2022 at prices between ~$524 and ~$667. The stock currently goes for ~$555. The last two quarters have seen minor trimming.

CBRE Group ( CBRE ): CBRE is a 2.43% of the portfolio position built during Q2 & Q3 2020 at prices between ~$35 and ~$56. There was a ~45% selling over the four quarters through Q1 2022 at prices between ~$80 and ~$109. The stock is now at $68.91. The last three quarters have seen only minor adjustments.

Clarivate Plc ( CLVT ): CLVT is a 2.20% of the portfolio stake purchased in Q3 2021 at prices between ~$21.50 and ~$27.15. There was a one-third stake increase next quarter at prices between ~$20.50 and ~$25.25. Q1 2022 also saw a similar increase at prices between ~$12.25 and ~$24.50. The stock currently trades below the low end of those ranges at $9.43. The last three quarters have seen only minor adjustments.

Note: Generation IM has a ~6.8% ownership stake in Clarivate plc.

10x Genomics ( TXG ), Alibaba Group Holding ( BABA ), Carlisle Companies ( CSL ), Cognizant Technology ( CTSH ), H World Group ( HTHT ), Microchip Technology ( MCHP ), and Palo Alto Networks ( PANW ), PTC Inc. ( PTC ), Salesforce Inc. ( CRM ), and STERIS plc ( STE ): These small (less than ~2% of the portfolio each) stakes were reduced during the quarter.

Kept Steady:

Remitly Global ( RELY ): RELY had an IPO in September 2021. Shares started trading at ~$38 and currently goes for $16.56. Generation IM's stake is at 0.73% of the portfolio.

Note: Generation IM has a ~6.5% ownership stake in the business.

SOPHiA GENETICS ( SOPH ): Sophia Genetics had an IPO last July. Shares started trading at ~$16.75 and currently goes for $4.42. Generation IM's 0.08% of the portfolio stake goes back to a funding round in 2019.

Note: Generation IM has a ~10.5% ownership stake in the business.

Asana, Inc. ( ASAN ), Proterra Inc. ( PTRA ), and SPDR S&P 500 ETF ( SPY ): These minutely small (less than ~0.20% of the portfolio each) stakes were kept steady this quarter.

Note: Generation IM's original investment in Proterra goes back to a funding round in 2017.

Below is a spreadsheet that highlights the changes to Al Gore's Generation Investment Management 13F stock portfolio as of Q4 2022:

For further details see: