How Is Viking Global Beating The Market?

In their Q2 letter to investors, hedge funds Viking Global Equities (VGE) and Viking Long Fund (VLF) reviewed their top positions and their best- and worst-performing stocks. Overall, the funds modestly beat the returns of both the S&P 500 and the MSCI World Index in Q2.

The Numbers

Both of the Viking funds gained 0.8 percent in Q2, while the S&P 500 added 0.3 percent and the MSCI World fell 0.7 percent.

As of the July 16 date of the letter, the VGE fund was up 5.6 percent year-to-date and the VLF fund was up 7.3 percent, while the MSCI World was up 4.1 percent and the S&P 500 was up only 1.2 percent.

On a long/short basis, VGE’s longs gained 1.7 percent during Q2, while its shorts declined by 0.1 percent.

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Biggest Gainers

VGE’s best performing position in the quarter was a short position in the Energy sector, which contributed 0.9 percent of the fund’s gain.

Other top-performing positions include Illumina, Inc. ILMN, LyondellBasell Industries NV LYB, Netflix, Inc. NFLX and Valeant Pharmaceuticals Intl Inc VRX.

Biggest Losers

The biggest losers for the two funds during Q2 include Pioneer Natural Resources PXD, Canadian Pacific Railway Limited (USA) CP, Cheniere Energy, Inc. LNG, Google Inc GOOG GOOGL and Air Products & Chemicals, Inc. APD.

The letter noted that short positions in Asia underperformed expectations in Q2, but indicated that those positions could be producing big gains so far in Q3. “We have exited some of these [positions] and continue to hold others in the belief that our theses will play out over time.”

As of June 30, the funds’ top five long positions were the following stocks:

• 1. Walgreens Boots Alliance Inc WBA
• 2. Google
• 3. Allergan PLC AGN
• 4. China Mobile Ltd. (ADR) CHL
• 5. LyondellBasell