The investment firm co-founded and chaired by former Vice President Al Gore recently made some big changes in its U.S.-traded portfolio.
Generation Investment Management materially raised its investment in Alibaba Group Holding (ticker: BABA), initiated a stake in Intel (INTC), and cut holdings in Analog Devices (ADI) and Palo Alto Networks (PANW) in the second quarter. The firm disclosed the stock trades, among others, in a form it filed with the Securities and Exchange Commission.
Generation, which managed $36 billion in assets as of June 30, declined to comment.
Generation’s largest public fund under its management, Lombard Odier Funds-Generation Global, has been trouncing its benchmark, the MSCI World Index, for the current year to date and longer periods. The annualized return since the fund’s launch in November 2007 is 10.42%, compared with the index’s 6.93%.
Generation bought 921,211 additional Alibaba American depositary receipts to end the second quarter with 3.9 million ADRs of the Chinese Internet giant.
Alibaba ADRs slid 2.6% in the first half of the year, and so far in the third quarter have dropped 30.3%. For comparison, the S&P 500 index rose 14.4% in the first half, and is up 3.4% so far in the third quarter.
Alibaba and peers have been hampered by Chinese measures to tighten regulations. In addition, Alibaba is feeling the fallout from sexual-harassment allegations after a female employee reported that she was assaulted in her hotel room by a male superior. CEO Daniel Zhang responded by firing a group of managers, and declaring the situation “a humiliation for all Ali People.” China last week announced a new privacy law, slamming Alibaba and peers. Alibaba ADRs recently tumbled to a pandemic low.
The firm initiated a position in Intel, buying 7 million shares of the chip giant. It hadn’t owned any at the end of the first quarter. Intel stock rose 12.7% in the first half, and so far in the third quarter has slipped 7.4%.
In July, Intel reported strong second-quarter earnings, but gross margins are falling. Intel CEO Pat Gelsinger told us at the end of July that one of the company’s past failings was that “Intel was too arrogant.” Gelsinger plans aggressive moves, and noted that top engineers who left Intel in recent years are returning. “They feel the mojo coming back.” Apart from chips, Intel disclosed this month a position in cryptocurrency exchange Coinbase Global (COIN).
Analog Devices stock rose 16.5% in the first half, and so far in the third quarter shares of the chip company have slipped 3.2%.
Analog Devices’ fiscal-third-quarter report last week set records, and it followed a strong fiscal second quarter. Needham analyst N. Quinn Bolton inched up his target price to $200 on the stock after the third-quarter report, and kept a Buy rating. Bolton wrote in a research report that Analog Devices’ growth rate in the fiscal fourth quarter “is expected to decelerate despite backlog growing” in the fiscal third.Generation sold 634,685 Analog Devices shares to end the second quarter with 4.9 million shares.
The firm sold 413,345 Palo Alto shares to end June with 1.8 million shares of the security-software firm. Palo Alto stock rose 4.4% in the first half, and so far in the third quarter has slipped 1.0%.
Analysts were bullish on Palo Alto earlier in the year, and earnings for the fiscal third quarter, ended April 30, were strong. Palo Alto will report fiscal fourth-quarter results after the market close on Monday.
Inside Scoop is a regular Barron’s feature covering stock transactions by corporate executives and board members—so-called insiders—as well as large shareholders, politicians, and other prominent figures. Due to their insider status, these investors are required to disclose stock trades with the Securities and Exchange Commission or other regulatory groups.
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