U.K.-based investment firm Baillie Gifford (Trades, Portfolio) recently disclosed its portfolio updates for the fourth quarter of 2022, which ended on Dec. 31.
Established over 100 years ago, Baillie Gifford (Trades, Portfolio) is an investment management firm that has a commitment to long-term growth investments. It puts investment ideas through a rigorous process of fundamental analysis and research, looking for companies around the globe that demonstrate the potential to grow at a faster rate on a more sustainable basis than their peers.
According to the firm’s 13F report for the latest quarter, its top trades were reductions to its holdings in Abiomed Inc. (ABMD) and Meta Platforms Inc. (META, Financial) and additions to Nvidia Corp. (NVDA, Financial) and MercadoLibre Inc. (MELI, Financial).
Investors should be aware that 13F reports do not provide a complete picture of a guru’s holdings. They include only a snapshot of long equity positions in U.S.-listed stocks and American depository receipts as of the quarter’s end. They do not include short positions, non-ADR international holdings or other types of securities. However, even this limited filing can provide valuable information.
Abiomed
The firm nearly eliminated its Abiomed (ABMD) holding, slashing it by 99.92% for a remaining stake of 2,991 shares. The trade shaved 0.92% off the equity portfolio at the quarter’s average share price of $334.59.
Abiomed is a medical device company that produces heart pumps and other devices for circulatory and oxygenation support. The Danvers, Massachusetts-based company is the maker of the world’s smallest heart pump, Impella.
Abiomed was actually acquired by Johnson & Johnson (JNJ, Financial) on Dec. 22, 2022 in an all-cash transaction, so I would not have expected to see any Abiomed shares on a 13F filing. Perhaps there was some delay in Johnson & Johnson acquiring all the outstanding shares due to the Christmas holiday being right around the corner in the U.S.
Meta Platforms
Baillie Gifford (Trades, Portfolio) also slashed its investment in Meta Platforms (META, Financial) by 66.57%, leaving a remaining stake of 2,358,497 shares. During the quarter, shares averaged $117.43 apiece. The trade reduced the equity portfolio by 0.66%.
Meta Platforms is the parent company of several social media juggernauts, including Facebook, Instagram and WhatsApp. It rebranded to its current name in late 2021 to represent that it is pinning its hopes for future growth on the Metaverse, a 3D interactive version of the internet.
The company still gets the vast majority of its revenue from its family of apps, with the Metaverse segment, Reality Labs, contributing only a small sliver. The fact that Meta is relying on Reality Labs for its long-term growth means the story for investors has fundamentally changed, requiring careful reassessment.
Nvidia
The firm’s top buy of the quarter was a 13.73% boost to its Nvidia (NVDA, Financial) holding for a total of 17,376,237 shares. With the stock trading for an average price of $146.65 during the quarter, this added 0.32% to the equity portfolio.
Nvidia is primarily known for designing graphics processing units and system on a chip units. It has a strong presence in the mobile computing and automotive markets and is a leader in artificial intelligence and internet of things innovations.
The stock has come under pressure lately due to the correction of the semiconductor shortage and a decline in demand for its gaming graphics cards, which has hit its earnings hard. This was due in part to the cyclical nature of the gaming industry and in part to the pull-forward in demand caused by the pandemic and supply chain issues. On the positive side, the company is seeing less impact than expected from the U.S.’s export restrictions to China, and as an industry leader in gaming GPUs and artificial intelligence, its long-term prospects seem promising.
MercadoLibre
Baillie Gifford (Trades, Portfolio) also boosted its second-largest holding MercadoLibre (MELI, Financial) by another 5.91% for a total of 6,125,300 shares, adding 0.30% to the equity portfolio at the quarter’s average share price of $890.25.
MercadoLibre is an Argentinian online marketplace that operates e-commerce and online option websites, including mercadolibre.com. It is headquartered in Buenos Aires, Argentina but is incorporated in the U.S. Its largest markets are Brazil, Argentina and Mexico.
As of the full-year numbers for 2021, MercadoLibre’s site was by far the most-visited e-commerce site in all of Latin America with an average of 667 million monthly visits. This far outpaced the second-most visited e-commerce site in Latin America, Amazon (AMZN, Financial), with 167 million average monthly visits. The company has recently returned to profitability after a few years of net losses as it focused on investing for growth. Historical (pre-2017) profitability and growth forecasts from Morningstar (MORN, Financial) analysts are key reasons why the GF Value chart rates the stock as significantly undervalued, despite the price-earnings ratio of 210.55.
See also
As of the quarter’s end, the firm held shares of 488 stocks in a 13F equity portfolio valued at $95.96 billion. The turnover for the quarter was 4%.
The firm’s top holding was Moderna Inc. (MRNA, Financial) with 8.38% of the equity portfolio, followed by MercadoLibre with 5.40% and Illumina Inc. (ILMN, Financial) with 3.53%.
In terms of sector weighting, the firm was most invested in health care, consumer cyclical and technology stocks.
