O. Andreas Halvorsen: Viking Global Investors LP

O. Andreas Halvorsen formed Viking in 1999 which manages two hedge funds investing in globally equities.

The fund group run by O. Andreas Halvorsen, is one of the so-called “Tiger Cub” fund managers who worked under billionaire hedge fund manager Julian Robertson of Tiger Management. When Robertson retired from the industry, many of his team members started their own funds.

In his first year on his own, Halvorsen produced an 89 percent return, while at the same time the S&P lost over 9 percent in 2000. Performance data since then is hard to find because Halvorson is known as being a secretive stock picker.

However, it is known that he earned $520 million in 2007, making him the tenth-highest paid in the industry. Since hedge fund manager compensation is based upon performance, it is clear that Halvorsen enjoyed considerable success that year.

The following is a list of the common factors that drive Halvorsen’s stock selection. He is certainly a value investor, and he seems to try to buy growth at a reasonable price.

His stock purchase criteria which lead to his success seem to be:

  • Return on equity must be better than the industry average. This is one of Warren Buffett’s favorite measures of a company’s management, and most of Halvorsen’s buys were among the leaders in this category.
  • Low debt compared to the average in their industry.
  • A P/E ratio better than the industry average, which usually means that the market considers the company as an industry leader.
  • A PEG ratio which is below the industry average. The PEG ratio divides the Price/Earnings ratio by the growth rate of the earnings per share. Low values indicate that the market is probably underestimating growth and that the stock is probably undervalued. This indicator combines growth and value and is generally thought to be the best indicator to discover growth at a reasonable price.
  • Only the largest 10 percent of investments were considered because large funds can’t easily trade smaller stocks.
  • Positive earning during the past year and a positive earnings forecast for next year.

< --Previous
Next–>