Magellan Financial Group Ltd (ASX: MFG) has just released its stock holdings for the month of September. Here’s what we can learn.
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Magellan Financial Group Ltd (ASX: MFG) is often regarded as one of the best fund managers in the country. As such, I like to keep close tabs on which companies Magellan, and its chief investment officer, Hamish Douglass, are interested in every month.
Well, Magellan has recently released the shares that its flagship Magellan Global Trust (ASX: MGG), as well as the high-octane Magellan High Conviction Trust (ASX: MHH), are currently holding. Magellan Global Trust (and its unlisted equivalent, the Global Fund) aims to hold 20-40 shares in a balanced and well-diversified portfolio. Meanwhile, the Magellan High Conviction Trust (and its unlisted sibling, the High Conviction Fund) instead aims to hold 8-12 shares in a concentrated, high-conviction strategy.
So, without further ado, here are that top shares, in alphabetical order, that the Global Trust was holding, as of 31 August:
- Alibaba Group Holding Ltd (NYSE: BABA)
- Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL)
- Atmos Energy Corporation (NYSE: ATO)
- Facebook, Inc. (NASDAQ: FB)
- Mastercard Inc (NYSE: MA)
- Microsoft Corporation (NASDAQ: MSFT)
- Reckitt Benckiser Group Plc (LON: RB)
- Tencent Holdings Ltd (OTCMKTS: TCEHY)
- Visa Inc (NYSE: V)
- Xcel Energy Inc. (NASDAQ: XEL)
And here are the top 5 stocks that the High Conviction Fund is holding, as of 31 August:
- Alibaba Group
- Alphabet Inc
- Facebook Inc
- Microsoft Corporation
- Tencent Holdings
What can we learn from Magellan’s share picks?
It’s interesting to note that Magellan is still betting big on the giant United States tech shares that have come to dominate the US markets over the last few years. FAANG stocks Facebook and Alphabet make up large proportions of both portfolios, as does fellow tech giant Microsoft. Magellan is also investing heavily in Chinese e-commerce, represented by the online titans Tencent and Alibaba.
Interestingly, both funds remain far from being fully invested. The Global Fund holds a 16% cash position, while the High Conviction Trust is 20% in cash. This tells us (in my view anyway) that Magellan is keeping a foot in both camps and is keeping some cash handy for any upcoming market volatility.
The Global Fund is also notably holding a number of defensive shares, such as utilities Xcel and Atmos, and consumer staples giant Reckitt Benckiser (who you might know as the maker of Dettol and Mortein products).
Magellan seems to be sticking with a philosophy of ‘keeping winners and letting them run’. Many of these shares have been in Magellan’s portfolios for years now. So it’s nice to see the company isn’t killing the geese that keep laying golden eggs.
All in all, I think there are many interesting and useful insights we can glean from Magellan’s August stock holdings. I hope you agree.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Facebook, Magellan High Conviction Trust, Mastercard, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Facebook, Mastercard, Microsoft, and Visa and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Facebook, and Mastercard. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.