Polen Capital Management just released their quarterly 13F filing with the SEC. I take a closer look at the firm's $13.4 billion stock portfolio and highlight its fastest growing investments.
Polen Capital Management's Largest Holdings
Polen Capital Management is a global, independently-owned equity boutique serving institutional investors, financial professionals and high net worth individuals. Mr. Stanley Moss is the CEO and responsible for the strategic direction of the firm.
According to its website, the investment manager believes in earnings growth as the primary driver of long-term stock appreciation. Its strategy consists of identifying these high growth companies and holding them on a long-term basis. Therefore, it is worth analyzing Polen Capital Management's holdings at the end of the year in more detail considering they're portfolio turnover is typically low.
On February 9th, Polen Capital Management filed their quarterly Form 13F regulatory filing with the SEC. I reviewed the filing to gain a glimpse into the firm's large portfolio.
Polen Capital Management's stock portfolio totals $13.4 billion according to the latest filing. The list value of stock holdings is up 8.2% when compared to the last quarter. As a benchmark, the S&P 500 was up 6.1% over the same period.
Quarter-over-Quarter Turnover (QoQ Turnover) measures the level of trading activity in a portfolio. Polen Capital Management's QoQ Turnover for the latest quarter was 9.4%. As we expected, the firm has high conviction in its holdings as indicated by the low turnover ratio.
The Ideas section of finbox.io tracks top investors and trending investment themes. You can get the latest data on the holdings discussed below at the Polen Capital Management page. The following table summarizes his firm's largest holdings reported in the last filing:
| Ticker | Name | Holding ($mil) | % Of Portfolio |
|---|---|---|---|
| ADBE | ADOBE SYS INC | $1,114.9 | 8.3% |
| FB | FACEBOOK INC | $1,065.0 | 7.9% |
| GOOG | ALPHABET INC | $1,014.1 | 7.5% |
| V | VISA INC | $928.1 | 6.9% |
| ADP | AUTOMATIC DATA P... | $810.5 | 6.0% |
| NKE | NIKE INC | $797.0 | 5.9% |
| ACN | ACCENTURE PLC IR... | $756.3 | 5.6% |
The seven positions above represent 48.1% of the hedge fund's total portfolio.
Polen Capital Management's 4 Biggest Sells
Here's the list of biggest position reductions determined by comparing the last two filings:
| Ticker | Name | Sold ($mil) | % Of Portfolio |
|---|---|---|---|
| ALGN | ALIGN TECHNOLOGY INC | $98.6 | 4.3% |
| CELG | CELGENE CORP | $12.3 | 4.0% |
| GOOGL | ALPHABET INC | $3.8 | 2.7% |
| TJX | TJX COS INC NEW | $0.3 | 0.0% |
The largest stock sale for the quarter was Align Technology. Polen Capital Management reduced its position in the company by $98.6 million. The stock now represents 4.3% of the firm's portfolio.
Polen Capital Management's Fastest Growing Stocks
Analysts often look at companies as either thriving, surviving or dying. Analyzing a company's revenue growth can help distinguish between these stages. Growth of over 10% typically signifies the core business is doing very well and the company's products and services are in demand.
The table below lists 7 stocks in Polen Capital Management's portfolio that have strong top-line growth.
| Ticker | Name | Revenue Growth | % Of Portfolio |
|---|---|---|---|
| TREE | LENDINGTREE INC NEW | 54.1% | 0.0% |
| BABA | ALIBABA GROUP HL... | 51.8% | 0.1% |
| FB | FACEBOOK INC | 47.9% | 7.9% |
| STMP | STAMPS COM INC | 34.7% | 0.0% |
| PAYC | PAYCOM SOFTWARE INC | 32.8% | 0.0% |
| ALGN | ALIGN TECHNOLOGY INC | 32.3% | 4.3% |
| ALRM | ALARM COM HLDGS INC | 28.9% | 0.0% |
LendingTree is the fastest growing company in Polen Capital Management's portfolio. The company's LTM total revenue of $558 million is up 54.1% year-over-year. Very impressive. Note that the stock price is up a significant 190.2% over the last twelve months.
Polen Capital Management's 7 Best Piotroski Score Stocks
The Piotroski Score is a stock score developed by Stanford accounting professor Joseph Piotroski. He developed a set of rules to find companies with strong liquid balance sheets, increasing profitability, and operating efficiency. He proposed screening for stocks based on a checklist that awards one point for each matched criterion. The strategy generated 23% annual return between 1976 and 1996, 7.5% higher than what the S&P 500 posted over the same period.
The stocks listed in the table below have the best Piotroski Scores. When two stocks have the same score, the larger holding is ranked higher.
| Ticker | Name | Piotroski Score | % Of Portfolio |
|---|---|---|---|
| ADBE | ADOBE SYS INC | 8 | 8.3% |
| FB | FACEBOOK INC | 8 | 7.9% |
| BLKB | BLACKBAUD INC | 8 | 0.0% |
| STMP | STAMPS COM INC | 8 | 0.0% |
| ADP | AUTOMATIC DATA P... | 7 | 6.0% |
| ORLY | O REILLY AUTOMOT... | 7 | 4.8% |
| ALGN | ALIGN TECHNOLOGY INC | 7 | 4.3% |
Investors interested in learning more about the Piotroski Screen should read how the strategy returned +90% in 2017.
Managers with more than $100 million in qualifying assets under management are required to disclose their holdings to the SEC each quarter via 13F filings. Qualifying assets include long positions in U.S. equities and ADRs, call/put options, and convertible debt securities. Shorts, cash positions, foreign investments and other assets are not included. It is important to note that these filings are due 45 days after the quarter end date. Therefore, Polen Capital Management's holdings above represent positions held as of December 31st and not necessarily reflective of the fund's current stock holdings.
However, most can agree that with thousands of stocks traded on U.S. exchanges, doing thorough research on each one is nearly impossible for smaller investors. Leveraging the resources of the largest hedge funds on Wall Street can be a powerful way to narrow down the list.
Author: Matt Hogan
Expertise: Valuation, financial statement analysis
Matt Hogan is a co-founder of finbox.io. His expertise is in investment decision making. Prior to finbox.io, Matt worked for an investment banking group providing fairness opinions in connection to stock acquisitions. He spent much of his time building valuation models to help clients determine an asset’s fair value. He believes that these same valuation models should be used by all investors before buying or selling a stock.
His work is frequently published at InvestorPlace, Benzinga, ValueWalk, AAII, Barron's, Seeking Alpha and investing.com.
Matt can be reached at [email protected].
As of this writing, I did not hold a position in any of the aforementioned securities and this is not a buy or sell recommendation on any security mentioned.
