Melvin Capital’s 41 Stock Portfolio List

Updated on June 27th, 2022 by Nikolaos Sismanis

Melvin Capital Management LP is a registered investment advisor headquartered in New York City. The partnership uses a bottom-up approach to finding attractive investments on both the long and short sides of equities, focusing on fundamentals.

Melvin Capital was founded in late-2014 by Gabriel Plotkin, who continues to serve as the partnership’s chief investment officer, and is the firm’s principal owner. The fund was started with $1 billion in seed money but has since grown to more than $21.8 billion in assets under management (AUM) in the eight years since.

Plotkin was once a trader at Steven Cohen’s Point72 hedge fund, where he focused on consumer stocks and managed over $1 billion. After achieving success at Point72, Plotkin went out on his own and founded Melvin Capital Management, which he named after his grandfather.

Investors following the company’s 13F filings over the last 3 years (from mid-May 2019 through mid-May 2022) would have generated annual total returns of 6.2%. This is above the S&P 500’s annualized total returns of 16.1% over the same time period.

Note: 13F filing performance is different than fund performance. See how we calculate 13F filing performance here.

You can download an Excel spreadsheet with metrics that matter of Melvin Capital’s current 13F equity holdings below:

 

Keep reading to learn more about Melvin Capital.

Table Of Contents

Melvin Capital’s Investing Strategy

Melvin Capital seeks to deliver superior, risk-adjusted returns by employing a long-short equity strategy. The firm primarily invests in the common stock of US-based issuers, but also employs other instruments, such as depository receipts, rights, warrants, options, derivatives, fixed income securities, foreign exchanged hedges, commodity hedges, and other debt instruments.

Melvin Capital serves as the management company with discretionary trading authority to private pooled investment vehicles and separately managed accounts. Its clients are generally institutions, pension plans, high net worth individuals, and other sophisticated investors. Its minimum initial investment is generally $1 million, and for managed accounts, that minimum is generally in excess of $50 million.

Its funds include Melvin Capital LP, Melvin Capital Offshore Ltd, Melvin Capital Master Fund Ltd, Melvin Capital II LP, Melvin Capital II Offshore Ltd, and Melvin Capital II Ltd. The offshore and onshore funds invest all of their assets substantially through the master funds.

Melvin Capital’s Portfolio and Top Holdings

As of its March 2022 13F filing, Melvin Capital had 41 total reported positions in US equities for a total market value of $9.6 billion. That’s the same number of holdings as last quarter, despite some changes in the underlying names. The portfolio is rather concentrated, with Consumer Discretionary, Technology, and Communications covering the majority of its sector exposure.

Source: Company filings, Author

During the quarter, Melvin made the following notable portfolio adjustments:

Noteworthy New Buys:

  • VISA Inc (V)
  • Martin Marietta Materials Inc. (MLM)
  • Spotify Technology SA (SPOT)
  • S&P Global Inc. (SPGI)

Noteworthy New Sells:

  • Opendoor Technologies, Inc. (OPEN)
  • Snap Inc Class A (SNAP)
  • Monster Beverage Corp. (MNST)
  • Take-Two Interactive Software, Inc. (TTWO)

Melvin’s largest position, Hilton Worldwide Holdings (HLT) accounts for 5.6% of the portfolio, while its top 10 ten holdings account for just under 40% of the total portfolio weight.

Source: Company filings, Author

Melvin’s top 10 holdings as of its latest 13F filing are the following:

Hilton Worldwide Holdings (HLT)

Hilton Worldwide Holdings is a hospitality company, that owns, leases, manages, develops, and franchises hotels and resorts. The company runs through two divisions, Management and Franchise, and Ownership. Hilton operates hotels under the Waldorf Astoria Hotels & Resorts, Canopy by Hilton, Tempo by Hilton, Motto by Hilton, Signia by Hilton, and Hilton Hotels & Resorts amongst others.

Hilton’s top line has been gradually recovering over the past few quarters, as the pandemic has been gradually fading away. However, considering the risks attached to the currently shaky macroeconomic environment, shares could be still somewhat expensive based on the current forward P/E of 24.6. The company benefits from a capital-light economic model and a strong balance sheet.

Melvin’s position was trimmed by 28% during the quarter, and the fund’s largest holding. The stock comprises 5.6% of its pubic-equity portfolio.

Live Nation Entertainment Inc (LYV)

Live Nation Entertainment, Inc. serves as a live entertainment company. The company works through Concerts, Ticketing, and Sponsorship & Advertising divisions. The company was materially impacted during the pandemic amid the restrictions imposed on live events. However, recovery signs are already visible.

Melvin trimmed its position in Live Nation by a substantial 50% during the last quarter. Yet the stock remains its second largest holding. The fund owns around 2.1% of the company’s total shares outstanding.

Microsoft (MSFT)

Found amongst the top holdings of the majority of the funds we have covered, Microsoft is Melvin’s third-largest holding, occupying 4.1% of its portfolio. The fund boosted its position by 18% during the quarter.

Microsoft is a mega-cap stock with a market capitalization of $1.85 trillion.

Supported by the company’s strong profitability, management has been consistently raising buybacks over the past decade to further reward its shareholders. The amount allocated to stock repurchases has reached new all-time highs over the past four quarters, at nearly $31.1 billion.

Revenue growth remains in the double-digits, so it’s likely to see capital returns accelerating moving forward. The company is also growing the dividend at a double-digit rate, though at the current yield, which stands below 1%, investors should expect the majority of their future returns in the form of capital gains.

Despite that, Microsoft’s cash position has been growing continually, with the company currently sitting on top of a massive $104.6 billion cash pile.

Further, while many companies had chosen to utilize the ultra-low interest rate environment over the past several years to raise cheap debt and buy back stock, Microsoft’s remained prudent and thoughtful. Not only are current earnings extensively covering buybacks (~60% buyback “payout ratio”), but long-term debt has been substantially reduced from $76 billion in mid-2017 to around $48.1 billion as of its last report.

It is impressive that a stock with a market capitalization of $1.85 trillion still has such a strong growth momentum. Shares are also trading at a forward P/E ratio of around 23.3, which could signal an opportunity against the company’s strong growth velocity, especially from Azure. Due to Microsoft’s robust growth and financials, it’s likely that investors won’t let shares trade at much of a discount going forward, despite the underlying shaky macroeconomic environment.

Amazon.com Inc. (AMZN)

Amazon’s latest results were somewhat weak, while management’s weak guidance for Q2 combined with a very uncertain macroeconomic environment kept inflicting dread on investors. Net sales rose 7% to $116.4 billion in Q1. However, operating margins fell from 8.2% to 3.2%. Hence, the company’s operating income for the three-month period plunged 58.4% to $3.7 billion.

What’s mostly stressing about Amazon’s operating income is that it’s presently exclusively subsidized by AWS. The division’s revenues increased 37% year-over-year or 34% yearly over the past two years, in Q1, as AWS was proven crucial in helping companies to endure the pandemic and push more of their workloads up to the cloud.

Driven by economies of scale, the segment’s operating margin grew from 30.8% to 35.3.% year-over-year, resulting in a segment operating income of $6.5 billion. Nevertheless, Amazon’s core business, excluding AWS, is currently recording losses. In fact, both Amazon’s North American and International branches posted losses, recording operating margins of -2.3% and -4.5%, respectively. Sadly, the ongoing headwinds impacting Amazon’s core operations do not appear to be a transient phenomenon.

The stock has had a place in Melvin’s portfolio since Q4-2014. The fund boosted its position by 167% during the quarter, pushing Amazon to its fourth-largest position.

Visa (V)

Visa is the world’s leader in digital payments, with activity in more than 200 countries. The stock went public in 2008, and its IPO has proven to be one of the most successful in U.S. history. The company’s global processing network provides secure and reliable payments around the world and is capable of handling more than 65,000 transactions a second. In the fiscal year 2021, the company generated nearly $12.3 billion in profit.

On April 26th, 2022, Visa reported Q2 fiscal year 2022 results for the period ending March 31st, 2022. (Visa’s fiscal year ends September 30th.) For the quarter, Visa generated revenue of $7.2 billion, adjusted net income of $3.8 billion, and adjusted earnings-per-share of $1.79, marking increases of 25%, 27%, and 30%, respectively.

These results were driven by a 17% gain in Payments Volume, a 47% gain in Cross-Border Volume, and a 19% gain in Processed Transactions. As a result of economic sanctions imposed on Russia by the U.S., European Union, United Kingdom, and others, Visa announced in March 2022 that they were suspending operations in Russia and since they are no longer generating revenue from activities related to Russia. Russia accounted for roughly 4% of total net revenues for the first half of fiscal 2022 and the full year of fiscal 2021.

During the quarter, Visa returned $3.7 billion to shareholders via dividends and share repurchases.

Visa is Melvin’s fifth-largest position, despite the fund just initiating a position. The stock accounts for 3.9% of its total holdings.

Marriott International, Inc. (MAR)

Similar to Melvin’s Hilton position, Marriott International manages, franchises, and licenses hotel, residential, and timeshare properties worldwide. The company used to be highly profitable, primarily due to licensing its brand to other hotel operators. Its performance was impacted materially between 2020 and 2021 due to the COVID-19 pandemic. However, the company has recovered notably, with profitability already present and growing.

Marriot International is Melvin’s sixth-largest holding, accounting for 3.7% of its total portfolio.

Ferrari N.V. (RACE)

Ferrari is a company we have never encountered amongst the top holdings of other major hedge funds. The iconic Italian luxury car manufacturer has leveraged its brand to expand its operation towards multiple endeavors, including luxury and lifestyle goods, and even theme parks. Unlike most auto manufacturers, Ferrari’s loyal customer base and strong pricing power have resulted in robust revenue and profit generation. The company remained quite profitable even during the COVID-19 pandemic.

Ferrari is Melvin’s seventh-largest holding, with the fund trimming its position by 3% during the previous quarter. Ferrari has been in Melvin’s portfolio since Q2-2018.

Datadog, Inc. (DDOG)

Datadog offers a monitoring and analytics platform for developers, I.T. teams, and business users in the cloud globally. The company’s SaaS platform incorporates and automates infrastructure, application performance, log management, and security monitoring to supply real-time observability of customers’ tech stack.

The company features a 2-year revenue growth CAGR of nearly 68.4%, though the company reinvests all operating cash flows back into the business. Therefore, it remains unprofitable.

Datadog is Melvin’s eighth-largest holding, comprising 3.4% of its total holdings. The position was trimmed by 19% during the previous quarter.

Dynatrace, Inc. (DT)

Dynatrace offers a software platform for dynamic multi-cloud environments. The company’s Dynatrace platform enables its customers to perform application and microservices monitoring, runtime application security, business analytics, and multiple other functions such as cloud automation.

While Dynatrace’s growth has slowed down lately, the company has attained and sustained profitability for several quarters. Still, at a forward P/E of 56.5, shares may be quite expensive in the current environment based on the company’s ongoing growth pace.

Melvin boosted its position in Dyntrace by 45% during the quarter. The stock is now Melvin’s ninth-largest holding and has had a place in its portfolio since Q2-2021.

Martin Marietta Materials, Inc. (MLM)

While Mevlin doesn’t have signifcant exposure in the basic materials sector, Martin Marietta Materials is its tenth-largest holding. The company offers heavy construction materials to a number of industries globally. Its products include crushed stone, sand, and gravel products amongst others such as asphalt and paving products. The company’s revenue growth track record is quite remarkable considering demand for contraction is rather cyclical. Net income growth has lagged over the years. However, the company still produces solid profits that have helped it grow its common equity value by a 10-year CAGR of 16.81%.

Martin Marietta Materials is an entirely new position for Melvin, which initiated a position just this past quarter. Yet, the stock is already amongst its top-ten holdings. It currently accounts for 3.0% of the fund’s portfolio, while the fund owns around 1.14% of the company’s total shares outstanding.

Final Thoughts

Melvin Capital seeks to generate strong risk-adjusted returns by focusing on fundamental characteristics that support future growth. The firm’s long-term performance has been decent, but its portfolio is not as diversified as perhaps some investors would like, and it is not focused on dividend-paying stocks. While performance has lagged lately as a result of the general sell-off in equities, it will be interesting to see how fast Melvin is going to regain its lost ground moving forward. Don’t forget that the fund has made its founder, Gabriel Plotkin, a billionaire.

Investors following Melvin Capital’s 13F filings would do well to consider the relatively high concentration of its top 10 holdings and high exposure to tech stocks.

However, for investors seeking growth stocks, Melvin Capital’s history of returns warrants a closer look at its holdings for potential investment ideas.

You can download an Excel spreadsheet with metrics that matter of Melvin Capital’s current 13F equity holdings below:

 

Additional Resources

See the articles below for analysis on other major investment firms/asset managers:

If you are interested in finding more high-quality dividend growth stocks suitable for long-term investment, the following Sure Dividend databases will be useful:

The major domestic stock market indices are another solid resource for finding investment ideas. Sure Dividend compiles the following stock market databases and updates them monthly:

Thanks for reading this article. Please send any feedback, corrections, or questions to [email protected]


Nikolaos Sismanis

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