Analyzing 13Fs: Public Funding Fund (Saudi Sovereign Wealth Fund)

The invention of oil within the 1930s has utterly revolutionized all points of life in Saudi Arabia and has finally led the nation on a path to changing into one of many richest and most affluent nations on earth. Realizing that will not be round endlessly, the Gulf Kingdom is plotting to pivot as a lot as attainable from its reliance on the oil and gasoline sector, trying to sever its monetary dependence on fossil sources. One of many key points of this technique is the Public Funding Fund. The fund got here below immense public consideration in 2021, after it led a consortium that bought Newcastle United, the Premier League soccer membership.

The Public Funding Fund, higher generally known as the “Saudi Fund“, represents the sovereign wealth fund of Saudi Arabia. This text is just going to cowl its US-based public fairness holdings, however you will need to take into account that the fund represents one of many largest sovereign wealth funds on the earth, with whole estimated property of $620 billion with an virtually unprecedented world attain, far past US equities. The Chairman of the Fund is none apart from Crown Prince Mohammed bin Salman himself, an undoubtedly controversial determine within the West.

This data from this text is predicated on the 13F submitting by the Public Funding Fund by which it’s obligated to reveal its US-based fairness positions not more than 45 days after the tip of the quarter. We scrape SEC 13-F filings to search out newly disclosed portfolio place adjustments by institutional traders, together with their most just lately reported holdings. Whereas not a purpose by itself to enter the identical positions given massive institutional traders purchase into and exit positions for quite a lot of causes not essentially aligning with the typical investor. Newly open positions signify a helpful supply for funding concepts and potential due-diligence targets. That is very true when combining the knowledge from these disclosures with the knowledge from the 13D filings, which generally inform a a lot clearer story.

Fund Overview

Whereas it stays true that the fund’s US-based property below administration shrunk to $40.81 billion from the $43.57 billion they reported final quarter, the Public Funding Fund was in truth an adamant purchaser all through the second quarter of 2022. The fund established 17 new positions throughout the time, a lot of them centered on “oversold” sectors just like the know-how sector. The PIF additionally used the chance to broaden on Four already current positions, with a largely comparable mindset. PIF has diminished just one place throughout the identical timeframe and has not closed out any of its positions. The sovereign wealth fund’s focus has been infamous for a long-time, however a number of of its high 10 holdings concentrations decreased this quarter as they reallocated their funds. For instance, Lucid Group (LCID) right now is taking over “solely” 42.68% of the fund’s portfolio, as in comparison with the final quarter when it represented 59.18%. As a reminder, the fund owns a 60.87% controlling stake within the EV maker. Mixed with the Utilities Choose Sector SPDR ETF (XLU) and Activision Blizzard (ATVI), these three positions are the one concentrated positions weighing 5% or extra of the portfolio. The Saudi Sovereign Wealth Fund is infamous for holding main possession stakes in its predominant investments, such is the case with seven of its holdings this quarter.

New Positions

Zoom Video Communications (ZM): represents the most important new place added this quarter to the fund portfolio. The current ~$507.20 million acquisition now represents virtually ~1.24% of the fund’s portfolio. PIF bought 4.69 million shares of the know-how firm at costs between $84.00 and $124.00, which is way from the stratospheric worth Zoom was buying and selling at in late 2020 and early 2021. The corporate has had a tough 12 months of buying and selling because the shares of the corporate are down -46.00% on a year-to-date foundation and greater than -82.57% from its all-time excessive. The sovereign wealth fund has established an estimated ~1.86% possession of ZM.

Costco Wholesale Company (COST): represents the second largest addition to the portfolio this quarter. The sovereign wealth fund bought 1.three million shares of the membership-only retail retailer chain for ~$496.81 million. This place now takes ~1.24% of the fund’s portfolio. PIF bought shares of the Charlie Munger favourite between costs of $416 and $608, a variety the corporate has maintained all through a lot of the 12 months. The sovereign wealth fund has established a comparatively negligible ~0.23% possession of the $245.67 billion market cap retail large.

NextEra Vitality (NEE): is the third main addition to the sovereign wealth fund for this quarter. PIF bought 6.36 million shares of the renewable vitality firm for ~$493.81 million, shares have been bought between costs of $68 and $87. This has skyrocketed Subsequent Period into the 11th largest holding inside the fund, presently taking over ~1.21% of the portfolio. The corporate is buying and selling at round $88 a share.

American Tower Company (AMT): is the one REIT added to the fund throughout the second quarter. The sovereign wealth fund purchased 1.89 million shares of the corporate spending ~$483.83 million within the course of. The fund is estimated to have entered the place between costs of $224 and $281 per share. The REIT, dealing virtually solely in communications infrastructure, is presently taking over ~1.19% of the portfolio. Nonetheless, PIF maintains solely a comparatively negligible possession stake of 0.41%.

Starbucks Corp (SBUX): represents the fifth largest new place within the portfolio this quarter. The PIF bought 6.31 million shares of the coffeehouse chain for ~$482.27 million. Starbucks is the 18th largest place inside the fund taking over ~1.18% of the fund’s portfolio. PIF bought shares of the corporate between $69 and $91 per share, after the current sell-off. This appears to have slowed down since because the inventory worth lastly noticed some constructive motion being traded at round $85 per share extra just lately.

Microsoft Corp (MSFT): is the sovereign fund’s sixth largest addition to the portfolio this quarter. As defined earlier, the fund scooped up lots of the high-flying tech shares that have been promoting at a big low cost as in comparison with their 2020 and early 2021 costs. The place presently takes up 1.16% of the portfolio and represents the 16th largest holding. The Saudis spent $473.98 million buying 1.84 million shares of Microsoft between costs of $214 and $342.

Alphabet Inc (GOOGL): is yet one more instance of this course of. After buying and selling within the $140-150 per share vary for a few years, shares of the corporate skilled important downforce currently. The Public Funding Fund managed to in lock purchases between $105 and $142, because it acquired 4.26 million shares of the tech large. This place represents 1.14% of the fund’s portfolio and is its 17th largest holding.

BlackRock Inc. (BLK): has additionally been one of many main portfolio additions for the quarter, with the sovereign wealth fund shopping for 0.74 million shares of the well-known funding administration firm for ~$451.72 million. The place took up 1.11% of the portfolio as of the tip of the second quarter. The fund is estimated to have entered the place between costs of $582 and $782 per share, making it the 18th largest holding inside the portfolio.

The Public Funding Fund has additionally opened a place inside House Depot (HD), Salesforce (CRM), JPMorgan Chase (JPM), Amazon (AMZN), Datadog (DDOG), Adobe Techniques (ADBE), Freeport-McMoRan Copper & Gold (FCX), and Superior Micro Units (AMD).

Expanded Positions

Digital Arts (EA): is the fourth largest holding inside the sovereign wealth fund representing 4.77% of the portfolio, in comparison with 4.13% of the portfolio because it was reported final quarter. The fund had determined to broaden on the place they have been holding since This fall 2020, buying shares between $111 and $141 in Q2. Digital Arts is a serious holding of the sovereign wealth funds which now controls 5.72% of the corporate and has expanded its place by 12% this quarter. They’ve spent ~$236.04 million buying 1.80 million shares of EA. For the previous 12 months and a half, shares of the online game veteran have largely traded flat and managed to outperform the S&P 500 (SPY).

Air Merchandise and Chemical compounds (APD): is one other massive holding inside the portfolio which is presently ranked because the eighth largest place taking over 1.58% of the portfolio, a stark enhance from 0.42% as was reported final quarter. PIF presently owns 2.86 million shares of the corporate, and seems to be doubling down on the place. This quarter, the Public Funding Fund spent ~$469.91 million including one other 1.95 million shares of the corporate, which constitutes a 269% change within the place. Shares this quarter have been bought between costs of $199 and $238.

PayPal Holdings (PYPL): represented a comparatively negligible place inside the fund however administration determined to actually double down on this place by increasing it by 674%. PIF purchased 6.14 million shares of the net fee system firm with a purchase order worth of between $69 and $121. That is presently the 12th largest place inside their portfolio, taking over 1.21% of the sovereign wealth fund.

Meta Platforms (META): is yet one more occasion of the PIF doubling down on high-end tech shares and utilizing the current sell-off to their benefit. This can be a holding that was expanded by 602% this quarter, with the fund having purchased one other 2.52 million shares for the worth of $155-$233 per share. Nonetheless, even after the current buy, Meta solely represents PIF’s 15th largest holding taking over a comparatively negligible 1.16% of the portfolio. The Public Funding Fund presently owns 2.94 million shares of Meta for the typical paid worth of $207.38 per share. The corporate is presently promoting for $167.96 per share.

Decreased Positions

Visa Inc. (V): is the one PIF holding that received trimmed throughout the second quarter. The funds card firm presently represents the 33rd largest holding within the fund, taking over solely 0.53% of the portfolio. This can be a 22% discount as in comparison with Q1 2022 when the corporate took up 0.73% of the portfolio. The sovereign wealth fund presently owns just one.11 million shares, having disposed of 0.32 million shares throughout the quarter at a slight loss.

Last Overview

We are able to conclude that the Saudi Sovereign Wealth Fund has been an aggressive purchaser throughout the second quarter using the liquidity crunch to its fullest extent with a view to double down on its beaten-down holdings, particularly these within the high-end tech house. Having invested greater than $7 billion throughout the quarter based on their 13F submitting, PIF used the opportune second and the favorable macroeconomic setting to search out room in its fund for family tech names reminiscent of Amazon, Google, Microsoft, AMD, amongst others. On the identical time, it closely expanded its already established holdings reminiscent of Meta, PayPal, and EA. So far as the PIF is anxious, so long as there are keen sellers for these high-quality firms, the long-term orientation of the fund’s targets positioned them brilliantly to be the opportune purchaser.