"Tracking Al Gore's Generation Investment Management Portfolio – Q2 2017 Update"
"Generation Investment Management portfolio value increased from $9.1B to $9.8B this quarter.They substantially increased Acuity Brands & Jones Lang LaSalle while decreasing Microsoft and dropping Varian Medical Systems.The top three positions are Cerner, Acuity Brands, and Jones Lang LaSalle and they add up to ~24% of the entire portfolio.This article is first in a series that provides an ongoing analysis of the changes made to Generation Investment Management’s US stock portfolio on a quarterly basis. It is based on Al Gore’s regulatory  filed on 08/14/2017.Al Gore and David Blood founded Generation IM in 2004 with the first outside money accepted the following year. Assets Under Management are at ~$17B and spread-out among four areas: Global Equity, Asia Equity, Growth Equity, and Global Credit.  The performance of the flagship long-only global equity strategy stunned the hedge fund world when it was reported at the 10th year anniversary in 2015 that their alpha against the MSCI World Index was 5.59% (12.14% annualized return compared to 6.55% for MSCI World Index) – an outsider had come in and beaten most of the hedge funds over a ten year period – Al Gore was introduced to money-management when he joined Metropolitan West Asset Management in Los Angeles after the 2000 presidential run. Generation IM’s value investing philosophy is based around bottom-up stock picking with one important restriction: they maintain a focus-list of 100-or-so businesses from which they invest and to get into that list the businesses have to pass their sustainability analysis. The performance so far must have intimidated many veterans as even the legendary Charlie Munger  the following recently, which is close to being a put-down: “…he's not very smart…his partner is a good value investor…no CO2 and so the value investor picked the best service companies…all of a sudden he made 100s of millions…but he is an idiot…”This quarter, Al Gore’s 13F portfolio value increased 7.52% from $9.1B to $9.8B this quarter. The number of positions decreased from 34 to 33. The largest five stakes are Cerner Corporation, Acuity Brands, Jones Lang LaSalle, Microsoft Corporation, and Thermo Fisher Scientific and they together account for ~35% of the total portfolio value.Generation Investment Management’s  and Al Gore’s  are good precursors for anyone interested in getting started on investing after filtering ideas through a sustainability analysis.New Stakes:PayPal Holdings (PYPL) and Credicorp Ltd. (BAP): These are the two new positions this quarter. The 2.54% PYPL stake was purchased at prices between $42.50 and $54.50 and the stock currently trades well above that range at $59.97. BAP is a 1.62% of the portfolio position established at prices between $152 and $183 and it is now above that at $206.Stake Disposals:Varian Medical (VAR): A small position in VAR was first purchased in 2007 and disposed the following year. A much larger 3.3M share stake was built in 2009 in the high-30s. The position had wavered since with the sizing peaking at ~4.5M shares in 2014. The stake was sold down by two-thirds over the next two years at prices between $75 and $100. Last quarter saw an about turn: ~75% increase at prices between $77.50 and $92.50. The ~2.5% portfolio stake as of last quarter was disposed of this quarter at prices between $88 and $105. The stock is now at $102.Mercadolibre Inc. (MELI) and Qualcomm Inc. (QCOM): These are very small (less than ~1% of the portfolio each) stakes disposed of this quarter. The QCOM stake was first purchased in 2010 while the MELI position was from 2012.Stake Increases:Cerner Corporation (CERN): CERN is currently the largest position at 11.73% of the portfolio. The stake was established in 2015 and doubled in Q1 2016 at prices between $52 and $60. Q4 2016 also saw another ~50% stake increase at prices between $47 and $62. Last two quarters have also seen marginal increases. The stock currently trades above those ranges at $65.25.Note: Generation IM controls 5.2% of CERN.Acuity Brands (AYI): AYI is a top three ~7% of the portfolio stake purchased last quarter at prices between $199 and $240 and increased by ~85% this quarter at prices between $163 and $204. The stock is now at $177.Note: Generation IM controls 8% of AYI.Jones Lang LaSalle Inc. (JLL): JLL is a top-three 5.5% long-term position first purchased in 2008. By 2013, that original position was doubled to a fairly large ~5% stake thru consistent buying every year. The next two years saw selling: ~75% overall reduction at prices between $103 and $178. The pattern reversed in H1 2016: ~200% increase at prices between $96 and $141. H2 2016 also saw a ~50% stake increase at prices between $91 and $120. That was followed with a ~30% increase this quarter at prices between $103 and $125. The stock currently trades at $119.Note: Generation IM controls 9.6% of the business.Thermo Fisher Scientific (TMO): TMO is a top five 5.2% portfolio position first purchased in Q3 2016 and more than doubled the following quarter at prices between $141 and $159. This quarter saw another ~20% increase at prices between $152 and $176. The stock currently goes for $177.MasterCard Inc. (MA): MA is large ~5% stake built in H1 2016 in the low-90s price-range. Q4 2016 also saw a one-third increase at prices between $100 and $107. The stock is now well above that range at $133. This quarter saw a marginal increase.Becton Dickinson (BDX): BDX is a fairly large ~4% long-term position that has been in the portfolio since their first 13F filing in 2006. The position saw a two-thirds increase this quarter at prices between $177 and $195 and the stock is now at $199. The large increase in a long-term stake indicates a clear bullish bias.Facebook Inc. (FB): FB is a 3.84% portfolio stake purchased in Q4 2016 at prices between $115 and $133. Last quarter saw a ~23% increase at prices between $115 and $143 and that was followed with a marginal increase this quarter. The stock is now at $166.Delphi Automotive (DLPH): The 3.28% DLPH position saw a ~60% increase this quarter at prices between $74 and $89. The original position is from Q4 2016 at prices between $63 and $72. Last quarter had seen a ~28% selling at prices between $67 and $82. The stock currently trades at $94.26.Charles Schwab (SCHW): SCHW is a ~3.2% portfolio position. This quarter saw a two-thirds increase at prices between $37.50 and $43. The stake is from Q4 2016 at prices between $31 and $40.50. The stock is now at $39.76.Note: SCHW has seen a previous round-trip. A large ~7.2M share stake purchased in 2013 in the high-teens price-range was disposed the following year at much higher prices.Cooper Companies (COO): The bulk of the ~3% position in COO was purchased in Q4 2016 at prices between $159 and $183 and the stock currently trades well above that range at $246. There was a marginal increase this quarter.Nike Inc. (NKE): NKE is a ~3% of the portfolio stake built up over the last three years at prices between $38 and $67. There was a ~18% increase this quarter as well at prices between $51 and $59. The stock is now at $53.90.Sensata Technologies (ST): The bulk of the ~3% ST position was purchased in Q2 2016 at prices between $33.50 and $39. This quarter saw a two-thirds increase at prices between $39 and $43.50. The stock currently goes for $44.28.VWR Corp. (VWR): The 2.71% VWR position was first purchased in Q4 2016 at prices between $24.50 and $28.50. There was a ~17% increase last quarter at prices between $24.50 and $28.50 and that was followed with a marginal increase this quarter. The stock is now at $33.08.Note: In May, Avantor agreed to buy VWR for $33.25 cash. Generation IM controls 6.1% of the business.Chipotle Mexican Grill (CMG): CMG is a 2.57% stake established in Q4 2016 at prices between $360 and $438 and the stock currently trades well below that range at $309. This quarter saw a ~7% increase.Infosys Ltd. (INFY): The 2.23% INFY position was purchased last quarter at prices between $13.50 and $16 and increased by ~280% this quarter at around the same price range. The stock is now at $15.15.Dentsply Sirono (XRAY): XRAY is a ~2% portfolio stake built in 2014 at prices between $44 and $56. 2015 saw a ~10% stake increase while last year saw a similar reduction. There was a ~20% selling last quarter at prices between $55.50 and $64.50 and the stock is now at $54.80. There was a marginal increase this quarter.Amazon.com (AMZN), Salesforce.com (CRM), Schein Henry (HSIC), SPDR Trust (SPY), and Taiwan Semi (TSM): These are very small (less than ~1.5% of the portfolio each) positions that saw increases this quarter.Stake Decreases:Microsoft Corporation (MSFT): MSFT is a top five 5.41% portfolio position. The stake saw a ~50% selling this quarter at prices between $65 and $72.50. The position was first purchased in 2014 and more than doubled the following year at prices between $36 and $56. The stock is now at $72.82. Generation IM is harvesting long-term gains.Deere & Co. (DE): DE is a fairly large 4.35% stake. The position is from 2015 at prices between $75 and $97. There was a ~40% reduction last quarter at prices between $103 and $111 and that was followed with a ~7% trimming this quarter. The stock is now at $116.Ingersoll-Rand plc (IR): IR is a 3.40% portfolio position first purchased in 2015 at prices between $51 and $71. The stake saw a ~30% reduction last year at prices between $50.50 and $78.50 and that was followed with another ~50% selling this year at prices between $75 and $93. The stock is now at $84.63.Alphabet Inc. (GOOG) and JD.com (JD): These two ~2% stakes established in 2014 saw large reductions this quarter. The original position in GOOG was purchased at prices between $510 and $610. The following year saw a large reduction but the position was built back up in H1 2016 at prices between $675 and $760. There was a ~55% selling this quarter at prices between $823 and $984. The stock is currently at $916. The JD purchase was in the low-20s. Last quarter saw a ~30% selling at prices between $25.50 and $32 and that was followed with a ~45% reduction this quarter at prices between $31 and $43. The stock is now at $40.87. Generation IM harvested gains.Waters Corp. (WAT), Ansys Inc. (ANSS), National Instruments Corp. (NATI), Banco Santander Chile (BSAC), and Allegion Pub (ALLE): These very small (less than ~1.5% of the portfolio each) positions saw reductions this quarter.Kept Steady:None.Below is a spreadsheet that highlights the changes to Al Gore's Generation Investment Management US long stock portfolio as of Q2 2017:"