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

The Crown Prince Of Saudi Arabia Visits The UK

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The discovery of oil in the 1930s has completely revolutionized all aspects of life in Saudi Arabia and has ultimately led the country on a path to becoming one of the richest and most prosperous nations on earth. Realizing that won’t be around forever, the Gulf Kingdom is plotting to pivot as much as possible from its reliance on the oil and gas sector, attempting to sever its financial dependence on fossil resources. One of the key aspects of this strategy is the Public Investment Fund. The fund came under immense public attention in 2021, after it led a consortium that purchased Newcastle United, the Premier League football club.

The Public Investment Fund, better known as the “Saudi Fund“, represents the sovereign wealth fund of Saudi Arabia. This article is only going to cover its US-based public equity holdings, but it is important to keep in mind that the fund represents one of the largest sovereign wealth funds in the world, with total estimated assets of $620 billion with an almost unprecedented global reach, far beyond US equities. The Chairman of the Fund is none other than Crown Prince Mohammed bin Salman himself, an undoubtedly controversial figure in the West.

This information from this article is based on the 13F filing by the Public Investment Fund in which it is obligated to disclose its US-based equity positions no more than 45 days after the end of the quarter. We scrape SEC 13-F filings to find newly disclosed portfolio position changes by institutional investors, along with their most recently reported holdings. While not a reason by itself to enter the same positions given large institutional investors buy into and exit positions for a variety of reasons not necessarily aligning with the average investor. Newly open positions represent a useful source for investment ideas and potential due-diligence targets. This is especially true when combining the information from these disclosures with the information from the 13D filings, which sometimes tell a much clearer story.

Geographic Map of Investments by PIF

Map of Investments (Public Investment Fund)

Fund Overview

While it remains true that the fund’s US-based assets under management shrunk to $40.81 billion from the $43.57 billion they reported last quarter, the Public Investment Fund was in fact an adamant buyer throughout the second quarter of 2022. The fund established 17 new positions during the time, many of them focused on “oversold” sectors like the technology sector. The PIF also used the opportunity to expand on 4 already existing positions, with a largely similar mindset. PIF has reduced only one position during the same timeframe and has not closed out any of its positions. The sovereign wealth fund’s concentration has been notorious for a long-time, but several of its top 10 holdings concentrations decreased this quarter as they reallocated their funds. For example, Lucid Group (LCID) today is taking up “only” 42.68% of the fund’s portfolio, as compared to the last quarter when it represented 59.18%. As a reminder, the fund owns a 60.87% controlling stake in the EV maker. Combined with the Utilities Select Sector SPDR ETF (XLU) and Activision Blizzard (ATVI), those three positions are the only concentrated positions weighing 5% or more of the portfolio. The Saudi Sovereign Wealth Fund is notorious for holding major ownership stakes in its main investments, such is the case with seven of its holdings this quarter.

Overview of PIF Q2 activity from 13F

PIF Overview Q2 2022 (Author Spreadsheet 13F Data)

New Positions

Zoom Video Communications (ZM): represents the largest new position added this quarter to the fund portfolio. The recent ~$507.20 million acquisition now represents almost ~1.24% of the fund’s portfolio. PIF purchased 4.69 million shares of the technology company at prices between $84.00 and $124.00, which is far from the stratospheric price Zoom was trading at in late 2020 and early 2021. The company has had a difficult year of trading as the shares of the company are down -46.00% on a year-to-date basis and more than -82.57% from its all-time high. The sovereign wealth fund has established an estimated ~1.86% ownership of ZM.

Costco Wholesale Corporation (COST): represents the second largest addition to the portfolio this quarter. The sovereign wealth fund purchased 1.3 million shares of the membership-only retail store chain for ~$496.81 million. This position now takes ~1.24% of the fund’s portfolio. PIF purchased shares of the Charlie Munger favorite between prices of $416 and $608, a range the company has maintained throughout most of the year. The sovereign wealth fund has established a relatively negligible ~0.23% ownership of the $245.67 billion market cap retail giant.

NextEra Energy (NEE): is the third major addition to the sovereign wealth fund for this quarter. PIF purchased 6.36 million shares of the renewable energy company for ~$493.81 million, shares were purchased between prices of $68 and $87. This has skyrocketed Next Era into the 11th largest holding within the fund, currently taking up ~1.21% of the portfolio. The company is trading at around $88 a share.

American Tower Corporation (AMT): is the only REIT added to the fund during the second quarter. The sovereign wealth fund bought 1.89 million shares of the company spending ~$483.83 million in the process. The fund is estimated to have entered the position between prices of $224 and $281 per share. The REIT, dealing almost solely in communications infrastructure, is currently taking up ~1.19% of the portfolio. However, PIF maintains only a relatively negligible ownership stake of 0.41%.

Starbucks Corp (SBUX): represents the fifth largest new position in the portfolio this quarter. The PIF purchased 6.31 million shares of the coffeehouse chain for ~$482.27 million. Starbucks is the 18th largest position within the fund taking up ~1.18% of the fund’s portfolio. PIF purchased shares of the company between $69 and $91 per share, after the recent sell-off. This seems to have slowed down since as the stock price finally saw some positive movement being traded at around $85 per share more recently.

Microsoft Corp (MSFT): is the sovereign fund’s sixth largest addition to the portfolio this quarter. As explained earlier, the fund scooped up many of the high-flying tech stocks that were selling at a significant discount as compared to their 2020 and early 2021 prices. The position currently takes up 1.16% of the portfolio and represents the 16th largest holding. The Saudis spent $473.98 million purchasing 1.84 million shares of Microsoft between prices of $214 and $342.

Alphabet Inc (GOOGL): is yet another example of this process. After trading in the $140-150 per share range for a couple of years, shares of the company experienced significant downforce lately. The Public Investment Fund managed to in lock purchases between $105 and $142, as it acquired 4.26 million shares of the tech giant. This position represents 1.14% of the fund’s portfolio and is its 17th largest holding.

BlackRock Inc. (BLK): has also been one of the major portfolio additions for the quarter, with the sovereign wealth fund buying 0.74 million shares of the famous investment management company for ~$451.72 million. The position took up 1.11% of the portfolio as of the end of the second quarter. The fund is estimated to have entered the position between prices of $582 and $782 per share, making it the 18th largest holding within the portfolio.

Saudi Fund Holdings according to Quiver Quant

PIF Movements (Quiver Quantitative)

The Public Investment Fund has also opened a position within Home Depot (HD), Salesforce (CRM), JPMorgan Chase (JPM), Amazon (AMZN), Datadog (DDOG), Adobe Systems (ADBE), Freeport-McMoRan Copper & Gold (FCX), and Advanced Micro Devices (AMD).

Expanded Positions

Electronic Arts (EA): is the fourth largest holding within the sovereign wealth fund representing 4.77% of the portfolio, compared to 4.13% of the portfolio as it was reported last quarter. The fund had decided to expand on the position they were holding since Q4 2020, purchasing shares between $111 and $141 in Q2. Electronic Arts is a major holding of the sovereign wealth funds which now controls 5.72% of the company and has expanded its position by 12% this quarter. They have spent ~$236.04 million purchasing 1.80 million shares of EA. For the past year and a half, shares of the video game veteran have largely traded flat and managed to outperform the S&P 500 (SPY).

Air Products and Chemicals (APD): is another large holding within the portfolio which is currently ranked as the 8th largest position taking up 1.58% of the portfolio, a stark increase from 0.42% as was reported last quarter. PIF currently owns 2.86 million shares of the company, and appears to be doubling down on the position. This quarter, the Public Investment Fund spent ~$469.91 million adding another 1.95 million shares of the company, which constitutes a 269% change in the position. Shares this quarter were purchased between prices of $199 and $238.

PayPal Holdings (PYPL): represented a relatively negligible position within the fund but management decided to truly double down on this position by expanding it by 674%. PIF bought 6.14 million shares of the online payment system company with a purchase price of between $69 and $121. This is currently the 12th largest position within their portfolio, taking up 1.21% of the sovereign wealth fund.

Meta Platforms (META): is yet another instance of the PIF doubling down on high-end tech stocks and using the recent sell-off to their advantage. This is a holding that was expanded by 602% this quarter, with the fund having bought another 2.52 million shares for the price of $155-$233 per share. Still, even after the recent purchase, Meta only represents PIF’s 15th largest holding taking up a relatively negligible 1.16% of the portfolio. The Public Investment Fund currently owns 2.94 million shares of Meta for the average paid price of $207.38 per share. The company is currently selling for $167.96 per share.

Reduced Positions

Visa Inc. (V): is the only PIF holding that got trimmed during the second quarter. The payments card company currently represents the 33rd largest holding in the fund, taking up only 0.53% of the portfolio. This is a 22% reduction as compared to Q1 2022 when the company took up 0.73% of the portfolio. The sovereign wealth fund currently owns only 1.11 million shares, having disposed of 0.32 million shares during the quarter at a slight loss.

Final Overview

Saudi PIF Top Holdings Using 13F Data

PIF Holdings Q2 2022 (Author Spreadsheet 13F Data)

We can conclude that the Saudi Sovereign Wealth Fund has been an aggressive buyer during the second quarter utilizing the liquidity crunch to its fullest extent in order to double down on its beaten-down holdings, especially those in the high-end tech space. Having invested more than $7 billion during the quarter according to their 13F filing, PIF used the opportune moment and the favorable macroeconomic environment to find room in its fund for household tech names such as Amazon, Google, Microsoft, AMD, among others. At the same time, it heavily expanded its already established holdings such as Meta, PayPal, and EA. As far as the PIF is concerned, as long as there are willing sellers for these high-quality companies, the long-term orientation of the fund’s goals positioned them brilliantly to be the opportune buyer.

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