Findlay Park Partners LLP, a prominent investment firm managing approximately $11.3 billion in assets, is recalibrating its tech portfolio as the market landscape shifts. The firm, known for outperforming 86% of its peers, has sold its entire stake in Nvidia Corp. during the third quarter, reflecting a strategic pivot away from the technology giants that have recently driven U.S. stock rallies.
Nvidia, once a significant holding that represented 5% of Findlay Park’s total assets earlier this year, saw its shares decline in value during the quarter. In contrast, other major positions like UnitedHealth Group Inc. and Accenture Plc experienced notable gains, each rising by at least 15%. The firm also reduced its stake in Microsoft Corp., its largest position for much of the last decade, from 4.8% in August to 3% by the end of September.
Simon Pryke, CEO of Findlay Park, noted, “While the Magnificent Seven stocks have delivered impressive growth, current earnings expectations are lackluster, and their valuations suggest that this growth will continue indefinitely. One of those numbers is wrong.” This cautious outlook comes as analysts project a slowdown in earnings growth for the group—expected to fall to 18% in the July-September quarter, down from 36% in the previous quarter.
The Dublin-based fund, operating under Europe’s UCITS framework to safeguard retail investors, focuses primarily on U.S. stocks. It has achieved a remarkable return of approximately 29% over the past year, outperforming peers who have averaged 16%, all while maintaining lower relative volatility.
Findlay Park’s investment strategy favors stocks heavily exposed to the domestic U.S. market and supply chain, intentionally excluding major players like Tesla Inc. and Apple Inc. Notably, the fund holds only 4.8% of its portfolio in the Magnificent Seven compared to a benchmark weighting exceeding 28%.
As U.S. stocks continue to reach record highs, the initial rally concentrated on a few tech stocks has expanded to include smaller companies, alleviating recession fears. Nevertheless, the heavy investments in AI technology are under scrutiny, as investors weigh their long-term value.
Despite the challenges, analysts maintain a positive outlook for the tech sector, forecasting that the S&P 500 Information Technology Index—home to giants like Nvidia, Apple, and Microsoft—will reach approximately 4,962 points within a year, indicating a potential gain of about 14%.
Findlay Park’s portfolio is notably diverse, with around 40% allocated to companies valued between $5 billion and $50 billion. Pryke emphasized a preference for business-to-business enterprises, which tend to be capital-light, generate high recurring revenues, and exhibit strong free cash flow.
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