Investor Summary
Fund Strategy
FUND PERFORMANCE AS OF 30th June 2026
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.22% | 6.43% | -7.5% |
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.22% | 6.43% | -7.5% |
The Loomis Sayles Global Growth Fund returned 6.43% in Q2 2026, underperforming the MSCI ACWI Index's 14.93% return by 850 basis points. The fund's concentrated portfolio of high-quality growth companies continues to benefit from secular drivers including AI adoption, cloud computing expansion, and e-commerce penetration. Top contributors Arm Holdings, Alphabet, and Amazon demonstrated strong fundamentals driven by AI-related demand, with Arm launching its first data center chip, Alphabet's cloud business accelerating to 63% growth, and AWS reaching a $150 billion revenue run rate. Detractors Netflix and Trip.com reported solid fundamentals but faced near-term guidance concerns, while Tencent's results were mixed relative to expectations. The manager added to seven positions during price weakness and trimmed four holdings based on reward-to-risk, while fully exiting Alibaba, PayPal, and Qualcomm. The portfolio trades at approximately 51% discount to the manager's estimate of intrinsic value, suggesting significant upside potential. The fund maintains its disciplined, long-term approach with 8.7% annualized turnover since inception, focusing on companies with sustainable competitive advantages trading at meaningful discounts to intrinsic value.
The fund invests with a highly selective, long-term private equity approach in high-quality businesses with sustainable competitive advantages, long-term structural growth drivers, attractive cash flow returns on invested capital, and management teams focused on creating shareholder value, when they trade at a significant discount to intrinsic value defined as the present value of all expected future net cash flows.
The manager remains committed to the long-term investment approach of investing in high-quality businesses with sustainable competitive advantages and profitable growth when they trade at a significant discount to intrinsic value. The portfolio discount to intrinsic value of approximately 51% suggests meaningful upside potential. The manager maintains a patient, selective approach with estimated annualized portfolio turnover of only 8.7% since inception, reflecting conviction in long-term holdings. The fund continues to focus on companies positioned to benefit from secular growth drivers including AI adoption, cloud computing expansion, e-commerce penetration, and streaming entertainment growth.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Aug 11 2026 | 2026 Q2 | 0700.HK, ADSK, ADYEN.AS, AMZN, ARM, CRM, GOOGL, MSFT, NFLX, NVO, RACE, TCOM | Advertising, AI, Cloud, E-Commerce, Intrinsic Value, quality growth, semiconductors, Streaming | - | The fund underperformed in Q2 2026 despite strong fundamentals across core holdings. AI adoption is accelerating growth at Arm, Alphabet, and Amazon, with cloud businesses showing particular strength. The manager used price weakness to add to seven high-conviction positions while trimming winners and exiting three names. With the portfolio trading at 51% discount to intrinsic value, the manager sees compelling long-term opportunities in quality growth companies benefiting from secular tailwinds. |
| May 14 2026 | 2026 Q1 | ABEV, ADYEN.AS, ARM, BA, NVS, SHOP.TO, TSLA | AI, Electric Vehicles, global, growth, healthcare, innovation, Quality, technology | - | Concentrated global growth fund underperformed significantly in Q1 2026 despite strong individual company fundamentals. Manager maintains high conviction in technology leaders like Arm Holdings benefiting from AI adoption and Tesla's EV/autonomy evolution. Portfolio trades at substantial discount to estimated intrinsic value, reflecting patient long-term approach focused on quality businesses with sustainable competitive advantages. |
| Feb 9 2026 | 2025 Q4 | 6954.T, AMZN, BA, BABA, GOOGL, MELI, META, MSFT, NFLX, NKE, NVO, ORCL, QCOM, RACE, SHOP.TO, TSLA, UAA, UL | AI, Automation, Cloud, global, growth, Quality, Streaming, technology |
GOOG SHOP 6954 JP ORCL NFLX MELI |
Loomis Sayles Global Growth Fund delivered strong 17.56% annual returns despite Q4 underperformance. The concentrated portfolio benefits from AI acceleration at Alphabet, e-commerce growth at Shopify and MercadoLibre, and automation demand at Fanuc. Manager initiated Ferrari and Nike positions while maintaining conviction in quality businesses trading at significant discounts to intrinsic value. |
| Nov 8 2025 | 2025 Q3 | 0700.HK, AAPL, ADYEY, AMZN, BABA, GOOGL, MELI, META, MSFT, NFLX, NVDA, NVO, ORCL, RIVN, SHOP.TO, TSLA, UBER, VRTX | AI, Cloud, Electric Vehicles, global, growth, long-term, Quality, technology | LFCR | Global Growth Fund delivered solid Q3 returns driven by AI and cloud infrastructure themes across Tesla, Alphabet, and Oracle holdings. Despite near-term EV delivery challenges and regulatory uncertainties, the manager maintains conviction in secular growth drivers including electric vehicle adoption, digital transformation, and streaming entertainment. Portfolio trades at 43% discount to intrinsic value with selective positioning in high-quality businesses. |
| Jul 27 2025 | 2025 Q2 | AMZN, GOOGL, MC.PA, MELI, META, MSFT, NFLX, ORCL, SHOP.TO, TCOM, TSLA, V, VRTX, YUMC | global, growth, healthcare, long-term, Quality, technology, value |
NFLX MELI ORCL TCOM YUMC VRTX |
Strong Q2 performance driven by Netflix's streaming dominance, MercadoLibre's Latin American e-commerce leadership, and Oracle's accelerating cloud transition. Portfolio maintains concentrated exposure to high-quality businesses with sustainable competitive advantages trading at significant discounts to intrinsic value. Long-term approach continues with patient capital deployment and selective positioning in structurally advantaged companies. |
| Mar 31 2025 | 2025 Q1 | ADYEN.AS, AMZN, BABA, DE, GOOGL, MELI, META, NFLX, NVS, ORCL, QCOM, SHOP, TSLA, V | E-Commerce, global, growth, healthcare, long-term, Quality, technology | - | Global growth fund underperformed in Q1 2025 with -3.35% returns versus -1.32% benchmark. Strong performance from MercadoLibre, Alibaba, and Novartis offset weakness in Tesla, Alphabet, and Amazon. Portfolio maintains concentrated exposure to quality growth companies in e-commerce, electric vehicles, cloud computing, and pharmaceuticals trading at significant discounts to intrinsic value estimates. |
| Jun 30 2024 | 2024 Q2 | 0700.HK, ADYEN.AS, ALNY, AMZN, BA, CRSP, GOOGL, MELI, META, MSFT, NFLX, NVO, ORCL, SHOP, TSLA, VRTX | AI, Biotechnology, Cloud, global, growth, healthcare, Quality, technology | - | Loomis Sayles Global Growth Fund outperformed in Q2 with a concentrated portfolio of quality growth companies trading below intrinsic value. Strong performance from Alphabet's AI and cloud growth, Alnylam's gene therapy progress, and Tencent's gaming recovery offset weakness in Adyen and Shopify. The fund maintains a 42% portfolio discount to intrinsic value. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI is driving accelerating growth across multiple portfolio holdings. Arm Holdings is benefiting from faster-than-expected adoption of its higher-royalty Armv9 architecture as companies monetize AI, with the company launching its first AGI data center CPU chip co-developed with Meta. Alphabet is seeing positive benefits from AI investments across search, YouTube, and cloud, with Google Cloud revenue accelerating 63% year over year driven by AI Solutions and AI infrastructure. Amazon's AWS segment is experiencing 28% growth driven by strong demand for AI workloads, with its custom silicon business growing at triple-digit rates. |
AI Infrastructure Data Centers Cloud Semiconductors GPUs |
CloudCloud computing remains a major growth driver with strong momentum across hyperscalers. Amazon's AWS grew 28% year over year to a $150 billion annual run rate with 38% operating margins, representing 59% of Amazon's operating income. Google Cloud accelerated meaningfully to 63% growth with margins expanding to 33%, driven by AI infrastructure and core GCP products. The cloud market remains underpenetrated with secular growth still in early stages, benefiting from enterprises' shift to public cloud services. |
AWS Google Cloud Public Cloud Infrastructure SaaS | |
E-commerceE-commerce continues to gain share of total retail with Amazon leading the secular shift. Amazon's e-commerce unit sales grew 15% suggesting market share expansion, with the company enhancing its value proposition through faster delivery speeds including 90,000 items available in 1-3 hours across 2,000 cities. E-commerce represents approximately 13% of $25 trillion global retail sales outside China, with Amazon capturing mid-20% share of e-commerce. The long-term secular shift from brick-and-mortar to e-commerce remains in early stages. |
Online Retail Logistics Last Mile Marketplaces | |
StreamingStreaming entertainment continues its secular shift from linear television, though Netflix faced near-term guidance concerns. Netflix reported solid fundamentals with 14% constant currency revenue growth driven by higher subscriptions, pricing, and advertising revenue reaching a $3 billion run rate in 2026. The company's advertising business expanded over 2x year over year with 4,000 clients. SVOD benefits from growing broadband penetration and consumer preference for on-demand content, with Netflix positioned to grow its share of global entertainment spending from 3% to over 5%. |
SVOD Advertising Content Subscriptions | |
Online TravelTrip.com reported strong fundamentals with 17% revenue growth reflecting resilient China and Asia-Pacific travel demand, though shares responded negatively to guidance for mid-single-digit growth deceleration. The company faces an ongoing antitrust investigation by China's SAMR which could result in fines of 1-10% of prior-year sales. Despite regulatory uncertainty, the company maintains a strong balance sheet with $20 billion in cash and investments against only $1.6 billion in debt, and is well-positioned to benefit from long-term growth in Asia-Pacific travel expenditures. |
Travel China Asia-Pacific OTA | |
AdvertisingDigital advertising showed strong growth across multiple platforms. Alphabet's advertising revenue increased 16% year over year with search accelerating to 19% growth, benefiting from strength in retail and financial services as well as AI-driven improvements. YouTube grew 11% while network advertising declined 4%. Amazon's advertising business grew 24% to over $70 billion trailing-twelve-months, led by sponsored products and expected to benefit from streaming ads on Prime. Tencent's marketing services grew 20% year over year benefiting from AI-driven platform improvements. |
Search YouTube Sponsored Products Ad Tech | |
GamingGaming showed mixed results with Tencent reporting 4% growth in value-added services, driven by double-digit international gaming growth while domestic gaming rose 6%. The company's gaming business accounted for 67% of VAS revenues. Social network revenue declined 2% partly due to Spring Festival timing. Tencent's Weixin/WeChat platform reached 1.4 billion monthly active users, up 2% year over year, providing a strong foundation for gaming and other services. |
Mobile Gaming Social Media China International | |
SemiconductorsSemiconductor holdings showed strong performance with Arm Holdings as the largest contributor. Arm reported record licensing revenue and second-highest royalty revenue in its 11th quarter as a public company, benefiting from faster-than-expected adoption of higher-royalty Armv9 architecture. The company's royalty revenue is growing as Armv9 reached over 30% of royalty revenue with royalty rates twice as high as Armv8. The manager trimmed positions in ARM, Fanuc, and NXP based on reward-to-risk, and sold Qualcomm entirely. |
Chip Design IP Licensing Mobile Data Center | |
| 2026 Q1 |
AIManager discusses AI's impact on portfolio companies, noting Arm Holdings benefits from faster-than-expected AI adoption driving higher-royalty technology incorporation. Addresses market concerns about AI threatening enterprise software companies, arguing that mission-critical providers like Shopify have sustainable competitive advantages that AI enhances rather than threatens. |
Artificial Intelligence Machine Learning Processors Software Technology |
Electric VehiclesTesla remains a core holding despite delivery declines, with manager emphasizing the company's evolution from hardware-centric to physical AI and autonomy focus. Believes secular EV adoption will accelerate driven by battery technology advances, cost parity, and government initiatives to phase out internal combustion engines. |
EVs Batteries Autonomy Transportation Clean Energy | |
SemiconductorsArm Holdings highlighted as benefiting from record royalty revenue and faster adoption of higher-royalty Armv9 architecture. Company expanding from mobile dominance into data centers, cloud computing, and automotive markets with significant growth potential in chip profit pool participation. |
Chips Processors IP Licensing Data Centers Mobile | |
E-commerceShopify demonstrates strong market share gains with 31% GMV growth, expanding merchant solutions globally and introducing AI assistant Sidekick. Manager believes the platform's network effects and mission-critical nature create sustainable competitive advantages despite AI concerns. |
Online Commerce Platforms Payments Merchants Digital | |
PharmaceuticalsNovartis facing largest patent expiry in company history but positioned for sustained growth through innovative medicine focus and strong pipeline. Company seeing benefits from decade-long R&D shift with novel drug launches like Pluvicto and Leqvio expected to drive future growth. |
Drugs Innovation Patents Healthcare R&D | |
| 2025 Q4 |
AIManager draws parallels between today's AI-driven market concentration and the 2014-15 oil collapse, warning that AI has become a macroeconomic assumption embedded in capital expenditure plans and valuations. Physical constraints like energy intensity and grid limitations complicate AI scalability assumptions. |
Artificial Intelligence Data Centers Valuations Energy Infrastructure Technology |
EnergyEnergy plays a critical role in AI infrastructure economics through data center power consumption. Rising electricity prices and grid constraints in data-center-heavy regions are compressing margins and extending deployment timelines, creating physical bottlenecks to AI scaling. |
Electricity Data Centers Grid Infrastructure Power Pricing Utilities | |
Small CapsThe Small Cap Strategy returned 6.21% gross versus Russell 2000's 12.81% return. Manager likes the current portfolio fundamentals with strong balance sheets and resilient cash flows, though markets haven't rewarded fundamentals on a linear schedule requiring continued patience. |
Russell 2000 Value Investing Fundamentals Portfolio Management | |
| 2025 Q3 |
AIMultiple portfolio companies are leveraging AI capabilities across their businesses. Alphabet benefits from AI overviews and AI Mode search functionality with over 2 billion monthly users. Oracle's cloud infrastructure is specifically built for AI workloads with major contracts from OpenAI, xAI, and Meta. Tesla continues advancing autonomous driving through AI training on supercomputers with FSD version 13 representing a step change improvement. |
Machine Learning Autonomous Driving Cloud Infrastructure Search Technology Data Analytics |
CloudCloud infrastructure represents a major growth driver across multiple holdings. Google Cloud accelerated growth to 32% year-over-year with improving margins reaching 21%. Oracle's cloud business is targeting over $100 billion in revenue by 2029, up from just over $10 billion in 2025, with remaining performance obligations growing 359% year-over-year to $455 billion. |
Infrastructure SaaS Data Centers Enterprise Software Scalability | |
Electric VehiclesTesla remains the core EV holding despite near-term delivery challenges. The manager believes secular EV adoption will accelerate driven by battery technology advances, cost parity, and government incentives. Tesla maintains technology leadership and strong market position with around 25% revenue share globally, while competitors like traditional automakers are pulling back on EV investments. |
Battery Technology Autonomous Driving Charging Infrastructure Manufacturing Market Share | |
E-commerceMercadoLibre continues executing well in Latin American e-commerce with gross merchandise volume growing 37% year-over-year. The company benefits from lower e-commerce penetration rates in Latin America versus other geographies and continues investing in fulfillment centers and logistics to improve user experience and extend market leadership. |
Marketplaces Logistics Payments Latin America Digital Commerce | |
StreamingNetflix reported strong results with revenue growing 17% in constant currency and operating margins expanding 700 basis points to 34%. The company completed rollout of its internal ad tech platform and is targeting a doubling of advertising revenue in 2025. Management expects the secular shift from linear television to streaming to continue benefiting the platform. |
Content Advertising Subscription Global Expansion Technology Platform | |
PaymentsMultiple companies benefit from the secular shift to electronic payments. MercadoLibre's fintech revenue grew 63% with total platform payment volumes increasing 61% to $65 billion. Adyen continues expanding market share in merchant acquisition despite some headwinds from U.S. tariff changes affecting Asia-based merchants. |
Digital Payments Fintech Merchant Services Financial Technology Transaction Processing | |
| 2025 Q2 |
StreamingNetflix continues to demonstrate strong competitive advantages through its global scale, content investment, and subscriber growth. The company is successfully transitioning to an ad-supported model while expanding internationally, with management expecting accelerating revenue growth driven by pricing power and new monetization strategies. |
Netflix SVOD Content Subscribers Advertising |
E-commerceMercadoLibre maintains its leadership position across Latin America with strong growth in both commerce and fintech services. The company continues to gain market share while investing heavily in infrastructure and logistics to improve customer experience and expand its addressable market. |
MercadoLibre Latin America Marketplace Fintech GMV | |
CloudOracle is successfully transitioning from traditional on-premise software to cloud-based subscription services, with cloud revenues now representing over 40% of total revenues. The company expects revenue growth to accelerate as the cloud transition progresses and benefits from higher customer lifetime value. |
Oracle Database Subscription Infrastructure Enterprise | |
TravelTrip.com continues to benefit from the recovery in China travel markets and growing international demand. Cross-border flight capacity has recovered to 83% of pre-pandemic levels, with management expecting further improvement and sustained mid-teens revenue growth. |
Trip.com China OTA Recovery International | |
RestaurantsYum China demonstrates resilience in a challenging consumer environment through value offerings and continued expansion into lower-tier cities. The company maintains attractive unit economics with two-year payback periods while growing its loyalty program to over 540 million members. |
Yum China KFC Pizza Hut Expansion Loyalty | |
BiotechnologyVertex Pharmaceuticals continues to innovate in cystic fibrosis treatments while expanding into new therapeutic areas. The company has successfully launched next-generation therapies and is building a diversified pipeline beyond CF, including gene therapy and pain management. |
Vertex Cystic Fibrosis Gene Therapy Pipeline Innovation | |
| 2025 Q1 |
E-commerceThe fund maintains significant exposure to e-commerce leaders including MercadoLibre in Latin America and Amazon globally. MercadoLibre continues to execute well with strong GMV growth and market share gains across commerce, payments, and financial services. Amazon's e-commerce business showed solid growth with 11% unit sales growth suggesting continued market share expansion. |
Marketplaces Payments Fintech GMV Digital Commerce |
Electric VehiclesTesla remains a core holding despite near-term headwinds from elevated interest rates and brand concerns. The manager believes Tesla's cost leadership, technology advantages, and upcoming lower-priced models position it well for long-term EV adoption. Full self-driving software represents a significant monetization opportunity with margins significantly higher than current company average. |
Autonomous Driving Battery Technology EV Adoption Software Monetization Manufacturing Scale | |
CloudThe portfolio includes major cloud providers Amazon Web Services and Google Cloud. AWS showed stabilization with 19% growth as clients shifted from optimization to innovation, while AI workloads represent a multibillion-dollar revenue run rate growing at triple-digit rates. Google Cloud decelerated to 30% growth but maintains strong operating leverage. |
AI Workloads Enterprise IT Infrastructure Operating Leverage Market Share | |
AIArtificial intelligence represents a key growth driver across multiple holdings. Google reported triple-digit AI-related revenue growth for the sixth consecutive quarter, while Amazon's AI-based workloads show triple-digit growth rates. Tesla's FSD version 13 represents the first AI-only training version delivering step-change improvements in autonomous driving capabilities. |
Machine Learning Autonomous Systems Data Processing Neural Networks Software Intelligence | |
PharmaceuticalsNovartis represents the fund's healthcare exposure with strong performance from established medicines and novel drug launches. Key growth drivers include Pluvicto for prostate cancer, Leqvio for cardiovascular disease, and Kisqali for breast cancer. The company benefits from a vast clinical pipeline of approximately 45 new molecular entities supporting long-term growth. |
Drug Development Clinical Pipeline Oncology Cardiovascular R&D Innovation | |
| 2024 Q2 |
AIGoogle has been operating as an AI-first company for much of the past decade, with nearly 80% of advertising customers using at least one AI-powered search product. The company continues integrating generative AI functionality into search and providing AI services through its cloud business. |
Artificial Intelligence Machine Learning Search Cloud Advertising |
CloudGoogle Cloud reported 28% year-over-year growth with accelerating momentum, representing 12% of total Alphabet revenue. The segment achieved 9% operating margins, improving from 3% in the prior year as the cloud business scales. |
Infrastructure Platform Software Enterprise Computing | |
Gene TherapyAlnylam Pharmaceuticals leads in siRNA-based therapies with five approved treatments and over ten in clinical trials. CRISPR Therapeutics has launched Casgevy for blood disorders and continues advancing CAR-T therapies for cancer and autoimmune diseases. |
RNA CRISPR Biotechnology Rare Diseases Therapeutics | |
E-commerceShopify generated $61 billion in GMV with 23% growth, outpacing overall retail sales and gaining market share. The platform serves over two million merchants across 175 countries with an integrated commerce operating system. |
Retail Merchants Platform Digital Commerce SMB | |
GamingTencent's gaming business showed signs of recovery with 3% growth in domestic gaming gross receipts. The company has navigated regulatory changes by investing in high-quality content and IP that fits within the regulatory framework. |
Video Games Entertainment Mobile Gaming Content China | |
PaymentsAdyen reported 46% volume growth as it ramped relationships with large clients including Block's Cash App. The company now processes over €1 billion annually for 19 platforms, demonstrating the scale of its unified payment offering. |
Fintech Merchant Acquiring Digital Payments Processing Financial Services |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Feb 9, 2026 | Fund Letters | Aziz V. Hamzaogullari | GOOG | Alphabet Inc. | Communication Services | Internet Services & Infrastructure | Bull | NASDAQ | advertising, Artificial Intelligence, CapEx, cloud, Free Cash Flow, Search | Login |
| Feb 9, 2026 | Fund Letters | Aziz V. Hamzaogullari | SHOP | Shopify Inc. | Information Technology | Internet Services & Infrastructure | Bull | New York Stock Exchange | e-commerce, Free Cash Flow, network effects, Omnichannel, Payments, platform | Login |
| Feb 9, 2026 | Fund Letters | Aziz V. Hamzaogullari | 6954 JP | FANUC Corporation | Industrials | Industrial Machinery | Bull | New York Stock Exchange | Artificial Intelligence, Automation, manufacturing, Margins, robotics, secular growth | Login |
| Feb 9, 2026 | Fund Letters | Aziz V. Hamzaogullari | ORCL | Oracle Corporation | Information Technology | Enterprise Software | Bull | New York Stock Exchange | Artificial Intelligence, backlog, CapEx, Cloud computing, Enterprise software, Subscriptions | Login |
| Feb 9, 2026 | Fund Letters | Aziz V. Hamzaogullari | NFLX | Netflix, Inc. | Communication Services | Streaming Services | Bull | NASDAQ | advertising, Content, Free Cash Flow, scale, Streaming, Subscriptions | Login |
| Feb 9, 2026 | Fund Letters | Aziz V. Hamzaogullari | MELI | MercadoLibre, Inc. | Information Technology | E-commerce Platforms | Bull | NASDAQ | e-commerce, Fintech, Latin America, Logistics, network effects, Payments | Login |
| Nov 8, 2025 | Fund Letters | Aziz V. Hamzaogullari | LFCR | Lifecore Biomedical, Inc. | Health Care | Drug Manufacturers - Specialty & Generic | Bull | NASDAQ | Bioprocessing, CDMO, Contractmanufacturing, GLP-1, Injectables, pharmaceuticals, Reshoring, tariffs | Login |
| Jul 27, 2025 | Fund Letters | Aziz V. Hamzaogullari | NFLX | Netflix, Inc. | Communication Services | Movies & Entertainment | Bull | NASDAQ | cashflow, Content, Margins, Streaming, Subscriptions | Login |
| Jul 27, 2025 | Fund Letters | Aziz V. Hamzaogullari | MELI | MercadoLibre, Inc. | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NASDAQ | ecommerce, Fintech, growth, Logistics, Margins | Login |
| Jul 27, 2025 | Fund Letters | Aziz V. Hamzaogullari | ORCL | Oracle Corporation | Information Technology | Systems Software | Bull | New York Stock Exchange | cashflow, cloud, Margins, Software, Subscription | Login |
| Jul 27, 2025 | Fund Letters | Aziz V. Hamzaogullari | TCOM | Trip.com Group Ltd. | Consumer Discretionary | Hotels, Resorts & Cruise Lines | Bull | NASDAQ | Demand, Margins, recovery, Tourism, Travel | Login |
| Jul 27, 2025 | Fund Letters | Aziz V. Hamzaogullari | YUMC | Yum China Holdings, Inc. | Consumer Discretionary | Restaurants | Bull | New York Stock Exchange | consumer, growth, Loyalty, Margins, Restaurants | Login |
| Jul 27, 2025 | Fund Letters | Aziz V. Hamzaogullari | VRTX | Vertex Pharmaceuticals Incorporated | Health Care | Biotechnology | Bull | NASDAQ | Biotech, cashflow, Genetics, innovation, pipeline | Login |
| TICKER | COMMENTARY |
|---|---|
| ARM | Arm Holdings is the world's leading microprocessor intellectual property (IP) supplier. The company develops and licenses its microprocessor IP technology to a network of partners to facilitate the design and manufacture of semiconductor chips used in a wide range of end markets, with a primary focus on mobile, cloud, automotive, and IoT (internet of things). Arm's clients include most of the world's leading semiconductor companies, which pay licensing fees to utilize the company's industry-standard technologies and ongoing royalties for the resulting chips incorporating its technology. While it can take in excess of five years before newly licensed technology is commercialized into new products, the resulting royalty payments to Arm can span decades. A holding since the company's September 2023 initial public offering (IPO) in which SoftBank spun-off a minority interest in the company, Arm reported quarterly financials that again reflected record results in its 11th quarter as a public company, including record high licensing revenue and the second highest quarter for royalty revenue. In late March, Arm announced that for the first time it would begin selling its own chips. The Arm AGI data center CPU chip was co-developed with Meta Platforms over the past few years. Arm has experienced faster-than-expected incorporation of its higher-royalty technology as companies look to monetize AI, and the company offers the only available design tool allowing for customization. The company is also seeing strong traction for its next-generation Armv9 architecture in the mobile market it has long dominated, with smartphone-related revenue increasing despite a recent decline in unit sales, reflecting the company's ability to grow significantly faster than the market due to adoption of its higher-royalty premium content. As of the company's most-recent fiscal year, approximately 50% of Arm's royalty revenue came from products launched over a decade ago, which we believe highlights the persistence of revenue from Arm's technology. We believe Arm's shares embed expectations that underestimate the company's sustainable growth and margin expansion opportunities. As a result, we believe that the company is trading at a meaningful discount to our intrinsic value and represents an attractive reward-to-risk opportunity. |
| GOOGL | Alphabet is a holding company that owns a collection of businesses, the largest and most important of which by far is Google. Google is the global leader in online search and advertising and also offers cloud solutions to businesses and consumers globally, with a goal of organizing the world's information and making it universally accessible and useful. Google dominates the US and global traditional search market with a greater than 80% share of search volumes. A fund holding since inception, Alphabet reported quarterly financial results that were fundamentally strong and above consensus expectations for most key metrics. The company is seeing the positive benefits of its AI investments in all the core areas of its business, including accelerating search volumes, strong user engagement and streamlined content creation on YouTube as well as the broader advertising business, and faster growth in the company's cloud business. Total revenue of $110 billion represented a 19% increase year over year in constant currency, while reported earnings per share rose 82%. Google Services reported quarterly revenue of $90 billion, which increased 16% year over year and represented approximately 82% of total revenue. Advertising revenue was driven by the search business, which accelerated and grew 19% year over year. The company benefited from strength in retail and financial services, as well as from the scaling growth in its Gemini AI app, which previously reported over 750 million monthly average users, AI overviews, which are available in 40 languages and 200 countries and previously reported over 2 billion monthly average users, and AI Mode, the company's native AI-search powered by its Gemini models. Google Cloud reported quarterly revenue of $20 billion on growth that accelerated meaningfully to 63% year over year and represented 18% of total revenue. Revenue acceleration was driven by continued growth of GCP across AI Solutions and AI infrastructure, as well as core GCP products. The company's cloud revenue backlog nearly doubled over the prior-year quarter to more than $460 billion. We believe market expectations underestimate Alphabet's long-term sustainable growth rate. As a result, we believe the company is selling at a significant discount to our estimate of intrinsic value and offers a compelling reward-to-risk opportunity. |
| AMZN | Online retailer Amazon offers millions of products – sold by Amazon or by third parties – with the value proposition to consumers of selection, price, and convenience. Amazon's enterprise IT business, Amazon Web Services (AWS), offers a suite of secure, on-demand, cloud-computing services, with a value proposition to clients of speed, agility, and savings. A fund holding since inception, Amazon reported quarterly financial results that were strong and above management guidance and consensus expectations for revenue, adjusted operating profits and margins, and earnings per share (EPS). For the quarter, net sales of $181.5 billion increased 17% year over year in constant currency. E-commerce and related revenue, which accounted for approximately 76% of revenue, was driven by 24% growth in advertising revenues, 15% growth in retail subscription services such as Prime membership and digital media subscriptions, and low-double-digit growth in the online store and third-party services. E-commerce unit sales growth of 15% suggest that the company expanded its market share both in North America and globally during the period. The company now offers delivery on over 90,000 items in 2,000 cities and towns in one-to-three hours. Over the past decade, the company has grown its advertising business from what we estimate was approximately $1 billion of revenue in 2014, to over $70 billion over the trailing-12 months, and which we believe will continue to grow at a mid-teens rate over our long-term investment horizon. Comprising 21% of total net sales at $38 billion, AWS revenue grew 28% compared with the year-ago quarter, up from 24% growth in the prior quarter, driven by strong demand for AI workloads and core cloud services. AWS now represents a $150 billion revenue run rate business that generated 38% operating margins during the quarter and accounted for 59% of Amazon's overall operating income. The company also disclosed that its custom silicon business has an annual run rate of over $20 billion and was growing at a triple-digit percentage year over year. Backlog in the AWS segment grew to $364 billion, which doesn't include a recent deal announced with Anthropic for over $100 billion. Over our investment time horizon, we believe Amazon can sustain low-double-digit revenue growth and faster growth in operating profits and free cash flow that is not currently reflected in the share price. As a result, we believe the company is selling at a significant discount to our estimate of intrinsic value and offers a compelling reward-to-risk opportunity. |
| NFLX | Founded in 1997, Netflix is one of the world's leading internet entertainment platforms and a pioneer of subscription video on demand (SVOD), which it first launched in 2007. Today the company is a global leader with over 325 million paid subscribers, out of what we estimate is a total addressable market of one billion households outside of China, who access TV series, movies, mobile games, and other entertainment content across a wide variety of genres, languages, and devices. A fund holding since the first quarter of 2022, Netflix reported quarterly financial results that were fundamentally solid and above consensus expectations for revenue, operating income, free cash flow, and earnings per share. Despite reiterating its full-year outlook for revenue and operating income and raising its free cash flow projection by approximately 14%, shares may have responded negatively to lower-than-expected guidance for the current quarter. There is no change to our long-term structural investment thesis for Netflix, which continues to perform above our long-term expectations. For the quarter, revenue of $12.3 billion rose 14% in constant currency, driven by higher subscriptions, higher subscription pricing, and increased ad revenue. The company highlighted its advertising business, which expanded by over 2 times year over year and is expected to reach $3 billion in 2026. Netflix is now working with over 4,000 advertising clients, an increase of 70% year over year. Operating income of $4 billion rose 18% year over year on margins of 32.3%. Free cash flow of $5 billion rose 91% from the prior-year quarter and represented approximately 40% of total revenue. We believe SVOD will continue to benefit from a secular shift from linear television to streaming entertainment due to growing global penetration of broadband internet connections, the proliferation of internet-connected devices, and consumers' desire for on-demand personalized entertainment at prices that are generally significantly below paid TV. We recently increased our longer-term projected operating margins for Netflix, driven by our expectation of greater scale benefits, and we now expect Netflix to generate longer-term operating margins in the mid-to-high-30% range, up from approximately 30%, previously. We believe current market expectations substantially underestimate the strength of Netflix's business model and its ability to generate sustainable growth in free cash flow over our long-term investment horizon. As a result, we believe the shares trade at a significant discount to our estimate of intrinsic value and offer a compelling reward-to-risk opportunity. |
| TCOM | China-based Trip.com (TCOM), formerly known as Ctrip, is among the world's largest global travel platform. Founded in 1999, the company offers a comprehensive, integrated platform on which travelers can make arrangements for lodging, transportation, packaged tours and other related services, including online advertising and financial services, as well as providing corporate travel management services. A holding in the fund since the first quarter of 2020, Trip.com reported quarterly financial results that were fundamentally strong and above consensus expectations for revenues and operating profit. Revenue growth of 17% year over year reflected resilient growth in China and Asia-Pacific travel, as well as increased demand for international travel and the company's global brands. Shares may have responded negatively to guidance for the coming quarter, which reflects a deceleration in revenue growth to mid-single digits due to both cyclical factors such as elevated energy and airline prices and operational changes to proactively align with industry regulatory practices. In January, China's State Administration for Market Regulation (SAMR) announced that it was launching an antitrust investigation into allegations that the company was using its dominant market position to engage in anti-competitive practices. If SAMR finds that the company is in violation, it could face a fine of 1% to 10% of prior-year sales and be required to change business practices. Based on Trip.com's 2025 full-year sales, potential fines could range from approximately $90 million to $900 million. As of March 31, the company had cash, short-term, and long-term investments valued at approximately $20 billion, with long-term debt of only approximately $1.6 billion. We continue to believe the company remains a high-quality company with a leading position in the Asia-Pacific travel market, and which trades at a substantial discount to our estimate of intrinsic value. We believe the company's share price embeds expectations for key revenue and cash flow metrics that are substantially below our long-term assumptions. As a result, we believe the company's shares are trading at a significant discount to our estimate of intrinsic value and offer an attractive reward-to-risk opportunity. |
| 0700.HK | Tencent Holdings is one of the largest internet services companies in China and globally, offering a wide array of value-added services that span social networking and communication, gaming, media and entertainment, and e-commerce and local services. A fund holding since the fourth quarter of 2018, Tencent reported quarterly financial results that were fundamentally solid but mixed with respect to consensus expectations. Revenue growth of 9% year over year was below expectations for 11% growth. However, a later Spring Festival in 2026 versus 2025 pushed some gaming revenue into the current quarter. Adjusted for the timing difference, revenue would have been in line with expectations. The company is benefiting from healthy demand trends across its businesses, including gaming, advertising, and financial technology services. VAS total revenues of RMB 96 billion rose 4% year over year, driven by double-digit growth in international gaming, while domestic gaming rose 6% and social network revenue declined 2% due in part to the Spring Festival timing. The company now has 266 million total fee-based subscribers to its digital content services, which was approximately flat year over year. The company's Weixin/WeChat platform ended the quarter with 1.4 billion monthly active users, up 2% year over year. Fintech and business services rose 9% year over year to RMB 60 billion. Fintech growth benefited from higher commercial payment activity and wealth management services, while businesses services saw increased demand for cloud solutions, including AI-related services, as well as increased e-commerce technology service fees. Marketing services revenues of RMB 38 billion grew 20% year over year, benefitting from AI-driven improvements to its advertising platform. We believe Tencent is one of the best-positioned companies in the China internet services industry. We believe the near-term uncertainty regarding the regulatory and economic environment does not change the long-term fundamentals; as a leading consumer platform provider, we believe the structural expansion of internet users in China will position Tencent to benefit from multiple secular growth drivers, including gaming, media, advertising, payments, and cloud-computing growth. We believe Tencent's strong growth prospects are not currently reflected in its share price. As a result, we believe the company's shares are trading at a significant discount to our estimate of intrinsic value, offering a compelling reward-to-risk opportunity. |
| ADSK | During the quarter, we added to our existing positions in Autodesk, Adyen, Ferrari, Microsoft, Novo Nordisk, Salesforce, and Trip.com as near-term price weaknesses created attractive reward-to-risk opportunities. |
| ADYEN.AS | During the quarter, we added to our existing positions in Autodesk, Adyen, Ferrari, Microsoft, Novo Nordisk, Salesforce, and Trip.com as near-term price weaknesses created attractive reward-to-risk opportunities. |
| RACE | During the quarter, we added to our existing positions in Autodesk, Adyen, Ferrari, Microsoft, Novo Nordisk, Salesforce, and Trip.com as near-term price weaknesses created attractive reward-to-risk opportunities. |
| MSFT | During the quarter, we added to our existing positions in Autodesk, Adyen, Ferrari, Microsoft, Novo Nordisk, Salesforce, and Trip.com as near-term price weaknesses created attractive reward-to-risk opportunities. |
| NVO | During the quarter, we added to our existing positions in Autodesk, Adyen, Ferrari, Microsoft, Novo Nordisk, Salesforce, and Trip.com as near-term price weaknesses created attractive reward-to-risk opportunities. |
| CRM | During the quarter, we added to our existing positions in Autodesk, Adyen, Ferrari, Microsoft, Novo Nordisk, Salesforce, and Trip.com as near-term price weaknesses created attractive reward-to-risk opportunities. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||