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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Reallocating toward software and enterprise hyperscalers utilizing AI while rotating out of commoditizing infrastructure, initiating new positions in Synopsys and Intuitive Surgical while fully exiting Cooper Companies, Equifax, and Charles Schwab."
Generation Investment Management Global Equity strategy navigated an evolving market environment in the third quarter of 2026, closing the period with strategy assets under management of $14.1 billion (firm-wide AUM standing at $22.6 billion). While long-term quality investing faced headwinds earlier in the year as market leadership narrowed around the initial artificial intelligence hardware build-out, the strategy witnessed an inflection during the quarter as market dynamics shifted in its favor. Net returns for the fund itself are not explicitly quantified in the letter, but management noted that median software and services equities surged 35% between late June and late September, boosting key portfolio holdings after a 15% drawdown in median AI infrastructure shares. From a macroeconomic perspective, the manager highlights a pivotal 'vibe shift' where the market began re-evaluating the sustainability of the estimated $5 trillion AI capital expenditure cycle. The manager contends that historical technology deployments consistently prove that long-term value accrues not to suppliers of commoditizing hardware infrastructure ('making intelligence'), but rather to application platforms and hyperscalers that embed AI into enterprise workflows ('making use of intelligence'). Concurrently, corporate commitments to decarbonization and the clean energy transition remain resilient despite political noise, with hyperscalers emerging as the primary corporate purchasers of carbon-free power and clean grid capacity. Portfolio activity reflected rigorous bottleneck identification across technology and disciplined capital redeployment. Generation initiated a new position in chip design software leader Synopsys and acquired Intuitive Surgical in healthcare robotics. Major contributors included Microsoft, Workday, and Danaher. Conversely, the team completely exited positions in Cooper Companies and Equifax due to deteriorated moats and executive execution failures, and divested Charles Schwab following deposit uncertainty and inadequate responsiveness to climate-related business risks.
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