Super Investors Are Buying AI Stocks

**Joseph Carlson** (0:00)
Well, folks, these super investors are buying and selling. And we get an insight into what's going on with their portfolios. We can see specifically what they're doing. We've already seen that some of them, like big time investors, have sold a bunch of Microsoft, and they're very worried about it. We talked about this with Chris Hohn in the previous episode. But now we have Bill Ackman saying he's buying a bunch of Microsoft. Who's correct, who's wrong? We also have other big investors piling money into Google left and right. But Google's already at a high stock price. Who's right in this and who's wrong once again? We're going to be going over all of these portfolios. We're going to be trying to figure out what the actual strategy is here of each investor and if there's any insight into what we can do with our own money. Now, of course, we also have the fail of the week, which in this case is Waymo. The RoboTaxi company has goofed and we're going to be highlighting it in this episode's fail of the week. Now, I've said before that Chris Hohn is one of, if not the best working investor today. And I say that for a couple reasons. First of all, Chris Hohn has had incredibly good returns, in the range of 19 to 20% for over a decade. So he's consistently beat in the market. He's even beat the QQQ, which is very difficult to do. A lot of investors would have loved to gone back in time, put all their money in the QQQ.
That's essentially what Chris Hohn did. He beat the best indexes of the time before you knew that those were the best indexes. That's a very difficult thing to do. And he also did that while growing his fund to massive size, now managing tens of billions of dollars. His fund right now is up to 45 billion dollars. It's just massive. The TCI fund is gigantic. But even with that fund, he has an extremely concentrated portfolio. He has about 10 US stocks. Now this leaves out a couple of European stocks. He has ones that are like GE Aerospace that are also very high barriers to entry. So there's a couple of companies missing from this list. But overall, I believe it represents his strategy. When we look at his most active trades, we already know because he told us about a couple of them.
One of them is that he sold a massive amount of Microsoft. He reduced his Microsoft holding by 83 percent.
So 83 percent, he sold 14 million shares of Microsoft, and it was an 11 percent part of his portfolio. So it was 11 percent. Now Microsoft is a 2 percent. So he really took down Microsoft. Now he mentioned some vague reasons of why he sold Microsoft. He said that the software enterprise of Microsoft, which constitutes the majority of Microsoft's moat, we've discussed this in previous episodes. It's the bundling, it's the switching costs, it's all of those things that make the Microsoft enterprise so sticky and valuable. Well, he believes that that is becoming more pressured, that the moat is more questionable, that AI removes a lot of the friction. It makes it so other software applications can transmute the data from application to application, as well as AI is becoming a layer on top of Microsoft products. You can see that with Claude. So he believes that Microsoft's moat is becoming more questionable, both in the software portion and in the Cloud portion with Azure. So in both of that, he becomes a little bit more concerned and he sells down the holding by 80 percent.
Now, in most cases, if a company you own has some questions with the moat, just a few questions, you may just hold on to the company because it might not turn out that bad.
But can you really do that when you have 45 or 50 billion dollars in 10 companies, and half that money concentrated into only five or six companies?
You can't really afford to take any guesses. You can't really afford to make any mistakes. Chris Hohn is at a whole different level of concentration than we can even imagine.
You might feel concentrated if your $250,000 portfolio or $300,000 portfolio has 15 percent into one position. That might feel like a little too much. Now imagine controlling 45 billion dollars and having 15 percent of that in a single position. The stakes are incredibly high.
I believe that Chris Hohn is extremely conservative when it comes to moats.
He is the moat investor.
He does not like playing games or taking chances with moats. He only invests in the highest quality with the widest moats possible.