From MoneyWeek · · 1m 20s
Follow the Money: AI Investment Strategy
Stephen Yiu's Blue Whale Fund shifts from software to hardware stocks amid AI boom.
In brief
Stephen Yiu's Blue Whale Fund shifts from software to hardware stocks amid AI boom. Stephen Yiu's Blue Whale Growth Fund pivots from software to hardware stocks as AI demand drives chip investments. Originally reported by MoneyWeek.
Investment Philosophy
Stephen Yiu's Blue Whale Growth Fund follows a simple strategy: invest in companies receiving spending from consumer, enterprise or government sources.
“our investment philosophy is very simple it's basically follow the money”
Current Portfolio Focus
The fund is heavily invested in tech stocks but not primarily as a tech investor focusing on companies with spending tailwinds.
“it's basically follow the money”
Historical Shift
From 2017 to 2022, consumer spending drove company growth with low interest rates, inflation and globalisation supporting robust economic conditions.
“consumer spending was a lot more robust in the 10 years up to 2022”
Software to Hardware Pivot
Yiu sold software stocks two years ago as ai threatens software companies' moats through easier rival product creation.
“ai is actually a big risk to the moats of software companies”
Hardware Investment Focus
The fund now primarily holds hardware stocks benefiting from ai-driven demand for chips and components.
“the fund is still heavily weighted towards the tech sector but its actual exposure is principally in hardware stocks”
Oil and Gas Addition
Blue Whale added an oil and gas producer anticipating sustained high oil prices from conflicts and geopolitical tensions.
“nobody should ever be interested in european defence companies before 2022”
European Defence Shift
The fund invested in a european defence firm as government spending shifted structurally with better fundamentals and returns.
“defence budgets were very much linked to european nominal gdp and european gdp has been very disappointing for many years”
Bottom-Up Approach
Blue Whale focuses on understanding a company's earning power rather than top-down geopolitical factors.
“you have to go back to the basics which is do you understand the business or the ecosystem better than the market”
At a glance
Stephen Yiu's Blue Whale Growth Fund pivots from software to hardware stocks as AI demand drives chip investments.
