HCP Focus fund is among the top 15 best-performing globally investing equity funds. It has reached a stupendous 152% 5-year performance with a very highly concentrated portfolio.¹ Now we are disclosing all the stocks in the fund and reveals his next picks.
Currently, HCP Focus holds only 12 positions. Eleven of those are technology giants such as PayPal and Facebook, that have become dominant players in their sector. HCP Focus fund successfully proven that most of the shareholder value comes just from a handful of stocks.
”The market systematically underestimates and misunderstands the power of the winner-take-all phenomenon,” says the portfolio manager of HCP Focus.Book a Virtual Meeting Make a Subscription
We seek for companies that have a long-term potential to displace their competitors. Target companies benefit from megatrends such as globalization and network effects.
”A good example of network effects is the online marketplace Mercadolibre, which I have had in the portfolio since the beginning. In its own sector, the company has become the largest and most profitable company in Latin America, largely because of network effects. As a long-term investment, it has also been one of the best-performing stocks in the world, with an average annual growth rate of over 30% for more than ten years. Now Alibaba grows and conquers the Chinese online market in the very same way,” says the portfolio manager.
Focus’ investment strategy is extremely concentrated and the investment horizon is long. We only buy companies that we expect to hold in the portfolio for more than 10 years. It is about trying to identify superstar companies early on. For example, he bought Amazon’s stocks already in the early days of his strategy.
”We have owned Amazon’s shares almost since the beginning of the strategy, that is, more than ten years ago. However, as the market situation changes, we might change a significant part of the portfolio’s content. The last major year of change was 2017 when we replaced as many as five companies in the portfolio.”
Although most of the shares in the portfolio are digital platform giants, HCP Focus strategy is not restricted to one industry. Currently, the best performing stock in the portfolio is FeverTree, that is, a company producing premium mixer drinks.
So, what are wegoing to buy next? We are considering investing in another three digital platform companies: Etsy, Zillow Group, and GrubHub. We are also looking into buying some shares of Nvidia Corp, that is, a company famous for computer graphics drivers.
Read more on the Focus Homepage.
¹ Hoikkala & Liman: ”One of the World’s Top 15 Fund Managers Reveals His Next Picks”, Bloomberg, Oct 16th, 2018.Book a Virtual Meeting Make a Subscription