Nvidia is experiencing a once in a generation tech advancement, says Gabelli's Howard Ward
TLDRIn the video transcript, Howard Ward, CIO of Growth, discusses the strategy of trimming tech stocks in a growth fund due to concerns of a potential recession. Despite the significant returns in 2023, the fund has reduced its positions in tech giants like Apple, acknowledging a slowdown in growth. Ward emphasizes the importance of not being overly greedy and preserving profits. The conversation also highlights the potential in non-tech sectors like GLP-1 drugs, where demand exceeds supply, and the unique position of companies like NVIDIA in the realm of artificial intelligence and hardware.
Takeaways
- 🏆 The discussion includes winners such as Microsoft, NVIDIA, and Alphabet.
- 🤝 Howard Ward, CIO of Growth, shares insights on fund management.
- 📉 Growth fund adjustments are made in response to market conditions and concerns of a potential recession.
- 🐖 The saying 'Pigs get fat and hogs get slaughtered' is referenced to emphasize the importance of being cautious and not overextending.
- 🚀 Remarkable stock performance in 2023, with some returning over 200%.
- 🔄 Profit-taking and rotation of investments from large-cap tech stocks are strategies employed to manage risk.
- 🍎 Apple's growth has been slowing down, leading to a reduction in the fund's position from 12% to around 5%.
- 📱 Despite the slowdown, Apple is still liked for its strong product line and potential for service growth.
- 💊 The GLP-1 drug market, particularly Eli Lilly's Zepbound and Mounjaro, is highlighted as an area of significant growth due to high demand.
- 💻 NVIDIA is added to the portfolio in the first quarter, reflecting its unique position in the tech industry.
- 🔄 A shift in the portfolio composition from software to hardware, specifically favoring NVIDIA, is mentioned to balance the holdings.
Q & A
Which companies are mentioned as winners in the transcript?
-Microsoft, NVIDIA, and Alphabet are mentioned as winners in the transcript.
What is Howard Ward's position at Growth?
-Howard Ward is the CIO (Chief Investment Officer) of Growth.
What is the main concern expressed by Howard Ward regarding the market in 2023?
-Howard Ward expresses concern about the prospects for a recession in 2023 and the impact it may have on the stock market.
What was the strategy adopted by Growth in response to the concern of a potential recession?
-Growth decided to take some profits out of their tech investments, particularly those with high market caps, and rotate that money to bring down their exposure.
How has Apple's growth trend changed according to Howard Ward?
-Apple's growth has been slowing down, with almost no growth in the last couple of years, shifting from a 20% grower to a single-digit grower with share buybacks pushing into double digits.
What was the rationale behind reducing the stake in Apple?
-The rationale was to acknowledge the change in Apple's growth rate and to adjust the investment to avoid paying too high of a multiple for a company that has transitioned from high double-digit growth to single digits.
Which industry does Howard Ward identify as a potential growth area outside of tech?
-Howard Ward identifies the GLP-1 drugs industry, specifically mentioning Eli Lilly's Zepbound and Mounjaro, as a potential growth area outside of tech.
Why is there a focus on GLP-1 drugs like Zepbound and Mounjaro?
-The focus is due to the high demand for these drugs, as they help people avoid being overweight, and the companies are struggling to produce enough supply to meet this demand.
Why did Growth add to its position in NVIDIA in the first quarter?
-Growth added to its position in NVIDIA because they believe it is a special situation within tech, with NVIDIA being in a cat bird seat that essentially has a monopoly position on the tools required to generate artificial intelligence technology.
What was the reason for trimming ServiceNow while not trimming NVIDIA?
-The reason for trimming ServiceNow was to balance the portfolio's software weight versus the hardware weight. NVIDIA was added because it is seen as a company with significant potential in the field of artificial intelligence, which is considered a once-in-a-generation opportunity.
What is the general advice given by Howard Ward for investors in tech stocks?
-The general advice is that if you buy tech stocks today, you should not expect them to only go up, implying that investors should be cautious and mindful of market fluctuations and potential downturns.
Outlines
📈 Market Insights and Tech Stock Evaluation
The paragraph discusses the strategy of a growth fund manager, Howard Ward, in dealing with large-cap tech stocks such as Microsoft, NVIDIA, and Alphabet. Ward explains the rationale behind trimming positions in these companies, citing concerns about a potential recession and the old adage about not wanting to be 'overweight' in a market downturn. He specifically mentions Apple, noting its slowing growth and the fund's decision to reduce its stake to reflect this change. Ward also highlights the importance of not being overly greedy and preserving gains in a volatile market. The discussion touches on the fund's tech rating being up near 60% and the decision to reduce this exposure.
Mindmap
Keywords
💡Growth Fund
💡Trimming
💡Recession
💡Market Cap
💡Tech Stocks
💡Apple
💡Adobe
💡GLP-1 Drugs
💡Eli Lilly
💡NVIDIA
💡Artificial Intelligence
Highlights
Discussion of prominent winners in the market like Microsoft, NVIDIA, and Alphabet.
Howard Ward, CIO of Growth, shares insights on trimming strategies for growth funds with multiple trillion-plus market caps.
引用老话 'Pigs get fat and hogs get slaughtered', Ward expresses preference to be a pig in the context of market behavior.
Mention of the impressive stock returns in 2023, with some cases seeing over 200% growth.
Concerns about the prospects of a recession this year and its potential impact on tech stocks.
Decision to take profits from certain tech names and rotate funds to mitigate risk.
Acknowledgment of Apple's growth slowing down in recent years and the decision to reduce stake from 12% to around 5%.
The importance of not paying too high of a multiple for stocks, even for companies with great products.
Shift in focus from tech to other growth areas, such as GLP-1 drugs, due to the difficulty of finding growth outside of tech.
Discussion on Eli Lilly's significant holding in the GLP-1 drug market with products like Zepbound and Mounjaro.
High demand for weight management drugs and the expectation that demand will continue to rise.
Lilly's position in the market with a better product compared to Novo Nordisk.
NVIDIA being added to the portfolio in the first quarter despite tech trimming.
Balancing software and hardware weights in the portfolio, with a focus on NVIDIA's unique position in AI technology.
NVIDIA's role in the once-in-a-generation shift brought by artificial intelligence and its impact on various industries.
The strategic decision to own more NVIDIA and less of other chip companies to avoid overexposure.
A cautionary note on the risks of investing in tech stocks today, reminding investors that stocks do not always go up.