As the boss of the world's largest sovereign wealth fund (about $1.8 trillion), Nicolai Tangen is always keen to advise investors on how to beat the market, and his latest advice is to do something different.
“The best approach is always to go against the flow of other people,” Tangen told Bloomberg in an interview in Davos.
“What does that mean for the current situation? Well, if you’re going to be different than everybody else, it’s sell U.S. tech, buy Chinese stocks, sell private credit, buy the obsolete stuff,” he added.
Tangen doesn't exactly mean what he says on his latest advice. In fact, the CEO of Norwegian Investment Bank Management, which runs Norway's sovereign wealth fund, is a big fan of U.S. technology stocks.
As of June last year, the company held NOK 1.9 trillion worth of shares in the "Big Seven" in the US stock market, equivalent to $173 billion. Its six largest equity investments by value are all in the "Big Seven" in the US stock market, and it also holds Tesla shares worth $5.6 billion. Last year, the company chose to sell off some of its shares in Meta.
Norwegian Investment Bank Management praised the performance of U.S. technology stocks (up 27.9% in the first half of the year) in its semi-annual report for 2024. Overall, U.S. technology stocks account for a quarter of the company's equity investments.
In an interview with Bloomberg, Tangen did acknowledge that taking a contrarian approach means accepting that his strategy will sometimes underperform the market, drawing skepticism from the outside world.
However, several investors, including Tangen himself, have warned of the potential risk of a bubble in popular U.S. technology stocks.
The market capitalization of the "Big Seven" in the U.S. stock market accounts for about one-third of the S&P 500 index, and their profits account for three-quarters of the index's earnings growth through 2024.
In an interview with the Financial Times in November last year, Tangen warned that the market for microchip-based stocks faces an unprecedented concentration risk following the AI boom. Large companies including Nvidia (NVDA), ASML (ASML), TSMC (TSMC) and Silicon Valley giants make up this cozy ecosystem.
“That concentration is absolutely concerning. It means there are risks in the stock market that we haven’t seen before,” Tangen told the Financial Times’ Unhedged podcast. “So there are very few companies tied to them and they are getting bigger and more important.”
As for China, another market Tangen mentioned, Norway's exposure to the country is relatively small, at NOK 385 billion ($34 billion). The Norwegian investment bank's largest investments in China include Tencent, Alibaba and Pinduoduo. The value of the company's investments in China grew by $4 billion in the first half of 2024.
The latest investment from Norwegian investment bank Management is in line with Tangen’s advice to buy what is out of fashion. The company announced a partnership with Grosvenor, owned by the Duke of Westminster, to develop 175 properties in Mayfair, an upscale London neighborhood. This marks the largest external investment in Grosvenor’s 305-year history.
Article forwarded from: Jinshi Data