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Blue Whale Capital, the fund group co-founded by billionaire investor Peter Hargreaves, has reported a drop in revenue and profit following the steep sell-off in tech stocks last year.
The London-based firm manages £950mn on behalf of customers in the Blue Whale Growth fund strategy, which invests in US tech businesses and other fast-growing companies.
But the fund’s performance was hit last year as tech stocks suffered bruising losses. Higher inflation and rising interest rates weighed on the likes of chipmaker Nvidia and Microsoft — two of Blue Whale’s largest holdings — and other companies whose value is tied to future earnings.
According to documents seen by the Financial Times, Blue Whale Capital posted revenue of £7.4mn in the year to the end of March, down from £8.8mn the previous year. Profit also dropped to £3.9mn from £5.6mn.
Despite a difficult year for Blue Whale, fund manager Stephen Yiu said the outlook for inflation, interest rates and the growth of artificial intelligence had already helped some of the fund’s biggest stocks to bounce back.
“We had a very good recovery in 2023, performance has completely reversed,” said Yiu. “If you look at Nvidia, last year the shares went down by more than 50 per cent, but this year have gone up over 200 per cent.”
The value of the Blue Whale fund fell 28 per cent in 2022, before rebounding by the same amount this year, he said. Nvidia, the fund’s largest holding, has contributed to a third of the fund’s performance this year. Blue Whale’s other top holdings include Mastercard and Visa. Shares in the two payment companies are up more than 20 per cent since the start of January.
The fund ditched other tech stocks last year, selling out of so-called Faang companies — Facebook (now Meta), Amazon, Apple, Netflix and Google (now Alphabet).
But together with Nvidia, Microsoft and Tesla, four of those stocks — Alphabet, Amazon, Apple and Meta — were responsible for driving the gains in the US stock market for much of this year as part of a group of stocks dubbed the “magnificent seven”.
Blue Whale was seeded by Hargreaves, who founded the FTSE 100 investment supermarket Hargreaves Lansdown in 1981.
Hargreaves told the FT that Blue Whale was his biggest personal investment, with more than £150mn of his family’s wealth tied up in the fund. He said his next biggest investment was India, noting that it has a compelling economic growth story with a “young, highly motivated workforce”.
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