Blue Whale's Top 10

Today’s semiconductor customers require faster, more efficient chips to enable increased performance. In addition, as the industry moves to smaller process nodes, the amount of space available on a chip to pull transistors closer together is disappearing. Applied Materials’ expertise in modifying materials at atomic levels and on an industrial scale ensures its equipment is used to produce virtually every new chip and advanced display in the world.

Charles Schwab is one of the largest investment platforms in the US, providing wealth management, securities brokerage, banking, asset management, custody and financial advisory services for individual investors, professional advisors and corporate retirement plans.

With over 50% of revenues derived from interest on cash balances on account, Charles Schwab is a beneficiary of a rising interest rate environment. This, combined with a successful takeover of TD Ameritrade (and the resulting synergies from the takeover) and impressive inflows to AUM, makes Charles Schwab a welcome addition to the portfolio.

Lam is a supplier of semiconductor manufacturing equipment, focused on meeting the industry’s escalating demands. The manufacturing equipment that enables production of devices is becoming ever more critical, especially given the increasing complexity of semiconductor devices. Already a key part of the global economy, the demand for semiconductors will continue to grow as the proliferation of technologies such as artificial intelligence, high performance computing and 5G networks takes hold. Lam is at the forefront of companies enabling manufacturers to keep up with growing global demand.

Mastercard is a high quality business benefitting from the structural shift of payments away from cash to mobile, online and contactless transactions. At its core, Mastercard runs BankNet, a global payment network connecting major banks for verifying and processing card payments. Mastercard is able to process hundreds of millions of transactions per day due to its superior technology. Looking ahead, Mastercard is seeking to build on its successes in consumer payments to business-to-business transactions (much of which is still made manually by cash or cheque) and we are confident in their ability to navigate and execute on this multi-decade opportunity.

For social media companies, ad targeting has become an exercise in marrying data with algorithms to improve user engagement and conversion rates for marketers. In the AI era, highly proprietary datasets, vast compute resources and vast distribution are the holy trinity. Meta possesses all three. It's successfully weaved together its wealth of user data, enabled by one of the world's largest compute clusters, in order to increase the relevance of the content it surfaces, delighting the three billion unique individuals that use at least one of Facebook, Instagram, Messenger, and WhatsApp on any given day. As generative AI drives an explosion in content, the ability for Meta to leverage AI to curate that content across its family of apps should translate to more engagement, which should ultimately drive more revenue.

Microsoft’s products; Windows, Office, server operating systems and developer tools, are part of the foundation of almost every enterprise. But history is littered with examples of companies in such enviable positions that abuse their power over customers and fail to adapt to a changing world.  We believe Microsoft is a rare exception. 

Since taking over as CEO in 2014, Satya Nadella has reinvigorated Microsoft by pursuing a more ‘open’ strategy (Office 365 works on Apple iPhones - unthinkable previously), overhauling internal culture to attract the best talent and focusing attention firmly on the future of technology (Microsoft is one of the top contributors to open source software and artificial intelligence research). 

Moncler, founded in 1952, is an outerwear-focused luxury brand famous for its down jackets. Since its acquisition in 2003 by current Chairman and CEO Remo Ruffini, its brand equity has been burnished by a focus on quality, control and highly effective marketing. Combined with a controlled store roll-out strategy enabling a shift from wholesale to retail, the company has grown revenues by 10x over the last 15 years. Moncler continues to have significant headroom to open new stores and also has a material opportunity to increase its presence beyond its main outerwear category. The acquisition of Stone Island also gives management an opportunity to redeploy its playbook on a business that resembles Moncler 10 years ago, and thus accelerate revenue and free cash flow growth over the medium-term.

You may not have heard of Nvidia but chances are, you’re already a regular user of one of the many services their chips enable, including video recommendations on TikTok, grammar checks in Word online, feed recommendations on Pinterest or ad recommendations on Facebook and Instagram.

Nvidia’s chips speed up compute-intensive parts of applications. Accelerators were initially used to power desktop computer graphics but as Moore's Law has slowed, accelerated computing has emerged as a solution, enabling researchers to continue to push the boundaries in fields such as AI, climate simulation, drug discovery, ray tracing, and robotics.

Sartorius represents one of the only publicly available pure-play investment opportunities in the growing bioprocessing industry. The bioprocessing industry is attractive because the business model and regulatory approval requirements mean that 75% of Sartorius’s revenue is repeatable consumables revenue that is locked-in for the lifetime of the biologic – a type of medicine that is made not from chemicals but from organic matter. Moreover, Sartorius is benefitting from two secular shifts; the increasing prevalence of biologics (currently 30% of drugs sold and growing) and a shift from stainless steel technologies to single-use technologies. The combination of these two factors means that Sartorius has a long and sustainable growth runway.

Visa is a high quality business benefitting from the structural shift of payments away from cash to mobile, online and contactless transactions. Visa operates VisaNet, a global payment network connecting major banks for verifying and processing card transactions. In 2018, Visa successfully merged its European and global operations so that its full array of value added products and services (especially in transaction security) could be rolled out across bank and fintech customers across Europe. Like Mastercard, Visa is building on its successes in consumer payments and bringing this to the B2B space. We are confident in their ability to navigate and execute on this multi-decade opportunity.