Investment Firm Makes Significant Changes in U.S.-Traded Investments

In the second quarter, Generation Investment Management, a pure-play sustainable investment manager co-founded and chaired by former Vice President Al Gore, made notable adjustments to its U.S.-traded investments.

Stock Trades

Generation Investment Management disclosed its stock trades in a form filed with the Securities and Exchange Commission. Notably, the firm bought more shares of the semiconductor-equipment maker, Applied Materials (ticker: AMAT), while reducing its investments in the cloud-based software firm, Salesforce (CRM), the payments company, Mastercard (MA), and brokerage firm, Charles Schwab (SCHW).

Generation declined to comment on these investment changes. As of June 30, the firm managed $34 billion in assets.

Applied Materials Investment

During the second quarter, Generation Investment Management increased its holdings of Applied Materials by buying an additional 943,951 shares. Consequently, the firm ended the quarter with a total of 8.4 million shares of Applied Materials.

According to Miguel Nogales and Mark Ferguson, Generation's co-chief investment officers, Applied Materials is well-positioned to benefit from generative AI. They stated in a July letter that the second quarter of 2023 marked the period when AI truly entered the public consciousness. They also mentioned the popular bot, ChatGPT, which millions of people use on a daily basis. While the technology holds great promise, it is currently challenging to determine where durable value will accumulate.

Recent Performance

Applied Materials reported a strong fiscal third quarter last week.

In the first half of 2023, Applied Materials stock saw a remarkable surge of 48%, outperforming the S&P 500 index, which rose by 16%. However, in the third quarter, Applied Materials' shares have slipped by 1.3% while the index has experienced a 1.8% decline. It is important to note that the stock has not fully recovered from a 38% drop it suffered last year.

Salesforce Stock Performance

Salesforce stock also faced significant decline in 2022, with a 48% drop. However, in the first half of 2023, the stock made a strong recovery, rising by 59%. In the third quarter, the shares have seen a slight decrease of 3%.

In conclusion, Generation Investment Management made notable adjustments to its portfolio during the second quarter, increasing its holdings of Applied Materials while reducing investments in Salesforce, Mastercard, and Charles Schwab. These changes reflect the firm's strategic approach to sustainable investments.

Salesforce Holds Off Elliott Investment Management

Salesforce successfully defended itself against activist investor Elliott Investment Management's attempt to nominate its own directors to the company's board. The tech giant posted impressive first-quarter earnings at the end of May and subsequently raised its financial guidance, which was well-received by investors. In a move that signaled long-awaited growth, Salesforce also announced its first price increases in years, generating further excitement. As the second quarter comes to a close, Salesforce is preparing to report its earnings after the market closes on August 30.

Generation Reduces Salesforce and Mastercard Holdings

During the second quarter, Generation sold 620,991 Salesforce shares, leaving them with a total of 1.8 million shares by the end of June. Additionally, the firm offloaded 346,996 Mastercard shares during the same period, resulting in a remaining stake of 1.4 million shares.

Mastercard's Steady Rise and Earnings Success

Mastercard saw a 13% increase in its stock price in the first half of 2023. Although shares have remained flat so far in the third quarter after experiencing a 3% decline last year, the brand's earnings reports for this year have been strong. These positive results helped push the stock to an all-time high of $405.19 on July 27, when second-quarter numbers were announced. Despite inflation and rising interest rates, consumer spending has remained robust. With these factors in mind, experts believe that both Mastercard and its competitor Visa (V) may be undervalued.

Schwab Holds Steady Amidst Volatile Times

In 2022, Schwab proved to be a reliable investment option by only experiencing a minor 1% decrease in stock value. However, the company has faced some challenges this year as its shares declined by 32% during the first half. On a more positive note, shares have risen by 5% in the third quarter, showing signs of recovery.

Despite a drop in stock prices caused by regional banking issues in March, Schwab insiders saw the opportunity and bought shares at a low price. Earnings for the company have remained strong throughout the year. CEO Walt Bettinger stated in July that Schwab's successes have been overshadowed by the general turmoil in the banking industry.

During the second quarter, Generation made the decision to sell 2.3 million Schwab shares, reducing their investment to a total of 9.3 million shares.

Inside Scoop on Stock Transactions

"Inside Scoop" is a regular feature that covers stock transactions made by corporate executives, board members, notable shareholders, politicians, and other prominent figures. These individuals, known as insiders, are required to disclose any stock trades they make to regulatory groups such as the Securities and Exchange Commission.