Stockholm (HedgeNordic) – At Asilo Argo, portfolio managers Ernst Grönblom and Henri Blomster employ a high-conviction strategy aimed at identifying “future superstar” stocks. With artificial intelligence and AI-related companies capturing significant investor attention amid rapid technological advancements and widespread adoption across industries, the duo has significantly increased their allocation to AI stocks, positioning them as tomorrow’s standout performers.

“The share of companies whose businesses are directly tied to the construction of AI data centers stood at 15 percent of the fund’s contents in the spring, and it now exceeds 40 percent,” Blomster tells Danish media outlet AMWatch. “Furthermore, the share of the portfolio of companies that have very little to do with the ongoing AI revolution was 27 percent in the spring, and now only makes up 5 percent,” he adds.

“The share of companies whose businesses are directly tied to the construction of AI data centers stood at 15 percent of the fund’s contents in the spring, and it now exceeds 40 percent.”

Henri Blomster, who teamed up with Ernst Grönblom in 2022 to build on Grönblom’s decade-long investment strategy at Asilo Asset Management, underscores the intense global competition in the AI race and its profound geopolitical significance. Blomster emphasizes that leadership in AI is not just about technological innovation but also about maintaining the balance of power on the world stage. “The US is and should be determined to keep its leading position in AI development – it cannot give in to China,” argues Blomster.

“AI is approaching artificial general intelligence (AGI), and that might lead to superintelligence, which has the potential to compress the development of all technology, military technology included,” he explains. “Consequently, the US has a very significant strategic interest to win the AI race,” he stresses. Blomster further describes the competition for AGI as “the Manhattan Project of our generation,” pointing out that “unfortunately, it seems that the US has already lost some of its lead despite all the chip restrictions in place.”

AI Revolution Drives Portfolio Reshuffle

By design, the Asilo Argo equity fund maintains a concentrated portfolio, typically holding between 10 to 20 stocks, with an unofficial rule of 12 key positions. The fund focuses on current or potential future “superstar” companies that the market has yet to fully recognize for their competitive advantage and growth potential. This fall, the team behind Asilo Argo made important adjustments to its concentrated portfolio by adding four new AI-related stocks, divesting from existing holdings in Hubspot and Datalog. The newly added companies include SK Hynix, Taiwan Semiconductor, Oracle, and Astera Labs.

The duo’s largest bet is on SK Hynix, a Korean company that accounts for roughly half of the global High Bandwidth Memory (HBM) market, with the majority of its HBM products supplied to Nvidia, the largest buyer of AI chips. As of the end of November, SK Hynix represents the fund’s second-largest holding, accounting for 10 percent of the portfolio. While SK Hynix is a new addition, Taiwan Semiconductor is a familiar name for Asilo Argo, with the fund having previously invested in the company.

“We’ve had Taiwan Semiconductor in the portfolio before, but now reinvested in it, as it has a central role in building new data centers, the size of which is now becoming humongous.”

“We’ve had Taiwan Semiconductor in the portfolio before, but now reinvested in it, as it has a central role in building new data centers, the size of which is now becoming humongous,” says Blomster. Oracle is also playing a key role in the construction of data centers, while Astera Labs addresses networking bottlenecks by providing purpose-built connectivity solutions for AI and cloud infrastructure.

Strong Trajectory for Asilo Argo

Officially launched in late 2020 under United Bankers, Asilo Argo has experienced two strong years of performance following a challenging 2022. The fund has delivered an 81 percent return year-to-date through the end of November, building on a 64 percent gain in 2023. This performance comes after a more difficult 2022, when Grönblom’s portfolio of richly-valued stocks (based on traditional metrics) incurred a 53 percent loss amid a risk-off market environment.

With robust performance in 2023 and early 2024, along with new capital inflows, Asilo Argo surpassed the €100 million mark in assets under management at the start of 2024. This marked the first time Grönblom reached this milestone after managing his strategy for over a decade under various umbrellas. As of the end of November, the fund now oversees €169.4 million.