Amidst widespread investor apprehension regarding the potential disruption of software companies by artificial intelligence, GCQ’s investment chief, Doug Tynan, has strategically increased the firm’s holdings in the sector. This high-stakes move comes after GCQ’s $2 billion Flagship Fund experienced a significant downturn, losing 9.1 per cent last month and 12.9 per cent over three months. GCQ is a financial services firm. It provides investment management services to individuals and institutions, focusing on delivering long-term investment performance.
Tynan believes the recent market sell-off presented an opportunity to capitalise on undervalued assets. While rivals like Hyperion Asset Management reduced their software exposure, GCQ freed up 10 per cent of its capital, or $200 million, by divesting positions in companies that had benefited from the market’s earlier flight to safety. These included luxury goods companies like Louis Vuitton and Richemont, as well as WD-40.
GCQ then invested in top-tier software as a service (SaaS) companies, including Microsoft, SAP, and S&P Global. Tynan stated these companies are unlikely to be disrupted by AI and will instead benefit from the technology. GCQ also acquired shares in accounting software giant Intuit, the US equivalent of Xero, favouring its robust network effects. In contrast, Hyperion has halved its exposure to traditional software companies, including selling shares in Intuit.
GCQ’s clients are supporting Tynan’s strategy, with the firm reporting record inflows this month after already attracting about $50 million in January. Tynan remains confident in GCQ’s portfolio, asserting that their holdings are protected from AI disruption and that the firm will not succumb to fear or change its investment approach in response to market volatility.
