Route One Investment Company is one of the top performing investment firms in the industry. With its exceptional investment capabilities and strong track record, Route One has established itself as a leading investment manager trusted by major hedge funds and institutional investors. In this article, we will take a closer look at Route One Investment, its investment strategies, portfolio holdings, performance metrics as well as the insights we can draw from the investment activities of this stellar fund.
Deep Focus on Technology and Outstanding Stock Selection
As revealed in its SEC filings, Route One Investment Company places great emphasis on the technology sector, with its top holdings concentrated in tech giants like Microsoft, Facebook, Apple, Alphabet and Amazon. Such focus on fast-growing technology leaders that are disrupting various industries has been a key driver of Route One’s market-beating returns over the years. In addition to overweighting tech, Route One also displays stellar stock picking capabilities. The fund made early and sizeable bets on many rising tech stars like Sea Ltd, Datadog, ServiceNow and Teladoc Health that went on to become multi-baggers.
Disciplined Buying of High Conviction Names
An examination of Route One’s latest quarterly acquisitions shows that it has focused its buying on a select number of high conviction stocks. In Q1 2020, top purchases included Amazon, Sea Limited, Datadog, ServiceNow and Teladoc Health – companies that either dominate their fields or are fast gaining market share. The fund returned to add more shares of these names amid the coronavirus sell-off, demonstrating its disciplined adherence to a watchlist of high quality growth companies. Such a concentrated strategy has served Route One well during both up and down markets.
Key Takeaways for Investors
For investors looking to improve their own portfolios, the key investing principles exemplified by Route One Investment Company are: 1) Focus on industry leaders disrupting big markets 2) Conduct in-depth research to develop conviction in big secular growth trends 3) Hold for the long-term by buying more on dips 4) Diversify across uncorrelated growth sectors while concentrating in best ideas 5) Avoid distraction by market volatility and stick to highest conviction names.
In summary, Route One Investment Company is a top-tier investment firm that owes its long-term outperformance to a focus on emerging leaders in technology, outstanding individual stock selection, as well as a disciplined strategy of buying the dip on high conviction names.