Mott Capital’s Strategy Gains 11.98% vs S&P 17.88%, Halves Microsoft Stake
Mott Capital’s Thematic Growth Strategy gained 11.98% versus S&P 500’s 17.88%, pointing to valuation pressures and AI-related debt at Microsoft. It cut its Microsoft stake by 50%, citing lack of a proprietary AI platform, as shares fell 6.64% over one month and posted a 1.19% 52-week gain.
1. Strategy Performance
Mott Capital reported its Thematic Growth Strategy achieved an 11.98% gain in 2025, underperforming the S&P 500’s 17.88% return. The fund cited sideways market action in Q4 and sector selection choices as drag factors.
2. Valuation Pressures and AI Debt
The letter highlighted mounting AI-related debt and elevated valuations at Microsoft, along with urgent needs for R&D investment in advanced software and data centers. It noted Microsoft’s reliance on external AI platforms, such as the OpenAI backbone, instead of an in-house AI solution.
3. Position Reduction and Stock Performance
In response to these risks, Mott Capital reduced its Microsoft position by half last year to mitigate potential downside. Over the past month, Microsoft shares declined 6.64% while recording a 1.19% gain over the trailing 52 weeks.