Trade Update: Adjusting weights in Titan Flagship

Investor Update6 days ago
We’ve sold out of our position in AutoDesk (ADSK) and increased existing holdings in Apple (AAPL), Amazon (AMZN), and Thermo Fisher (TMO) for clients in our Flagship strategy.
With this change, we believe we’ve accomplished two important goals for our clients:
  • Reduced exposure to a high-growth software story; and
  • Improved sector exposure for clients relative to our benchmark.

Clearing off our ADSK

AutoDesk (ADSK) is a global leader in design software and recently completed its transition to a subscription revenue model from a traditional one-time license model.
We’ve held ADSK in our Flagship strategy since inception on February 20, 2018. Shares have increased ~175% over that period, a 31% compound annual growth rate.
While we believe ADSK remains an excellent business, we believe shares offer the least attractive risk-adjusted forward returns of the software names in Titan Flagship. We also believe expectations for an increase in the company’s profitability over the next two years are too aggressive and will have to be revised lower.
Our work suggests returns for ADSK over the next 3-5 years may average ~9% net of fees, which we don’t believe is a risk/reward compelling enough to continue holding the stock for Flagship clients.

Lifting weight

With the proceeds from our sale of ADSK, we have increased our clients’ exposure to AAPL, AMZN, and TMO.
As outlined in our memo on TMO back in October, TMO offers clients direct exposure to the healthcare sector, which we believe may see steady growth through this cycle.
We believe TMO is a high-quality compounder within the life sciences tools (LST) industry, providing “picks and shovels” to the healthcare and testing industries. An increased position in TMO diversifies Titan Flagship, which we believe may protect against higher volatility in the quarters ahead.
AAPL and AMZN are household tech giants that our clients know well, and these names have been holdings in Titan Flagship since inception.
Before this adjustment, our clients’ exposure to AAPL was lower than its overall weight in the S&P 500.
Given AAPL’s position as a global leader in consumer tech and our view that the company may be able to drive stable double-digit returns net of fees through 2023, we believe it is sensible to increase AAPL’s weight in Flagship to match our benchmark, the S&P 500 index.
Flagship’s allocation to the Consumer Discretionary sector is also underweight relative to its benchmark. Increasing our position in AMZN helps to partially correct that imbalance.
As a leader in e-commerce and cloud computing, Amazon sits at the nexus of two of the most potent economic trends playing out today. Amazon’s current investments to navigate potential supply chain issues may also help power market share gains against other e-commerce players and build customer loyalty for the long run.
We believe the company has strengthened its market position and our work suggests Amazon shares may be positioned to achieve 15%+ returns net of fees through 2023.
Amazon shares have also underperformed the S&P 500 this year, and we believe the current risk/reward skew makes allocating additional capital to this position attractive at this time.
Christopher, Justin, and the team at Titan
As of this writing, ADSK, AMZN were a portfolio holding of Titan. This security may cease to be a portfolio holding at some point in the future.

Become a Titan investor today.

Titan Global Capital Management USA, Inc ("Titan") is an investment adviser registered with the Securities and Exchange Commission (“SEC”). By using this website, you accept our Terms of Use and Privacy Policy. Titan’s investment advisory services are available only to residents of the United States in jurisdictions where Titan is registered. Nothing on this website should be considered an offer, solicitation of an offer, or advice to buy or sell securities. Past performance is no guarantee of future results. Any historical returns, expected returns [or probability projections] are hypothetical in nature and may not reflect actual future performance. Account holdings are for illustrative purposes only and are not investment recommendations. The content on this website is for informational purposes only and does not constitute a comprehensive description of Titan’s investment advisory services.
Refer to Titan's Program Brochure for more information. Certain investments are not suitable for all investors. Before investing, consider your investment objectives and Titan’s fees. The rate of return on investments can vary widely over time, especially for long term investments. Investment losses are possible, including the potential loss of all amounts invested. Brokerage services are provided to Titan Clients by Apex Clearing, an SEC registered broker-dealer and member FINRA/SIPC. For more information, see our disclosures. Information provided by Titan Support is for informational and general educational purposes only and is not investment or financial advice.
© Copyright 2021 Titan Global Capital Management USA, Inc. All Rights Reserved.