The Longriver Partners Fund returned 11.7% net for the second quarter, bringing its year-to-date return to 11.4%. The MSCI AC World USD Net Index gained 11.5% in Q2 and is up 10% year to date. Since Longriver’s inception, it has gained 55.6%, versus the benchmark’s 58% return.
Why invest in Big Tech?
In his second-quarter letter to investors, which was reviewed by Hedge Fund Alpha, Graham Rhodes of Longriver encouraged a long-term view of the fund, comparing it to investments in real estate or a private company.
His favorite investments are “monopolies with growth,” which he said are more predictable and have “natural places to invest profits,” reducing the risk of poor capital allocation. As a result, Rhodes was led to invest in Big Tech and the “surrounding ecosystem.”
“Thanks to network effects, scale, bundling and switching costs, companies like Alphabet, Amazon, Apple, Meta and Microsoft have sustained extraordinary profitability and growth,” he wrote. “These are not contrarian ideas, but that doesn’t mean they’re overvalued. Markets often struggle with the idea that something obvious can still be mispriced.”
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