Sands Capital Portfolio: Are Their Investment Strategies Sustainable?

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Jacob Wolinsky
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Sands Capital Portfolio performance analysis

Overview of Sands Capital Portfolio

Sands Capital is an investor company founded in 1992. Since 2008 the firm’s CEO and CFO is Frank M. Sands. They operate as a growth equity firm, choosing to invest in companies that have a high potential for future growth. We will do an overview of Sands Capital portfolio stocks by analyzing them by size and sector allocation.

Their current portfolio is valued at $37.6 billion and consists of 72 holdings. It is heavily concentrated in the technology sector, with crucial holdings being Nvidia,, DexCom Inc, and Visa Class A stocks. 

They recently sold their entire stake in Chegg Inc (NYSE:CHGG). Other important recent trades include increases in Nu Holdings Ltd (NYSE:NU), Okta Inc (NASDAQ:OKTA), and trimmings in Sea Ltd (NYSE: SE) and Aptiv PLC (NYSE:APTV). In the rest of the article, we will focus on Sands Capital’s portfolio, its historical performance, and its investment approach.

Top Holdings

  • Nvidia (NASDAQ:NVDA) with 7.43% of the portfolio

Sands Capital is the fourth biggest stakeowner of the most sought-after stocks in the market today. They own 3.1 million shares, and they started building this holding in mid-2022. In Q4 2023 they sold 558 thousand shares at $463. The firm invested in Nvidia shares $859 million, while its value jumped to $2.8 billion, resulting in a gain of 225%.

  • (NASDAQ:AMZN) with 6.32% of the portfolio

Amazon is a long-term integral part of Sands Capital’s portfolio, dating back to 2013. In a period of over a decade, they invested $789 million in their shares, while its current value is $2.38 billion. The company owns 13.2 million shares that delivered a gain of 201% so far. From mid-2021 to mid-2022 they increased their position when the stock prices were between $150 and $170, and sold about 4 million stocks during 2023 at a range between $80 and $150.

  • DexCom Inc (NASDAQ:DXCM) with 5.58% of the portfolio

DexCom Inc. is a pioneer in monitoring diabetes conditions, and its innovative approach was a trigger for Sands Capital to invest. They hold a massive stake in the company owning over 15 million shares. In 4 years of trading, they invested $1.42 billion, while the holding is now valued at $2.1 billion, generating a gain of 48%.

  • Visa Class A stocks (NYSE:V) with 4.80% of the portfolio

Visa has been a favorite of the Sands Capital almost from the inception of the fund. They are regularly keeping a solid stake in the payment card services provider due to the overall quality of the company and its position in the market. Now they own 6.47 million shares, and that comes after a two-year streak of constant selling. The company invested in the holding of $601 million, and it rose to $1.81 billion, creating a surplus of 200% so far.

  • Lam Research Corp (NASDAQ:LRCX) with 4.31% of the portfolio

Lam Research, an important part of the semiconductor industry, has been a steady part of the Sands Capital Portfolio since 2020. They own 1.68 million shares valued at $1.62 billion, and during 2023 they trimmed this position on four occasions. The firm during three years invested $735 million in shares, and they generated a gain of 121%.

  • ASML Holding NV (AMS:ASML) with 4.17% of the portfolio

A Dutch-based company focused on manufacturing machines that are used for producing chips is another long-term Sands Capital investment. They bought a massive stake in the company more than 10 years ago for a price of $75 per stock. Today, their stock value is $970. They own 1.62 million shares that have a value of $1.57 billion. They invested only a small fraction of that figure, $197 million, and generated a gain of 698% so far.

  • Microsoft (NASDAQ:MSFT) with 3.89% of the portfolio

As a part of their search for innovative companies Sands Capital invested in Microsoft back in 2014 when its stock price was at $44. They have been very active in trading Microsoft stocks, and they now own 3.47 million shares. Their stake at Microsoft cost $721 million, while the present value of the holding is $1.46 billion, netting a gain of 103%.

Key Sector

Sands Capital is heavily invested in the Technology sector which can be seen from the brief overview of their portfolio. They also have significant stakes in Consumer Discretionary and Healthcare sectors. The current sector allocation of Sands Capital portfolio is:

  1. Technology with 67.3% of the portfolio valued at $25.3 billion
  2. Consumer Discretionary with 12.9% of the portfolio valued at $4.85 billion
  3. Healthcare with 11.5% of the portfolio valued at $4.34 billion
  4. Industrials with 3.1% of the portfolio valued at $1.19 billion
  5. Finance with 1.5% of the portfolio valued at $575 million
  6. Other with 3.4% of the portfolio valued at $1.27 billion.

Sands Capital Investment Approach

The guidance for Sands Capital investments is the potential for innovation that companies have. They search among different sectors for companies that show an innovative approach and that can bring something new to the market.

That is complementary to their growth equity philosophy. This philosophy is based on investing in companies that can deliver significant returns in the future. The best way to accomplish this goal is by betting on the innovators.

When choosing their investment targets the firm follows a six criteria guide. It revolves around these factors:

  • Sustainable above-average growth
  • Leadership in a promising business space
  • Significant competitive advantage
  • Clear mission and value-added focus
  • Financial strength
  • Ration valuation and terms

From this, we can see that besides innovations, recommendations for investing are based on the company’s culture, management team, and position in the market. Also, they need to have financial strength that can sustain the cost of innovation.

The key sectors that are a priority are AI, cybersecurity, healthcare technology, and digital life. They choose to invest usually after the company acquires seed capital, and when it is followed with Series A and B fundraising.

The size of investment varies between $2 and $15 million, while the primary investment markets are the United States and Europe. They have an extensive network that allows them to detect emerging tech hubs in all parts of the world.

Take A Look At Frank Sands (Sands Capital Management) Discusses Growth Investment Strategy: 

Sands Capital Portfolio Performance Analysis

Historical Portfolio Performance

Sands Capital Management’s 30-year cumulative returns are 3339.87% which dates almost to the inception of the fund. That results in 12.52% annual returns. In the same period, the S&P 500 index generated cumulative returns of 2418.61%, which translates to 8.05% annual returns.

When we go into detail, we can see that the fund has been regularly outperforming the index, until roughly the last 10 years. The last time the fund beat the index was a 10-year cumulative (2014-2023) when the fund generated 178% and the index 158% gains.

In the last 5 years, the fund generated 85.43% and the index 90.26% returns. The difference becomes wider when we look at the last three years. In the 2021-2023 period, the fund had a negative return of -18.84% to an index of 27%. In the last year, the fund showed great performance, beating the index with 52% to 24.23% returns.

Notable Success

Most Sands Capital success stories are based on timely investments in some of the biggest tech companies in the market. Those include Meta, Amazon, Alphabet, and Salesforce. Also, worth noting is their investment in the streaming platform giant, Netflix.

Notable Failure

Sands Capital has made numerous good investing decisions in its long operational history, but with it also came some bad choices. Some of them include investments in:

  • Bluebird Bio Inc. (NASDAQ:BLUE) The company bought over a million shares in 2019 for $133 per share. Then they bought another million at $117. They continued to increase this position in 2020, but eventually, they had to cut their losses. In 2021 they sold the entire stake at just $38.
  • Spruce Biosciences Inc. (NASDAQ:SPRB) In 2020 they bought 750 thousand shares in this biotech company at $22 per share. Less than a year later they exited from this holding for just $8 per share.

Risk Management

Sands Capital uses two tactics to manage risk. First, the companies they choose to invest in are under detailed scrutiny from the firm’s professionals. The company must pass a series of strict conditions to be included in the portfolio. That includes a detailed fundamental analysis which should show the state of the company and its future potential.

Second, they aim to diversify their portfolio. Although they are focused on innovative companies from the technology and medical sectors, they are not closely matched. In the case of a downturn in a sector, it doesn’t hit all the companies from their portfolio.

Also, they are conducting a risk-return analysis through which they want to assess what the company can get from that investment and compare it to potential risks. Besides that, once they invest, they are actively monitoring all their investments. In case something big is happening, they make quick decisions that could bring additional gains, or minimize potential losses.

Outlook and Future of A Sands Capital Portfolio

Some of Sands Capital’s recent investments include healthcare and cybersecurity companies like Avenzo, Alamar Biosciences, HealthSnap, Freenome, and LimaCharlie. Most of these companies are in their first founding rounds, which shows.

From these indicators, we can make a strong assumption that Sands Capital is still keen on keeping up with its trademark strategy. They will most likely continue searching for innovators, mostly from the healthcare and tech industries that are in the early stages of development.


How Big Is Sands Capital?

When talking about the size of the company, we can view it from the angle of AUM size, and number of employees. Currently, Sands Capital is managing $37.6 billion AUM, and it has 199 employees, of which 65 are investment professionals.

What Is the Revenue of Sands Capital Management?

Sands Capital Management revenue is $37.5 million.

Who Founded Sands Capital Management?

Frank M. Sands Sr. founded Sands Capital Management in 1992.

Final Thoughts

Investing in young innovative companies was always a high-risk high-reward investment approach. To do it for three decades with high results is not a small feat, and Sands Capital managed to do it.

They had their rough patches, that in the last 10 years made some blows to the firm. But, all in all, their performance is currently recovering, and they are continuing their mission of finding new game changers in their respective industries.

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Jacob Wolinsky is the founder of HedgeFundAlpha (formerly ValueWalk Premium), a popular value investing and hedge fund focused intelligence service. Prior to founding the company, Jacob worked as an equity analyst focused on small caps. Jacob lives with his wife and five kids in Passaic NJ. - Email: jacob(at) FD: I do not purchase any equities to avoid conflict of interest and any insider information. I only purchase broad-based ETFs and mutual funds.