MW What investors are overlooking at Nvidia, Apple and a cruise-line operator, according to this fund manager

By Barbara Kollmeyer

Silvant Capital Management CIO talks disciplined investing and riding out tariff turmoil

The chief investment officer at Silvant Capital Management, which manages $2.5 billion in client money, admits he's not sleeping so well these days.

"Tariff commentary and a ping-pong approach to how we're going to have trading partners globally keeps me up at night, every single night," Michael Sansoterra, the firm's CIO of 10 years who runs its $1.2 billion flagship institutional Virtus Silvant Focused Growth Fund PGFIX, told MarketWatch in a Wednesday interview.

"I think we're on the wrong path fundamentally and we're on that path in a way that is completely unpredictable and arguably, you know, nonsensical," he said. And to him, that turmoil has "made long-term fundamental bottoms-up stock selection a discipline you want to stay tight to."

The fund has outperformed its Russell 1000 benchmark RUI, over 3, 5, 10 and 15 years by "just sticking to our knitting."

"This is why you stick to discipline. This is why we're not traders," said Sansoterra, who has 28 years of experience in investment management.

Sansoterra said they have overweights in top holding Nvidia $(NVDA)$, and fourth- and fifth-biggest Amazon and Meta, while they've trimmed Apple and Microsoft holdings. He said they also took advantage of market selloffs to add to Meta Platforms and Netflix $(NFLX)$.

"We try to manage those positions carefully, very, very tactically and very company specific in the places where we think the growth can still surprise investors," he said, noting many are long-term holdings, such as Nvidia since 2020.

They've been trimming the AI chip maker for the last nine consecutive quarters, given its hefty size in the portfolio at one point, he said.

"We do still like it. It's a little bit hard to like it as much as we did two years ago because expectations have risen so greatly in the last few years. But the AI theme is a larger one; it's bigger than any one quarter in any one year in our opinion," he said.

Nvidia is still the "largest and most profitable company in the space from a positioning perspective," he said, adding that they are looking ahead to the next iteration of its chip usage, particularly involving the newest and priciest chip, Blackwell.

"We think there's a long tail to usage cases that will continue to show up, both at the hyperscaler level and at the enterprise level," he said. "But now you're going to start seeing inference usage, which is good for Nvidia," which processes faster and "more robustly" than any competitor.

And even if U.S. tariffs may cut into what China will buy, worldwide enterprise usage will probably swallow up the excess. "I think when the quarter comes out and folks see the data, they'll be impressed at the continued growth," he said.

The fund also trimmed Apple at the end of last year and start of 2025 to below market weight, "based on unit demand and their, let's call it underwhelming AI exposure in the most recent iPhone releases," he said.

He predicted Apple's quarterly earnings focus will focus on location of production. "If we were having this conversation in normal times, I'd say units matter, AI exposure matters and the software's ability to do whiz-bang things, so we need to hear some announcements on that."

However, at present, investors will want to know about costs to consumers and Apple's costs from changing or relocating, and "a lot of moving pieces at Apple now that really cloud the story a bit."

Away from tech, the fund's ninth-biggest holding, Royal Caribbean $(RCL)$ "isn't a stock that every large-cap growth investor likes to own or owns at all," due to debt and headline risks, such as illnesses at sea, he said.

But post-COVID spending has been "far more anchored in travel experience, and Royal Caribbean is a stock and a company that's done a better job of releasing new ships, more profitable ships."

"So we don't worry too much about their debt, because they've got more than enough cash to cover it," Sansoterra said.

The markets

Nasdaq-100 futures (NQ00) are surging, driving up S&P 500 (ES00) and Dow industrials (YM00) futures. Treasury yields BX:TMUBMUSD10Y BX:TMUBMUSD02Y are steady and gold (GC00) is slumping as the dollar DXY rises.

   Key asset performance                                                Last       5d      1m       YTD      1y 
   S&P 500                                                              5569.06    3.59%   -1.80%   -5.31%   10.97% 
   Nasdaq Composite                                                     17,446.34  4.42%   -0.88%   -9.65%   11.80% 
   10-year Treasury                                                     4.186      -13.90  15.30    -39.00   -39.80 
   Gold                                                                 3243.6     -1.75%  1.67%    22.90%   39.20% 
   Oil                                                                  58.08      -6.74%  -17.87%  -19.19%  -26.60% 
   Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

McDonald's $(MCD)$ could offer consumer health when it reports this morning.

Strong results from Meta $(META)$ and Microsoft $(MSFT)$ are sending those shares flying. Amazon $(AMZN)$ and Apple $(AAPL)$ report after the close.

Chip maker Qualcomm $(QCOM)$ reported better-than-expected results.

Online retail brokerage Robinhood (HOOD) reported 'robust' trading growth.

Tesla $(TSLA)$ denied a report that the EV maker's board has started a search to replace Chief Executive Elon Musk.

The day's economics calendar includes weekly jobless claims and the Institute for Supply Management manufacturing survey.

Best of the web

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Beijing doesn't want America to see its trade-war pain.

China is reportedly holding off on trade talks as it gauges a divided White House.

The chart

The long-run average performance of U.S. stocks (after inflation) is around 6.8% since 1925, the chart from Barclays Annual Gilt Study shows. Government bonds have returned just 2%, while cash is 0.3%. Over 10 years, U.S. equities have returned 8.2%, still handily beating bonds and cash, Barclays reports.

Top tickers

These were the most active tickers on MarketWatch as of 6 a.m.:

   Ticker  Security name 
   TSLA    Tesla 
   NVDA    Nvidia 
   MSFT    Microsoft 
   META    Meta 
   GME     GameStop 
   PLTR    Palantir Technologies 
   AMZN    Amazon 
   AAPL    Apple 
   TSM     Taiwan Semiconductor Manufacturing 
   AMD     Advanced Micro Devices 

Random reads

Japanese company summons lightening strike with a drone.

Black bear frolics joyfully in kiddie park.

Also in Japan: snake on a bullet train.

-Barbara Kollmeyer

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(END) Dow Jones Newswires

May 01, 2025 06:54 ET (10:54 GMT)

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