Global Fund Update – October 2025
September was another strong month for global equities. The Goshawk Global Fund gained 3.5% over the period.
The Federal Reserve finally cut interest rates by twenty-five basis points last month for the first time since December 2024 and signalled that there would be a further rate cut at the next meeting. However, although President Trump and his newly-appointed Fed Governor Stephen Miran are arguing for aggressive rate cuts, the remainder of the Fed is currently very divided on the pace at which further cuts should occur. The dilemma for the Fed is that it has a dual mandate to control inflation and to prevent a substantial increase in unemployment. This is challenging as inflation continues to creep higher and is above the Fed’s 2% target while unemployment is starting to rise. The US stock market has been able to shrug off these concerns and continues to make strong progress.
Stocks & Portfolio Moves
In Asia, we have continued to add to our position with a new holding in our Chinese portfolio via the purchase of Baidu, which is pivoting to an AI strategy. Baidu shares have been trading at an extremely low valuation as its ‘Search’ business has come under pressure. However, the market has warmed to the new initiative and the company’s robotaxi strategy, ‘Apollo Go’, which is built on their broader autonomous driving division. Baidu is also in the process of overhauling its Search business by integrating its large language model, ‘Ernie’, into the user experience. Our position in Alibaba has also performed well of late in light of its AI strategy and, as a result, the position size has risen to 2.4%.
The Global Fund portfolio now has around 20% direct exposure to Asia via Japan, Singapore, China and Taiwan, with our holding in TSMC via its US ADR. This is a big shift in our portfolio from a year ago when we started to acquire Chinese-related stocks for the first time in many years. Our confidence in this investment has grown over the last twelve months even though the Chinese economy has not recovered strongly and the property market remains weak.
At the end of October, the Chinese Communist Party is launching its new five-year plan and we anticipate that there will be new measures to support a recovery in consumer spending following President Xi Jinping’s comments in April that boosting consumer spending is a strategic priority, not just a short-term stimulus, but one that is essential for the long term. Alongside our direct exposure, we also own several consumer discretionary stocks, including L’Oréal, LVMH and Moncler, which would all be significant beneficiaries of a recovery in Chinese consumer spending. LVMH has had a difficult year, but performed better in the third quarter, rising 16%.
We have reluctantly cut our position in Freeport McMoRan, the US-quoted copper and gold miner. The company suffered a tragic accident at its Indonesian Grasberg mine, which is the second-largest copper mine in the world. This accident has meant the mine will be closed for a considerable period following the mudslide, which will result in a significant loss of production for the remainder of 2025 and for much of 2026. We have moved to the sidelines as we see too much uncertainty in the short term and prefer to look for other opportunities that will benefit from the rise in the copper and gold price.
We have taken profits in Oracle after a very strong run in the share price that may have peaked with its latest results announcement. These results led to a 40% share price rise after the company said that its Remaining Performance Obligations reached $455 billion in the quarter, mostly through a contract win with OpenAI reportedly worth as much as $300 billion. The level of RPO will require Oracle to fund a considerable capital expenditure plan that is not supported by its existing cash flows.
We have switched the proceeds from the sale into German enterprise software company SAP, which has seen its share price decline by nearly 20% in recent months as uncertainty around the threats to the software sector from AI has increased. We see SAP as a high-quality company at an attractive valuation given the strong cloud conversion momentum from legacy on-premise, which we believe will drive improving growth and margin enhancement over the next few years. We believe that one of the strengths of the company is that transitioning mission-critical ERP solutions away from SAP to a competitor takes a considerable period of time, involves multiple layers of complexity and is costly, all of which create significant operational risks. We also believe that SAP is a potential winner from the opportunity created by AI agents to lower costs in the back office, human resources and finance functions. This is an area where we see companies focusing their AI spending budgets to lower their costs.
We have initiated a new position in Salesforce, a company which develops cloud-based software tools for customer relationship management. We also believe this stock has been wrongly de-rated by investors, and anticipate that the company’s business model will prove far more resilient than feared and be able to continue to grow despite challenges from AI that may erode its ‘Service Cloud’ business to a degree over time. Salesforce has launched its own AI product called Agentforce, which acts as an interface with customers, and we anticipate that this will grow strongly over time and help maintain Salesforce’s business model in the future.
We sold our holding in T-Mobile US, taking profits in our long-standing holding, which has been a successful investment. We like the opportunity in the telecom sector and one of our biggest positions is now Singtel. Singtel not only operates the Singapore Telecom network, but also has a portfolio of very attractive investments in Asia, not least of which is its stake in Bharti, the fastest-growing Indian mobile franchise. We are looking at a number of other investment opportunities within the sector as we believe that the industry has passed the height of their capital expenditure cycle and are at a cash flow inflection that should lead to considerably better share price performance, from low valuations and high dividend yields.
Outlook
The Global Fund’s overall cash position has come down modestly as we have added to some existing investments in the portfolio and started a number of new positions. We continue to tread carefully, but remain optimistic about the quality of our holdings and the resilience of their business models.
Goshawk Asset Management
Data source: Goshawk Asset Management, Bloomberg
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