Buy-Side Insights No. 17

What’s on tap today:

● The shrinking investment holding period
● The great American capitalism machine is solving bottlenecks
● NVDA post quarter
● Ken Griffin’s next chapter?
● Fed cut positioning
● Gas and the U.S. consumer
● Multi-strats in commodities
● The three-point lesson from Steph Curry

In the pipeline:

🔜 From Fidelity PM to Hilliards Chocolate — inspired by a car ride with chauffeur Warren Buffett!
🔜 Is Fastenal moving too $FAST? – A candid debate with a former Citadel colleague
🔜 The first annual Pitch The PM stock pitch competition – three current hitters grilled by three former PM’s!

Watch Now: AI Capex Super Cycle Webinar with Semi Analysis. Sponsored by AlphaSense.

The shrinking investment holding period

The average stock hold period has dropped from seven years to just one.

• A typical long/short hedge fund turns its ideas ~4x per year and its GMV 8–12x per year.

• More managers are jumping into this pond as allocators chase uncorrelated returns. Think of market-neutral funds as equity-like returns with far lower volatility (on a historical basis, not leverage). For the top firms, the absence of down years means cumulative returns can actually exceed equities. Larger shops often aren’t even open to new capital — and sometimes return profits to existing investors in exchange for longer lock-ups.

• True long-term thinkers are rare. Berkshire is the obvious example. Unlike hedge funds, it doesn’t report monthly or quarterly P&L, and unlike long-only managers, it doesn’t need to match an index. Berkshire can sit on cash for years and wait for its “Forrest Gump” moments — like the GFC — when the pond is empty and the odds are tilted in its favor.

For most hedge funds, the clock is always ticking. For Berkshire, duration itself is the edge.

The great American capitalism machine is solving bottlenecks

I learned early in my career that industry tailwinds often matter more than company-specific technology. Most stocks tend to rise and fall with their industry.

Right now, hyperscaler capex is surging — up ~50% YoY for 2025E and another ~14% for 2026E. That’s more than $100B of incremental spend from the four largest players, who make up about half the data center GPU market.

• Semis: The $NVDA ( ▲ 3.85% ) ecosystem is capturing 55%–65% of the spend at strong margins.

• Physical infrastructure: New data centers take time to build — so much so that $META ( ▼ 1.79% ) has resorted to temporary tents, a tactic we’ve seen in past energy projects.

• Power: The grid can’t keep up. Expanding capacity and transmission is slow, and regulators add friction. That’s why firms like $SEI ( ▲ 17.86% ) and $WMB ( ▲ 2.07% ) are stepping in with mobile power solutions, some systems are capable of 400MW or more, generating ~20% returns.

• Turbines: Another well-known bottleneck. Just look at $GEV ( ▲ 6.25% ) ’s stock performance. $CAT ( ▲ 1.15% ) and $BKR ( ▲ 3.23% ) are also seeing the benefits from load growth going from flat for 15 years to a 3% expected CAGR through the end of the decade.