The world's most profitable hedge fund has sharply cut an $8 billion stake in Microsoft

Billionaire Christopher Hong's hedge fund The Children's Investment Fund (TCI), known for its high returns and pragmatism, sold almost all of its stake in US software giant Microsoft in the first quarter of the year, the Financial Times reports. TCI last year became the most profitable hedge fund in the world, the newspaper notes.

TCI has held a significant portion of its portfolio in Microsoft securities for most of the last decade: at the end of last year, the company's securities held 10% of its capital, a stake worth about $8 billion. By the end of March, TCI had reduced Microsoft's stake in its portfolio to just 1%, according to a letter to investors seen by the FT.

"We have reduced our investment in Microsoft because rapid progress in AI creates uncertainty around Microsoft's future competitive position," Hong wrote to investors. - We are primarily concerned about the Microsoft Office productivity software franchise: AI could change established workflows and lead to new work platforms. In addition, we see some risks to [cloud service] Azure."

According to regulatory filings, the fund has held a large stake in Microsoft almost continuously since the fourth quarter of 2017, although the paper briefly disappeared from its disclosures in 2023, the FT writes.

The letter to investors also reveals that TCI's stake in Alphabet grew from 3% to 5% of the portfolio during the quarter, and is now the fund's largest technology position.

TCI declined to comment to the Financial Times.

Hong's TCI became the world's most profitable hedge fund last year, earning investors $18.9 billion and beating out competitors including Ken Griffin's Citadel and Izzy Englander's Millennium. According to Forbes, the fund manages $77 billion. The publication estimates Hong's own fortune at $11.8 billion.

Hoehn's fund concentrates bets on a small number of companies - now 15. The vast majority of large hedge funds spread their bets across dozens or hundreds of stocks, the FT explains. Hohn holds stocks for an average of nine years - much longer than most hedge fund traders. Hon is also known as an activist investor.

Technology occupies a relatively small part of TCI's portfolio compared to other funds: the Hong fund is mainly focused on infrastructure and aerospace companies. The fund's largest position is GE Aerospace, which accounts for 18% of the portfolio. It also has large stakes in Visa, Moody's and infrastructure company Ferrovial, the FT writes.

This article was AI-translated and verified by a human editor