Top Stock Picker Beats 97% Of Peers With AI Fringes

In the realm of trading amidst the fervent enthusiasm for artificial intelligence (AI), one exemplary global equity fund has demonstrated remarkable success by exploring unconventional investment opportunities. Nick Cregan, a distinguished investor at Fairlight Asset Management, directs his investments towards companies poised to benefit from AI integration or effectively shielded from its ramifications. This strategic approach has propelled the performance of the Fairlight Global Small & Mid Cap fund, which has achieved a substantial 24% growth over the past year, surpassing 97% of its counterparts, as per Bloomberg's compiled data.

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Cregan affirms that their intention is not to identify the ultimate victor in the AI field, recognizing the inherent uncertainties associated with such predictions. He asserts, "Attempting to pinpoint the eventual winner in the AI arena is an endeavor fraught with risks. It is conceivable that even the most promising companies could be outpaced by unexpected technological advancements that entirely displace their business models." This perspective underscores the fund's investment strategy, which seeks to leverage the broad potential of AI without banking on any single contender.

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The excitement surrounding AI has experienced exponential growth since the introduction of ChatGPT last year, leading to a proliferation of rival tools and products developed by companies eager to capitalize on its potential. Many investors perceive this technology as being on the brink of revolutionizing operational paradigms within certain industries and corporations. In line with this sentiment, the Nasdaq Composite Index has surged by 31% in 2023, with the tech sector playing a pivotal role in lifting the broader S&P 500 Index by 15%.

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Among the notable holdings of Fairlight's fund is German online marketplace Scout24 SE, which has witnessed a year-to-date increase of 26%. Cregan anticipates that AI will empower the company to delve deeper into pricing dynamics and market trends. Nevertheless, he maintains that AI is unlikely to supplant the existing foundation of uploaded inventory and loyal customer base, as Scout24 SE already holds a dominant position in its market niche. Instead, AI is anticipated to optimize the efficiency of the company's platform and pricing mechanisms.

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Another strategic investment is in Copart Inc., a US-based auctioneer website specializing in repairable and wholesale vehicles, which has experienced a substantial surge of 43% in 2023. Cregan's rationale for investing in Copart aligns with the aforementioned approach, as he anticipates that AI integration will confer similar advantages to the company.

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Additionally, the A$900 million ($612 million) fund holds shares in Nordson Corp, a leading manufacturer of hot melt glue dispensing equipment utilized in industrial settings. The investment thesis is grounded in the expectation that the rising demand for microchips will prove beneficial for Nordson Corp. Although the company's shares have shown limited fluctuations thus far in the year, the fund remains optimistic about its long-term prospects.

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In summary, Fairlight Asset Management's unwavering commitment to identifying investment opportunities within the AI landscape has yielded substantial returns. By strategically selecting companies expected to benefit from AI or withstand its disruptive effects, the Fairlight Global Small & Mid Cap fund has achieved commendable growth, outperforming a significant majority of its peers. The fund's investments in prominent entities such as Scout24 SE, Copart Inc., and Nordson Corp reflect the conviction that AI integration will enhance operational efficiency and generate favorable outcomes in various sectors.

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