Light and Shadow in the Ithaka US Growth Strategy in the Third Quarter of 2024

The investment advisory firm Ithaka Group recently released its investor letter for the "Ithaka US Growth Strategy" for the third quarter of 2024. Although the market continued to show momentum with rising prices across various asset classes, Ithaka's portfolio fell short of expectations. Compared to the R1000G, which gained 3.2%, the portfolio recorded only a growth of 0.4% (before fees). The underperformance was mainly due to stock selection, while sector allocations contributed marginally. The report particularly highlighted the stock of ASML Holding. The company, a leading manufacturer of advanced semiconductor systems, saw an 18.60% decline over the month, despite an overall gain of 7.32% over the 52-week period. With a stock price of $683.83 and a market capitalization of $276.209 billion, ASML remained a central figure in the semiconductor sector. The company's technologies, especially in the area of extreme ultraviolet lithography (EUV), are essential for cutting-edge chip production. However, ASML's strong quarterly report was overshadowed by potential trade sanctions from the U.S. government against China. These could significantly restrict the sale and maintenance of lithography systems in the region. Despite these challenges, ASML is not among the 31 most popular stocks with hedge funds, although the number of hedge fund portfolios holding ASML has slightly increased. Our analysis suggests that AI stocks, particularly an alternative, inexpensive AI stock, might offer greater potential for short-term earnings increases.