Sustainable Growth Advisers (SGA), an investment management entity, recently released its second-quarter 2026 investor correspondence for its Global Growth Strategy. The report details the portfolio's performance, which yielded a 7.4% gross return and 7.2% net return, trailing the MSCI ACWI and MSCI ACWI Growth Index. The market's significant gains were primarily driven by momentum in AI infrastructure, with semiconductor, memory, and hardware stocks leading the charge. Despite the portfolio's exposure to AI beneficiaries and strong underlying fundamentals—with median revenue and EPS growth at 12% and 14% respectively, and over 60% of holdings surpassing expectations—broader investments lagged. SGA attributes this to valuation compression reflecting market sentiment rather than a decline in business quality. The firm remains committed to durable compounders, forecasting 16% revenue growth and 20% earnings growth over the next three years.
During the second quarter of 2026, SGA Global Growth Strategy decided to liquidate its holdings in Intuit Inc. (NASDAQ:INTU), a company specializing in financial management, payment solutions, compliance, and marketing services. This strategic move was prompted by growing concerns stemming from the company's fiscal third-quarter results. Despite a slight revenue beat and an upward adjustment in full-year guidance, the performance was overshadowed by significant weaknesses in the DIY Tax segment, particularly TurboTax, and continued deterioration in its Mailchimp platform. The investment firm also expressed doubts regarding the timeline for Intuit's growth reacceleration and the management's ability to navigate a challenging market environment effectively.
Specifically, TurboTax revenue growth reached only 7%, falling short of projected guidance. This was largely due to pressure from lower-income, price-sensitive filers and an approximate 30 basis point contraction in total IRS filers. While Intuit reported double-digit revenue growth and consistent margin expansion above 40%, the persistent issues within DIY Tax and Mailchimp raised flags for SGA. Consequently, the capital divested from Intuit Inc. has been strategically redirected into a new position in Arista Networks, signifying a shift towards what SGA perceives as more promising investment opportunities.
Intuit Inc. closed at $367.00 per share on August 21, 2026, showcasing a one-month return of 20.76% but a 44.14% loss over the preceding 52 weeks, with a market capitalization of $100.4 billion. While Intuit holds a notable presence, it is not listed among the most favored stocks by hedge funds according to a specific database. The consensus among some investment circles is that certain AI stocks offer superior upside potential with reduced downside risk, prompting a focus on other emerging opportunities in the technology sector.
