One of Britain’s best-performing fund managers has been buying this FTSE 100 stock

This fund manager has an excellent track record when it comes to picking growth shares. And he’s just bought a well-known FTSE 100 stock.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

One UK fund manager I keep an eye on is Stephen Yiu. He runs the Blue Whale Growth fund and has a great track record when it comes to generating strong returns for investors (his fund is up nearly 40% over the last year). Recently, I learnt that Yiu has been buying a FTSE 100 stock for his global equity fund this year. Here’s a look at the company he’s been investing in.

A top stock picker

Before I reveal the name of the Footsie stock, it’s worth touching on the portfolio manager’s approach to stock-picking.

A high-conviction investor, Yiu focuses on both growth and quality when selecting stocks. He’s looking for exceptional companies that have the ability to grow and improve profitability over the long term and that are trading at attractive valuations.

Should you invest £1,000 in Diageo right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Diageo made the list?

See the 6 stocks

Since his fund was launched in 2017, Yiu has shown a great ability to pick big winners. In recent years, he’s made a ton of money (more than £100m) for his investors with Nvidia. Other stocks that have done well for the him include Microsoft, Meta Platforms, and Lam Research.

Created with Highcharts 11.4.3Nvidia PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

His new pick

As for the one he’s been buying for Blue Whale, it’s London Stock Exchange Group (LSE: LSEG), or LSEG as many refer to it. It’s a major financial markets infrastructure and data company.

After acquiring Refinitiv a few years ago, London Stock Exchange Group is now the world’s leading provider of financial data. Today, its data is used by 99 of the top 100 global banks and 75 of the top 100 global asset managers.

And one reason Yiu is bullish on the company is that it has partnered with tech giant Microsoft to enhance its offerings. Through this partnership, it will soon start providing its customers with AI-driven solutions such as customised Large Language Models (LLMs), AI analytics and modelling, data-management-as-a-service, and more.

Beyond a step change in revenue from the new solutions themselves, the flow-on effect will be greater demand for LSEG’s data, according to Yiu. He believes this should further entrench the company’s leading position and power the business for years to come.

If any further evidence is needed of LSEG’s leading position, look no further than Microsoft’s ~4% equity holding in the company – an investment that puts it in rare space along with other key Microsoft-backed AI players such as OpenAI and Mistral AI to name but a few.

Stephen Yiu

My view

I see this trade from the fund manager as an astute move. Over the last 12 months, I’ve actually been buying the stock myself.

I’m excited about the partnership with Microsoft. And I’m not convinced that it’s fully factored into the valuation yet. Currently, London Stock Exchange Group’s P/E ratio, using next year’s earnings forecast, is just 23. That’s quite low for a major financial data company.

Created with Highcharts 11.4.3London Stock Exchange Group Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

A risk with this business is that it’s up against some big players including Bloomberg and FactSet. These companies could steal its market share.

But I’m optimistic that the group has what it takes to thrive in the years ahead.

It’s worth noting that in late May, analysts at Jefferies raised their target price for the stock to 11,500p from 11,000p. That new target is more than 20% above the current share price.

But there are other promising opportunities in the stock market right now. In fact, here are:

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Ed Sheldon has positions in Lam Research, London Stock Exchange Group Plc, Microsoft, Nvidia and Blue Whale Growth fund. The Motley Fool UK has recommended Lam Research, Meta Platforms, Microsoft, and Nvidia. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our best passive income stock ideas

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

More on Growth Shares

Investing Articles

What’s happening to the Rolls-Royce share price now?

The Rolls-Royce share price has taken a knock from US trade tariffs, but it's still gained more than 50% in…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

2 world-class shares to consider buying in the market sell-off

Looking for blue-chip shares to buy amid the market chaos? Here are two high-quality businesses that Edward Sheldon sees potential…

Read more »

Investing Articles

16% lower in 10 days, does Prudential’s share price look a compelling bargain to me?

Prudential’s share price is down a lot from its one-year traded high, which suggests a bargain to be had. I…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

Down 17% in a week! This FTSE 100 growth stock is one I’m watching

Over the last five years, Informa has shown itself to be one of the UK’s most resilient growth stocks. So…

Read more »

Investing Articles

Car-mageddon! The Aston Martin share price has tanked 30% in a month

Our writer looks at the performance of the Aston Martin share price over the past few weeks and considers whether…

Read more »

Light trails from traffic moving down The Mound in central Edinburgh, Scotland during December
Investing Articles

£10,000 invested in Aston Martin shares at Christmas is now worth…

Aston Martin shares have fallen from above £10 in early 2020 to pennies today. Is this the perfect time for…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Down 34%, does IAG’s share price look an unmissable bargain to me now?

IAG’s share price had fallen a long way even before the latest market rout, but this may mean a bargain-basement…

Read more »

Investing Articles

Up 30% in weeks, does the BAE Systems share price still offer value?

The BAE Systems share price has been on a tear over the past couple of months. This writer sees limited…

Read more »