Top Fund Manager Reveals Strategic Investment in AutoTrader and Nvidia for Future Growth

Every month, our I’m a Fund Manager series challenges a seasoned fund or investment manager to reveal how they handle their personal finances.

We delve into their investment strategies for both the upcoming year and the next decade, seeking insights into potential pitfalls. Our discussions also cover their views on Nvidia, gold, bitcoin, and their most significant investment blunders.

This edition features Mark Ellis, who helms the Nutshell Growth Fund.

Launched in May 2020, this fund manages assets worth £175 million and holds stakes in 36 companies spanning the globe.

With a strong U.S. focus—accounting for 68.2% of its portfolio—it also maintains investments in the UK (11.9%), Taiwan (4.2%), and the Netherlands (4%).

Information technology is the cornerstone of the fund’s strategy, comprising 56.8% of its total investments.

Its largest 10 holdings make up 54.2 per cent of the fund making it quite concentrated. Its largest holdings include Adobe Inc, Fortinet, Nvidia and Microsoft Corp.

If you could invest in only one company for the next 10 years, what would it be? 

Mark Ellis replies: If I had to choose one, I would lean towards a high-quality compounder like Microsoft. It has a strong long-term track record, a resilient business model and the sort of consistency we like. 

That said, I would slightly challenge the idea of buying any share and simply forgetting about it for 10 years, because the world changes quickly and investors need to stay flexible as new risks and opportunities emerge. 

Also at the end of March I added the stock to my personal pension, which reflects my conviction in that business, particularly given what I viewed as one of its most attractive valuations in close to a decade.

What about for the next 12 months? 

A name that looks interesting to me over the next 12 months is AutoTrader in the UK. 

It has been caught up in some of the broader anxiety around technology and AI, but the underlying business remains highly cash-generative, dominant in its niche and very profitable. 

If markets return to focusing on fundamentals rather than headlines, I think the shares have scope to recover well. 

Which sector most excites you? 

Technology still offers the strongest growth prospects, particularly in businesses supplying the infrastructure behind AI and digitalisation. 

ASML stands out because it plays such a critical role in the semiconductor supply chain and benefits from long-term demand for more advanced chips. 

It is a great business, but even great businesses need to be bought sensibly, so we would always want to combine that quality with valuation discipline and look to add on weakness rather than chase price higher.

What sector are you avoiding and why? 

Parts of the consumer staples sector are beginning to look expensive. Recent global uncertainty has driven significant inflows into defensive names, but we would expect some mean reversion once geopolitical risks, such as the Iran conflict, and the US mid-term elections are behind us. 

Walmart is a good example. The stock is currently trading on a PE (price to earnings) ratio close to 50, well above historical averages, despite delivering only mid-single-digit earnings growth. 

The resulting PEG ratio (Price/Earnings-to-Growth)  looks very unattractive to us.

What country offers best value? 

The UK still looks attractive in parts. International investors have been downbeat on the market for years, which has left some very good businesses overlooked and undervalued. 

You do need to be selective though, because many of the best opportunities sit outside the traditional large FTSE 100 names. 

Which cheap UK company stands out?

Foresight Group looks interesting to me. It operates in real assets and alternative infrastructure, has a strong balance sheet and exposure to long-term structural themes, but the valuation still looks reasonable relative to the growth opportunity. 

It is a good example of the sort of overlooked UK business that can be missed by broader market narratives. 

Are we in an AI bubble?

There are definitely pockets of hype in the market, and some companies are clearly being valued more on excitement than substance. 

You can see that in cases like Allbirds, which sold its footwear assets, rebranded as NewBird AI and pivoted into AI infrastructure. 

But I do not think it is helpful to say that all of AI is a bubble, because some businesses are genuinely growing fast, generating real profits and earning their valuations. 

So you don’t think a stock market crash is looming? 

I do not spend much time trying to predict crashes, because almost nobody does that consistently well. 

There is always something for investors to worry about, whether it is inflation, geopolitics, tariffs or interest rates. 

For long-term investors, the bigger risk is often selling good businesses in a panic and then missing the recovery. As long term investors we use volatility and crashes as opportunities. 

Should investors be buying fundamental assets such as energy and infrastructure?

Over the long run, markets tend to reward fundamentals. Speculative phases do happen, and they can last longer than people expect, but businesses that generate profits, cash flow and strong returns on capital tend to win out over time. 

Energy and infrastructure can play a role, but more broadly I think investors will continue to come back to quality and valuation disciplines. 

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What about looking to rebalance away from the US?  

I do not think the decision is as simple as ‘US or not US’. The US remains home to some of the world’s best businesses, and that depth of innovation has rewarded investors for a long time. 

The more sensible approach, in my view, is to avoid over-concentration and make sure portfolios have broad exposure across regions, sectors and individual companies. 

When we compare individual companies like for like across the globe we typically have around 70 per cent allocated to the US, simply because that’s where the best companies reside. Virtually all have global revenue streams so are diversified globally. 

Is there a company you believe has the potential to offer ‘Nvidia level’ returns?

The next Nvidia might simply be Nvidia. Great businesses do not stop being great just because they have become large, and if demand keeps growing strongly there is no rule saying the shares cannot keep compounding. 

Investors can sometimes be too quick to assume that size alone means the opportunity has gone. Nvidia is currently our highest conviction position.

Do you think investors should be wary of passive investing at the moment? 

Passive funds are a very good option for many investors, but they will only ever give you the market return. 

Our aim is to do better than that by being more proactive and selective than a traditional global equity fund. 

We focus on high-quality companies with strong growth and sensible valuations, and we refresh the portfolio every two weeks so we can keep adapting as opportunities change. 

Should everyone be adding gold to their portfolio?

Gold can have a place in a portfolio as a diversifier, but I would not view it as the core of a long-term investment strategy. 

It can offer reassurance during periods of stress, but it can also go sideways for years as it did after the late 1970s. 

For most DIY investors, if they want exposure at all, it should probably be a modest one rather than a major allocation. 

Do you personally invest at all in crypto? 

No, I do not. I prefer investments where I can assess long-term value through cash flows, competitive position and profitability, and that is much harder to do with most cryptocurrencies. 

That does not mean there will not be winners, but it is outside my circle of competence. 

What’s your greatest ever investment? 

Since the fund’s launch, I would say Arista Networks has been our most lucrative investment. 

However, Fortnox AB was probably my favourite. In our view, it represented one of the highest-quality businesses in our universe, with exceptional growth and profitability characteristics. 

Periods of negative press, particularly from the Financial Times, combined with hedge fund shorting created compelling opportunities to actively trade the position, as shifts in valuation significantly altered its expected return profile. 

Also the timing of its takeover was highly advantageous. Announced in March 2025, just ahead of the ‘Liberation Day’ market disruption, it effectively transformed a large position into a store of value, allowing us to redeploy capital into oversold areas of the portfolio as risk-off conditions unfolded. 

And what’s your greatest ever investing mistake? 

Since inception, our worst investment was in Boohoo Group plc. 

We initially vetoed the stock due to ESG concerns, but later took a position after observing improvements. 

Post-Covid performance, however, was very weak, and the investment did not play out as expected. In hindsight, we held the position for too long. 

That said, the experience was valuable, leading us to refine our process and strengthen our approach to similar situations.