The second quarter began turbulently due to Trump’s tariff news, which sent markets diving — but the rebound was just as swift. Sifter’s value rose by 5.3% between April and June, even though year-to-date the fund remains down by 3.0%. Overall, the portfolio has moved in line with the global equity market.
Please note that past performance is not indicative of future results.
Winners and Losers in the Portfolio
The top performers came from the technology sector, which accounts for a third of the Sifter Fund’s weight. Semiconductor equipment manufacturers like BE Semiconductor and Disco Corporation benefited from the Trump administration avoiding new tariffs, and even floated the idea of lifting AI chip export restrictions.
This sparked strong optimism and boosted investment expectations in the sector. Sifter’s technology companies rose by an average of 23%, significantly outperforming the broader market.
The healthcare sector, which makes up around one-sixth of Sifter’s portfolio, experienced weaker performance. Healthcare stocks fell by an average of 9% as investors grew nervous about potential drug price regulation and cuts to public healthcare in Trump’s budget plans.
The largest decliner was Johnson & Johnson, whose share price also suffered due to setbacks in talc-related lawsuits. We reduced our position in JNJ, and the associated risk is now under control.
A New Company in the Portfolio
The biggest change during the quarter was the sale of the Swedish company Autoliv and the purchase of IDEXX Laboratories.
Although Autoliv appeared undervalued, its growth outlook was weak: automotive production growth is slowing, and Chinese manufacturers are increasingly producing safety systems in-house.
We replaced Autoliv with a new company — U.S.-based IDEXX, a leader in pet diagnostics with strong competitive advantages and predictable cash flow.
We also made a few smart reallocations within the portfolio: we trimmed our positions in Johnson & Johnson, North West, and Costco due to elevated valuations, even though their long-term outlooks remained unchanged.
The freed-up capital was directed toward Disco, Novo, and Deutsche Börse, where we see better long-term return potential.
For example, in Disco’s case, we believe demand for specialty memory related to AI chips will recover by 2026 at the latest. Novo is likely to remain a leader in weight management, even if its latest GLP-1 drug isn’t the absolute best on the market — the valuation remains attractive for long-term investors. Deutsche Börse, meanwhile, benefits from growing interest among European investors and EU harmonization initiatives.
Earnings Growth Is at the Heart of Our Investment Strategy
On the earnings front, Sifter’s companies look stable. We forecast a conservative average annual revenue growth of 7.3% and EBIT growth of 7.9% over the next five years. In terms of valuation, the portfolio is in line with its five-year average, keeping the overall valuation moderate.
In the Q2 video, we also dive deeper into two of our portfolio companies — Microsoft and Cintas.
Microsoft has successfully diversified its cloud services and grown earnings robustly, even though AI revenues still represent a small fraction of the total. The market expects as much as 15% earnings growth, but we’ve estimated a more conservative 10% annual growth rate for the next five years — still an excellent result.
U.S.-based Cintas, on the other hand, benefits from scale advantages and a fragmented market, supporting continued stable growth. Cintas is the market leader in workwear rentals (outsourcing) and — remarkably — has grown its earnings by over 10% annually for decades. We expect that trend to continue.
Sifter’s Strategy Is Always Rooted in Quality, Resilience, and Predictability.
This is how we aim to offer peace of mind to long-term investors — even when negative macro headlines dominate the news cycle. As investors and entrepreneurs ourselves, we’re on the same journey — and that’s precisely why we remain committed to a disciplined, long-term approach.
Watch the Quarterly Report Video [YouTube]
Santeri Korpinen
CEO
