The $10,000 portfolio: How our picks fared over the past year

A year after our original offering in Livewire’s $10,000 investment series, we thought it would be helpful to check back on the companies we selected, Intercontinental Exchange, GE Healthcare and Microsoft. The portfolio has increased by 22%, but what has happened to the companies? We delve deeper into each one below. 

Update on Intercontinental Exchange (ICE)

ICE is a global operator of exchanges and clearinghouses, including its marquee asset, The New York Stock Exchange. ICE continues to deliver record earnings and profitability as demand for its exchange products has surged, particularly Energy and Financials (interest rate and other financial futures and options).

We selected ICE because of its high recurring earnings, strong competitive position, and dependable management team. In addition, ICE is revolutionising the mortgage ecosystem following its $11.9 billion acquisition of Black Knight in 2023. The mortgage business is currently grappling with higher interest rates and lower mortgage origination, but as long-term investors, we like this set-up, and know this business will be a key earnings driver as the housing recovery inevitably transpires.

ICE has achieved notable early client wins in the mortgage segment including JPMorgan Chase, which signed on to ICE's mortgage servicing business, highlighting the platform's expanding network and product development investments. Additionally, ICE has successfully integrated clients like Citizens Bank onto its Encompass platform, coupled with its data and document automation (DDA) capabilities, providing a comprehensive front-to-back solution. These significant client wins underscore ICE's strategic focus on leveraging technology to enhance efficiency and streamline the mortgage process, positioning it well for future growth.

Update on GE HealthCare (GEHC)

GE completed its spin off of GE HealthCare in 2023 and the company has been trading as a stand alone entity for more than a year. Prior to the demerger GE established a number of Transition Services Agreements to ensure business continuity and cover previously shared services such as IT, HR and Finance. Rationalising the TSAs offers GEHC considerable opportunity to improve profitability from a combination of efficiency gains and greater operational focus driving our expectations about the future for the business.

GE HealthCare has a worldwide presence, functioning in over 160 countries, supported by a team of more than 10,000 sales experts, 8,500 field engineers, and a manufacturing base spread across 43 locations in 17 countries. This critical infrastructure provides the backbone of GEHCs competitive position. In addition, the surge in adoption of precision healthcare is driving demand for innovative health services, and an ageing population further propels potential revenue growth.

GE HealthCare has made several recent strategic investments aimed at enhancing its capabilities and expanding its market presence:

• Generative AI Collaboration: GE HealthCare has a strategic collaboration with Amazon Web Services (AWS) to accelerate healthcare transformation using generative AI. The partnership aims to leverage AI to accelerate innovation to expedite clinical and operational workflows and improve healthcare delivery.
• Acquisition of Intelligent Ultrasound's AI Business: GE Healthcare will acquire the clinical artificial intelligence business from Intelligent Ultrasound. This acquisition will enhance GE Healthcare's ultrasound capabilities by improving scan accuracy and workflows across its product offerings.

These investments reflect GE HealthCare's commitment to innovation and its strategic focus on integrating advanced technologies to improve healthcare outcomes and expand its market reach. We continue to be sanguine about GEHCs long term opportunities as it prosecutes its vision and concludes remaining TSAs.

Update on Microsoft (MSFT)

We have owned Microsoft for 9 years, and it continues to be a substantial part of our portfolio. We are attracted by its high-quality management, strong competitive position and leadership in the cloud. Together with Amazon and Google, Microsoft is investing heavily in cloud computing and artificial intelligence, both of which are expected to drive significant growth. We discussed the rationale behind our cloud investments in the LiveWire article; Nvidia: Should you buy the dip?

Microsoft’s partnership with Open AI, the developer of Chat GPT, provides access to leading AI talent and models, and the collaboration has been pivotal in integrating AI capabilities in Microsoft’s products such as Copilot, which enhances productivity tools like Office 365 and Azure.

Microsoft has made several recent investments to expand its cloud and AI capabilities globally:

• Investment in Malaysia: $2.2 billion to enhance cloud and AI infrastructure. Microsoft will build digital infrastructure, creating AI skilling opportunities for 200,000 people, and establish a national AI Centre of Excellence. The initiative aims to support Malaysia's digital transformation and economic growth.
• Investment in Sweden: $3.2 billion to expand its cloud and AI infrastructure. This includes deploying advanced graphics processing units and investing in renewable energy. The initiative also involves training 250,000 Swedes with AI skills, supporting the adoption of AI across the Nordic region.
• Investment in Wisconsin, USA: $3.3 billion to develop cloud and AI infrastructure, create a manufacturing-focused AI co-innovation lab, and provide AI skilling for over 100,000 local residents. This investment is part of a broader strategy to enhance economic growth and job creation in the state.
• Investment in Australia: A$5 billion to increase its computing capacity and expand its data centre footprint. This investment, in partnership with the Australian Signals Directorate, will boost cloud and AI capabilities, create high-value jobs and enhance cybersecurity.

These investments reflect Microsoft's commitment to advancing AI and cloud technologies, supporting digital transformation and fostering economic growth around the world.

Conclusion

In conclusion, our investments in Intercontinental Exchange, GE Healthcare and Microsoft have proven to be strategically sound choices. Each company has demonstrated resilience and growth potential, even amid challenging macroeconomic conditions.

Intercontinental Exchange continues to innovate within the financial and mortgage sectors, positioning itself for future gains despite current industry headwinds. GE HealthCare's global presence and focus on precision healthcare provide a robust foundation for long-term success, especially as it streamlines operations post-spin-off. Meanwhile, Microsoft's leadership in cloud computing and artificial intelligence, bolstered by strategic partnerships, ensures its continued relevance and growth in the tech industry.

We remain confident in the prospects of these companies and the strategic weightings we have allocated to them in our portfolio.