Billionaire investor Chris Hohn’s TCI Fund Management, which made nearly $20 billion last year, completely exited its position in Microsoft during the second quarter and built large positions in Martin Marietta Materials and Vulcan Materials, according to its latest holdings. Microsoft had been TCI’s third-largest position at the end of 2025.

The reasoning comes down to disruption risk. Hohn believes AI could disrupt Microsoft’s Office and Azure businesses faster than investors expect. By comparison, AI cannot easily disrupt the physical infrastructure controlled by companies such as Martin Marietta and Vulcan.

Both companies are among the largest US suppliers of gravel, crushed stone and sand, basic materials needed for roads, buildings and infrastructure. Their advantage is not the rocks themselves, but location. Because transporting heavy materials over long distances is expensive, strategically located quarries can develop strong local competitive advantages.

The strategy also has history behind it. Vulcan Materials was the second-best-performing US stock in a study covering 1925 through 2023. A $1 investment would have grown to almost $400,000, according to data highlighted by Compounding Quality.

Other Stocks Getting Upgraded and Downgraded

Compounding Quality also updated its own Buy-Hold-Sell watchlist this week:

• Alphabet, Hermès and Teqnion moved from Hold to Buy.
• Dino Polska and Novo Nordisk moved from Buy to Hold because of increasing competition.
• Williams-Sonoma moved from Hold to Sell because of valuation concerns.
• The watchlist currently contains 55 stocks rated Buy.

Worst performers

Here are the 10 worst performers on our watchlist so far this year:

Best performers

The 10 best performers look as follows:

Investor takeaway: The shift highlights an interesting divide in today’s market. While investors continue chasing AI winners, some are looking toward simpler businesses with physical assets and competitive advantages that technology cannot easily replace.

Source: Compounding Quality, TCI Fund Management

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

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