To start off the new year, we trimmed our position in Linde (tkr: LIN), one of the leading industrial gases providers. This reduction trimmed our exposure to the materials sector and brought our allocation to the sector closer to that of the S&P 500. This freed up cash to purchase a position in Nvidia (tkr: NVDA), a semiconductor company that sells a critical piece of infrastructure in the rapid development of Artificial Intelligence (AI), following a plunge in stock price. The rise in DeepSeek, a Chinese AI-powered chatbot, which was viewed as on par with ChatGPT, but allegedly was created at a fraction of the cost and without access to the top-of-the-line GPUs from Nvidia. This sent shockwaves through the entire AI industry and dragged Nvidia stock down 17%. However, after the initial knee-jerk reaction, investors and analysts questioned the accuracy of the announcement due to allegations of DeepSeek stealing data, accessing banned chips and understating the costs associated with building these models. Ultimately, the fundamental need for hardware remains unchanged as these models still need GPUs and data centers to run. In fact, this has leveled the playing field, opening up the development of AI models to more than just the mega-cap companies who can afford to invest billions in data center infrastructure, generating even more demand for compute power. More efficient models will likely accelerate AI adoption and while this could mean selling fewer of Nvidia’s high-end chips, it can make up the difference through higher volume sales across a broader market. Since our purchase, Trump’s unpredictable tariff and trade policy have ushered in volatility in the stock price, but we remain confident in the company’s ability to adapt to the challenging environment and retain its dominant role in AI infrastructure.

Next, we sold our position in General Mills (tkr: GIS), a global packaged food company. General Mills owns a variety of cereal brands including Cheerios, Lucky Charms, Cinnamon Toast Crunch, in addition to other food brands such as Betty Crocker, Pillsbury, Nature Valley and Progresso. The appointment of Robert F. Kennedy Jr. as Secretary of the Department of Health and Human Services threatens General Mills as Kennedy is a strong critic of highly processed foods. He has specifically called out cereal makers for their use of artificial colors and processed ingredients, which he argues have contributed to obesity and other diseases. Stricter federal dietary guidelines for food and beverages could dampen sales growth for companies with products eligible for federally funded programs such as SNAP and school meals. Adjustments to formulations can also crimp demand, as substituting ingredients without changing a product’s flavor profile is challenging. Even subtle changes to taste or texture can shift demand. Additionally, the rise in availability of weight loss drugs that are curbing “food noise”, or the constant thoughts about food. As these drugs evolve, with several companies testing oral alternatives, demand for highly processed foods could be particularly at risk.

Lastly, we initiated a position in Berkshire Hathaway (tkr: BRK.B), a multinational conglomerate holding company. It does not operate businesses directly, but rather owns and manages a diverse portfolio of other companies. Berkshire Hathaway is the largest holding in the Financials Sector because a significant portion of its business operations, especially earnings and assets, are tied to insurance and financial services. Overall, Berkshire Hathaway has a stable set of businesses, an attractive valuation, low volatility, a strong cash position, and is well positioned to benefit from potential deregulation under the current administration.

Individual investment positions detailed in this post should not be construed as a recommendation to purchase or sell the security. Past performance is not necessarily a guide to future performance. There are risks involved in investing, including possible loss of principal. This information is provided for informational purposes only and does not constitute a recommendation for any investment strategy, security or product described herein. Employees and/or owners of Nelson Capital Management, LLC may have a position securities mentioned in this post. Please contact us for a complete list of portfolio holdings. For additional information please contact us at 650-322-4000.