Grantham, Mayo, Van Otterloo & Co. LLC Doubles Down on Rails, Not Just AI

The biggest incremental dollars went into what amounts to a global toll-road theme. Mastercard, Visa, and Uber are all mis-tagged as real estate in the data, but the pattern is obvious: GMO is paying up for payment and mobility networks that skim a fee off rising nominal GDP and e-commerce volume.

• Mastercard: A near-clean-slate rebuild to a $475.1M stake at 1.22% of the portfolio, a massive size-up that turns it into a core holding despite the position sitting modestly below their average buy price.
• Visa: A 14.6% add, now $917.6M and 2.35% of the book, reinforcing the card duopoly bet.
• Uber: A 26.5% add to $530.6M; GMO is treating mobility and delivery as real transaction infrastructure, not a speculative app.

On the software side, they initiated Synopsys at $360.9M, a pure IP tollbooth on the entire semiconductor industry. They also pushed Microsoft by 17.2% and added to Salesforce, leaning into cloud and enterprise software even as they trim some of the most cyclical chip names.

Health care conviction is rising in scale plays: Cigna was boosted 32.7% and UnitedHealth 18.3%. That is a clear view that managed care and medical specialties remain structural growers and a counterweight to more cyclically exposed tech and consumer names.

Funding for this rotation came from a very deliberate harvest of past winners and lower-conviction defensives. Lam Research is the standout: GMO cut the position by 26.1%, freeing over $521.3M while still keeping a large $1.48B stake. After a gain of over 400% versus their average cost, that looks like disciplined profit-taking, not an abandonment of the AI hardware theme.

• KLA was trimmed 9.3%, again after very large embedded gains, while Taiwan Semiconductor saw an 8.1% cut. Together, these moves dial back exposure to the most cyclical part of the AI stack.
• SolarEdge was reduced by 12.0% despite being deeply underwater relative to cost, signaling genuine conviction loss in this particular clean-energy hardware name.
• In health care, Elevance was cut 23.4% even as Cigna and UnitedHealth were increased, a clear internal rotation toward the insurers GMO likes better on valuation or growth.

On the defensive side, Coca-Cola, Darling Ingredients, and Hilton were all meaningfully trimmed. They’re stepping away from some classic staples and travel winners to fund higher-growth, higher-strategic-value assets like Netflix and the payments complex.

At the sector level, tech and health care both ticked down a bit in weight, yet the quality of exposure inside those sleeves went up. Within technology, GMO is recycling from capital equipment (Lam, KLA, TSM, SolarEdge) into software, cloud, and EDA IP (Microsoft, Synopsys, Salesforce, ASML) while keeping the big platforms like Alphabet, Apple, and Meta intact or larger.

Real-world financials exposure (banks and trading platforms) is steady in aggregate, but the effective “fintech and payments” bucket jumps: Mastercard and Visa alone now account for more than 3.5% of the book, on top of Tradeweb and growing bank positions like US Bancorp, TD, Deutsche Bank, and Bank of Nova Scotia.

Consumer exposure is getting more growthy. GMO trimmed Coca-Cola and TJX, but built Netflix to a 1.0% stake and increased Procter & Gamble by 33.1%, while adding to Aramark. That nudges the consumer sleeve away from pure staples and toward platforms with pricing power and secular streaming or services growth.

Meanwhile, traditional defensives — consumer staples and parts of health care — modestly shrink as a share of the book, even though individual high-conviction names like Johnson & Johnson, Merck, and Abbott all saw incremental adds. The message: defend with quality, not with index-like sector ballast.

Put together, GMO is signaling that the easy money in semicap and some classical defensives has been made, and the next leg of returns will come from owning the rails and tollbooths. They still like AI and cloud, but increasingly via software, IP, and the payment systems that monetize digital activity, rather than just the tools that build the chips.

The Mastercard, Visa, Uber, Netflix, and Synopsys builds say they want long-duration, asset-light cash engines that scale with volume, not cycle. Their rotation inside health care — out of Elevance, deeper into Cigna, UnitedHealth, and device/procedure names like Intuitive Surgical and Thermo Fisher — keeps a strong ballast of non-cyclical earnings.

Going forward, expect GMO to keep trimming where gains are extreme or fundamentals more cyclical (semicap, weaker clean-energy hardware, slower staples) and to recycle into high-ROIC, network-effect businesses even when they are temporarily out of favor versus cost. For allocators watching this book, the signal is not “less tech” so much as a maturing of the thesis: from AI hype and defensives toward infrastructure, data, and services that tax the whole system over time.