Mag 7 Cheap Tilt
Best of
@favoritetakes
+0.9%
since Sep 28
The idea
I own all seven Magnificent 7 names, but sized by valuation rather than market cap, so the cheapest names carry the most weight and the priciest carry the least. The idea is mean reversion within the group: these businesses share strong earnings power, so whichever one falls out of favor tends to get bought back, and being overweight the cheap end is where that pays off. Weights shift as prices and multiples change rather than on a fixed schedule, and I keep a small cash reserve to add to whichever stock gets cheap next.
What it owns
- The cheapest of the seven carries the most weight in this take, where a valuation snap-back toward the group would pay off first. · Alphabet Inc.It trades at the lowest valuation among the seven and gets the largest allocation, positioned to benefit most if its multiple expands toward the group average., Meta Platforms Inc.It trades at a low multiple on growing profits while the rest of the group commands higher valuations, making it a core part of the mean-reversion bet., Amazon.com Inc.Margin expansion flowing through to earnings will eventually reveal it as cheap relative to the group, sustaining this position as those gains materialize.54%
- These two sit at fair valuations for the group, held at moderate weight to stay balanced if either tier makes a significant move. · Apple Inc.It sits in the middle of the group on valuation, holding a middle-sized position as part of the complete seven., Microsoft CorporationIt typically trades at a premium to the group, so the cheap-tilt approach keeps it at moderate weight rather than outsized.24%
- The priciest of the seven stays small until its valuation converges back toward the rest of the group. · NVIDIA CorporationIt trades at the high end of the group's valuations, so it is sized small pending any reversion toward pack multiples., Tesla Inc.It trades at a premium valuation relative to the group and holds a minimal position until its multiple normalizes toward the pack.17%
- Cash5%