GK: 4th Quarter 2023 Portfolio Review

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The fourth quarter commenced on a somber note as escalating interest rates cast a shadow over stocks throughout October. This persisted from a three-month downturn triggered by the upward surge in interest rates, denting the portfolio’s performance following a robust first half of the year. With rates climbing from 4% to 5% on the 10-year U.S. Treasury yield and peaking in October, GK’s returns suffered under the pressure of rising rates. However, a shift occurred as substantially lower inflation figures, coupled with a robust economy, signaled to the markets that the surge in interest rates had subdued inflation. The rapid ascent in rates proved unwarranted, prompting a steep decline. Interest rates were evidently overstretched in comparison to future inflation expectations, sparking a significant rally in Treasury bonds and driving rates back down from 5% to 4%. This alleviated pressure on GK’s holdings, swiftly propelling its recovery and reclaiming substantial value in November and December.

Structural adjustments were made in GK’s portfolio during the fourth quarter, transitioning from climate change investments to a focus on technology, particularly in the realm of artificial intelligence (AI) opportunities. Unfortunately, Tesla (TSLA), GK’s top holding, continued to lag behind. Consequently, we scaled back our position in Tesla during Q4 as the company struggled to sustain pricing on its vehicles which impacted its profits and margins, and subsequently, its stock. Elon Musk’s actions further dampened demand for Tesla products as evidenced by decreased sales in key markets like California year over year. The fundamental narrative surrounding Tesla shifted with Musk’s foray into Twitter. This prompted us us to greatly reduce GK’s Tesla position from a high of 10% to about 5% by year-end. We reallocated this capital into technology and AI investments, with heavier investments in Nvidia (NVDA), Microsoft (MSFT), Oracle (ORCL), Advanced Micro Devices (AMD), and Google parent Alphabet (GOOG). Nvidia and Microsoft emerged as our primary technology investments, fueling substantial growth in the portfolio during the fourth quarter, ultimately culminating in a total return exceeding 21% (market) for the year.

Despite commendable returns, our performance was hindered by substantial investments in climate change companies, particularly solar and electric vehicle (EV) stocks, which suffered from higher rates. Many EV and solar companies were sold off as higher rates eroded their future earnings potential. Conversely, our technology investments thrived amidst intense competition and a growing emphasis on AI infrastructure. Looking ahead to 2024, we anticipate lower rates, increased earnings, and a wave of innovation. GK’s portfolio diversification extends to consumer sectors like Lululemon (LULU) and promising ventures such as MGM Resorts International (MGM) hotels and Novo Nordisk (NVO) in obesity treatments, alongside bullish positions in residential real estate, exemplified by Lennar (LEN). Despite the challenges faced in 2023, particularly in certain segments of GK’s portfolio, we believe the strength of the US economy, coupled with robust employment and low inflation positions GK favorably for the year ahead, with expectations for global investor recognition.

Top Holdings

Ticker Security Description Portfolio Weight %

As of 12.31.2023. Cash is not included. Subject to change.  



Ross Gerber | Gerber Kawasaki | President and CEO
AdvisorShares Gerber Kawasaki ETF (GK) Portfolio Manager

Past Manager Commentary


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