Healthcare: Technology & Equipment Portfolio

Thermo Fisher is an anchor holding because it sells tools and services that labs and drug makers use in daily work. A large part of its revenue repeats over time. When a lab buys a platform and builds processes around it, it also buys reagents, consumables, and servicing for years. Switching is not easy because it can require new validation, staff retraining, and operational disruption.

The main questions are simple. Is lab activity stable or improving? Is bioprocessing demand returning after a slower period? Is Thermo keeping good margins and cash flow while it invests in growth? I also watch how it buys other businesses. Small additions that strengthen its workflow can make sense. Large deals only help if returns stay strong.

I would reduce conviction if demand became more cyclical than expected, if switching costs weakened, or if acquisitions started to lower returns.

Stryker is our main exposure to hospital procedures through orthopaedics, trauma, and surgical technologies. The core thesis is that procedure volumes rise over time, and Stryker can outgrow the underlying market by combining a broad product suite with systems that increase attachment and standardization, including robotics. Once a hospital standardizes around implant systems, instruments, and vendor support, switching becomes disruptive, which reinforces pricing power and share durability.

The business is judged on execution and utilization, not just reported growth. We monitor procedure trends and hospital capacity constraints because elective procedures can be delayed in weak macro environments or staffing shortages. We also track robotics adoption and, more importantly, utilization, because the economic engine is the combination of systems, instruments, and procedure pull-through. Quality and regulatory issues are always latent risks in implants, so we stay alert to recalls, remediation, and any signs of elevated litigation exposure.

We would reduce conviction if robotics failed to support incremental share and economics, if margins deteriorated structurally, or if competitive systems undermined surgeon preference and hospital standardization. Stryker is sized as a core holding because the cash-flow profile is broad and repeatable, even though near-term results can be sensitive to procedure timing.

Abbott is a diversified compounder that balances stability with identifiable growth drivers. The portfolio role is to provide exposure to multiple healthcare end-markets; devices, diagnostics, and nutrition; without relying on a single product line to justify ownership. The upside comes from continued adoption in higher-growth device categories, while the downside is buffered by the breadth of the franchise and the company’s capacity to invest through cycles.

We evaluate Abbott by looking at whether growth engines remain durable and whether weaker segments are manageable rather than corrosive. For devices, we watch share trends, innovation cadence, and the ability to expand access through reimbursement and payer coverage. For diagnostics, we focus on normalized profitability and competitive pressure, especially in price-sensitive markets. We also pay attention to the company’s balance between reinvestment, shareholder returns, and deal-making, because “diversified” only works if the portfolio remains coherent.

We would rethink the position if key device franchises began losing share across multiple cycles, if structural pricing pressure compressed returns more broadly, or if capital allocation diluted the strength of the core. Abbott is sized as an anchor because the portfolio of earnings is broader and less valuation-dependent than the higher-multiple growth names.

Danaher is the second anchor in life-science tools and diagnostics, and it plays a complementary role to Thermo Fisher. The thesis is built on embedded workflow exposure in bioprocessing and diagnostics, combined with a historically strong operating system that has improved acquired businesses over time. In practice, Danaher’s stickiness often comes from being designed into validated processes, where switching suppliers can create downtime, regulatory rework, and operational risk.

We focus on whether the bioprocessing cycle is behaving like a cyclical digestion rather than a structural impairment. That means tracking order rates, customer inventory dynamics, and signs that demand is moving from destocking to replenishment. In diagnostics, we care about placements, utilization, and reagent pull-through, since those determine the durability of recurring revenue. We also pay attention to China exposure and any shifts in procurement or pricing that could pressure margins.

We would reassess if bioprocessing returns structurally reset lower, if Danaher’s execution culture stopped translating into margin and return improvement, or if capital allocation became overly aggressive. Like Thermo, Danaher is here to anchor the portfolio with a repeatable compounding model rather than to express a single-cycle view.

Boston Scientific provides exposure to fast-growing procedure categories in cardiovascular and electrophysiology, where outcomes data, physician training, and product cycles create durable competitive positions. The thesis is that category leadership in expanding indications can support above-market growth for an extended period, and that operating leverage can translate that growth into rising profitability and strong cash generation.

We track whether growth is coming from sustainable share and category expansion rather than temporary comparisons. That means watching procedure trends, clinical data flow that influences guidelines and reimbursement, and competitive launches that could shift share in structural heart and ablation. We also monitor whether margin progress remains consistent, because valuation is less forgiving when the market already expects strong execution.

We would reduce exposure if growth decelerated due to sustained share loss, if new products failed to maintain competitive differentiation, or if pricing pressure began to erode the economics of the portfolio. Boston Scientific remains a significant holding because the underlying procedure categories are attractive, but we treat it as more valuation-sensitive than the anchor compounders.

IQVIA is the portfolio’s services and data layer, providing exposure to outsourced clinical trials and real-world evidence rather than device unit sales. The thesis is that drug and device developers increasingly rely on external partners to run complex, global studies and to interpret large datasets, and that scale, operational infrastructure, and proprietary data assets can create sticky relationships and recurring demand even when R&D spending shifts across modalities.

We focus on backlog and conversion because visibility is a core part of the model. We also watch pricing and competitive intensity in CRO services, since the best version of this business is rationally priced and execution-driven rather than commoditized. Because leverage is higher than most medtech peers, cash conversion and balance sheet trajectory matter more here, and we treat regulatory and data-access changes as meaningful risks that can affect the analytics component.

We would reconsider if backlog quality deteriorated, if pricing became structurally irrational, if leverage rose without clear return, or if data access constraints weakened the competitive advantage. IQVIA is sized meaningfully because it diversifies the portfolio’s drivers while still fitting the “healthcare infrastructure” theme.

Intuitive Surgical is the portfolio’s purest platform-adoption holding. The investment case rests on the installed base of robotic systems and the high-margin recurring stream from instruments, accessories, and service that scales with procedure volume. The key variable is utilization: long-term returns are driven by how consistently procedures migrate onto robotics and how broadly the platform expands across indications and geographies.

We judge the business by procedure growth and utilization more than headline system placements, because capacity only matters if it is used. Competitive risk is also central, so we track whether alternative platforms gain traction in ways that could lower switching costs or pressure pricing. Because the stock’s valuation embeds a strong forward path, we also watch margin stability and any sources of cost pressure that could compress operating leverage.

We would reassess if procedure growth slowed in a sustained way beyond temporary hospital constraints, if credible competition began eroding the installed-base advantage, or if incremental returns from new platforms and indications weakened. The position is meaningful because the business quality is exceptional, but it is sized to respect valuation risk.

ResMed is a home care holding focused on sleep apnoea therapy. The debate is whether weight-loss drugs will reduce the long-term need for CPAP therapy. The thesis here is that even if drug treatment grows, many patients will still need, prefer, or stay on device therapy. ResMed’s economics are also supported by repeat sales of masks and supplies, not only new device starts.

I watch two things separately: new patient starts and ongoing resupply. Resupply and adherence are important because they drive repeat revenue. I also watch payer behaviour and clinician practice, because coverage rules can shape what happens in the real world. Competition and alternative therapies are also part of the risk.

I would reassess if evidence showed a large and lasting decline in the treated CPAP population, or if resupply patterns weakened over time.