Yacktman Fund's Strategic Shift in Energy Exposure: A Rebalancing Toward Growth and AI-Driven Sectors

The Yacktman Fund's recent decision to reduce its stake in Canadian Natural Resources Ltd (CNQ) by 25% marks more than a tactical move—it signals a strategic rebalancing toward sectors poised to capitalize on macroeconomic tailwinds. The reduction, which impacted the fund's portfolio by -1.93%, reflects a disciplined approach to asset allocation, favoring companies with durable earnings and long-term value over cyclical energy plays. While CNQ's 9.41% three-month return and 6.32% year-to-date performance suggest a resilient stock, the fund's pivot underscores a broader shift in capital markets: the redefinition of growth in an era defined by artificial intelligence, biotechnology, and clean energy.

The fund's rationale is rooted in a macroeconomic reality. Energy markets, once a bedrock of portfolio stability, now face headwinds from regulatory pressures, decarbonization mandates, and the commoditization of oil and gas. In contrast, AI-driven sectors are experiencing a surge in venture capital inflows, with AI-focused funds accounting for 24.5% of new VC launches in 2025—up from 5.4% in 2022. This growth is not speculative; it is underpinned by technological maturation, from generative AI's integration into enterprise software to AI's role in accelerating drug discovery.

The fund's reallocation into AI and biotech is emblematic of this trend. Pagaya Technologies, a fintech company leveraging AI for credit risk modeling, has demonstrated explosive growth, with revenue guidance projecting a 13.7% annual increase. Similarly, Alnylam Pharmaceuticals and Vertex Pharmaceuticals are leveraging AI to refine RNAi therapeutics and CFTR modulators, respectively, positioning themselves at the forefront of precision medicine. These companies exemplify the fund's focus on innovation with tangible, scalable applications.

The macroeconomic tailwinds supporting this shift are robust. The U.S. market's 9.9% annualized growth and 14% earnings expansion highlight a tech-led recovery, while regulatory frameworks—such as the FDA's Diversity Action Plans and the Inflation Reduction Act—are reshaping incentives for biotech innovation. Meanwhile, the CRISPR gene-editing market, projected to grow from $3.3 billion in 2023 to $24.6 billion by 2033, offers a glimpse into the long-term potential of life sciences.

For investors, the Yacktman Fund's strategy offers a blueprint for navigating today's volatile markets. Energy remains a necessary component of any diversified portfolio, but its role is evolving. Allocating capital to AI and biotech—sectors with high margins, defensibility, and growth—aligns with a forward-looking approach. However, caution is warranted: AI valuations have surged, with late-stage startups commanding 150% higher valuations than non-AI peers. The risk of a speculative bubble looms, particularly in subsectors lacking near-term revenue visibility.

The fund's emphasis on intrinsic value and sound capital allocation provides a counterbalance to this volatility. By prioritizing companies with strong management, durable business models, and clear competitive advantages, the Yacktman Fund mitigates the risks inherent in high-growth sectors. This approach is particularly relevant in biotech, where regulatory hurdles and R&D timelines remain significant challenges.

In conclusion, the Yacktman Fund's reduction in CNQ is not a rejection of energy but a recognition of its diminishing role in a portfolio seeking long-term, compounding returns. The rebalancing toward AI and biotech reflects a nuanced understanding of macroeconomic forces and the transformative power of technology. For investors, the lesson is clear: adapt or be left behind. The future belongs to those who can see beyond the rig to the data center—and act accordingly.