Baillie Gifford Q3 2026 13F Portfolio Analysis: Capital Realization and Aggressive Shifts in Semiconductor & Biotech Moats

During the third quarter of 2026, Baillie Gifford & Co. executed a pronounced capital reallocation strategy across its US-listed equity holdings, transitioning into a net seller of approximately $7.79 billion. According to its SEC Form 13F filing for the period ending September 30, 2026, the firm recorded total sales of roughly $13.63 billion against total purchases of $5.85 billion. This operational rebalancing was driven by substantial profit-taking across long-term winning positions—most notably Space Exploration Technologies Corp. (SpaceX), Moderna, Inc., PDD Holdings Inc., and Amazon.com, Inc.—with proceeds redeployed into aggressive expansions within semiconductor capital equipment (Lam Research Corporation) and commercial-stage RNA interference biopharmaceuticals (Alnylam Pharmaceuticals, Inc.). [Inference: For long-term investors, this strategic rotation highlights how a conviction-driven growth manager systematically harvests capital from mature or capex-intensive leaders to fund emerging high-growth compounders before cash flow inflections are fully priced.]

The Investor: Philosophy, Fund, and Lifetime Work#

Baillie Gifford & Co. represents one of the global investment management industry's most enduring independent partnerships. Established in Edinburgh, Scotland, the firm traces its roots back to 1907 when Lieutenant Colonel Augustus Baillie and Carlyle Gifford formed Baillie & Gifford WS as a legal partnership. In 1908, responding to the prevailing financial climate, the business transitioned its focus to investment management.

Founding & Organizational Structure#

• Origins: Founded in Edinburgh, Scotland, in 1908 following its initial 1907 legal partnership.
• Corporate Structure: An independent partnership wholly owned by working partners, maintaining an institutional structure that insulates investment decision-making from external shareholder pressures.
• Assets Under Management & Staff: Manages £286.3 billion in AUM (as of 2025) with a total workforce of 1,640 employees.
• Global Footprint: Headquartered at 3 Haymarket Square in Edinburgh, with global offices spanning Amsterdam, Dublin, Frankfurt, Hong Kong, London, New York, Shanghai, Singapore, Toronto, and Zurich.

Investment Style & Strategy#

DeepValues classifies Baillie Gifford’s core investment style firmly as Growth. The firm's approach is defined by long-term horizon compounding, active stock selection, global equity coverage, and an explicit willingness to endure significant share price volatility in pursuit of category-defining global enterprises.

Historical Milestones & Moat Investments#

Baillie Gifford’s early expansion began with the creation of the Straits Mortgage and Trust Company Limited in 1909 to lend to rubber planters in Malaya and Ceylon. This entity was renamed The Scottish Mortgage and Trust Limited in 1913 (later Scottish Mortgage Investment Trust), which became the firm’s flagship investment vehicle. In 1931, the firm expanded its trust business by taking over the management of Monks Investment Trust alongside two related companies.

In modern equity markets, Baillie Gifford established a historic growth benchmark through its early listed-equity investment in Tesla, Inc., entering the position in 2013. By 2021, the firm had realized $14.8 billion in profit from Tesla shares sold while retaining $14.6 billion in unrealized gains on remaining holdings, generating a total gain of $29.5 billion across its funds.

In recent years, the partnership has adapted its public engagements. Following activist pressure and threats of author boycotts over fossil-fuel exposure in 2023 and 2024, Baillie Gifford ended all remaining literary festival sponsorships in June 2024 (an annual funding total of approximately £1 million), clarifying that only 2% of client assets were invested in companies with fossil-fuel-related business compared to a market benchmark average of 11%.

The Portfolio at Quarter End: Size, Concentration, Core Holdings#

As filed with the SEC on November 9, 2026 (accession number 0001088875-26-000074), Baillie Gifford’s reported US long equity portfolio valued $105.89 billion across 277 positions as of September 30, 2026. This represents a contraction from Q2 2026, when reported portfolio value stood at $110.22 billion across 272 positions.

Portfolio Concentration#

The portfolio remains heavily weighted toward top-conviction mega-caps and high-growth disruptors. The top ten holdings account for 45.0% of total reported US long equity assets.

Beyond the top ten core positions, other noteworthy holdings within the top section of the portfolio include Samsara Inc. (IOT: $2.05B, 1.9% portfolio share, -4% share count change), Meta Platforms, Inc. (META: $1.75B, 1.7% share, -24% share count change), Bending Spoons S.p.A. (BSP: $1.72B, 1.6% share, new position), AppLovin Corporation (APP: $1.48B, 1.4% share, -21% share count change), and Alnylam Pharmaceuticals, Inc. (ALNY: $1.36B, 1.3% share, +125% share count change).

What Changed: New, Added, Trimmed, and Sold-Out Positions#

During Q3 2026, Baillie Gifford executed 18 new position entries, added to 65 existing holdings, trimmed 179 positions, and completely sold out of 13 positions. Quarterly portfolio turnover registered at approximately 5.4%.

Estimated transactional volume totaled $5.85 billion in gross purchases against $13.63 billion in gross sales, making Baillie Gifford a clear net seller of $7.79 billion in US equities during the quarter.

Major Portfolio Adjustments Ranked by Dollar Impact#

1. Major Trims and Profit-Taking Realizations#

• Space Exploration Tech. Corp. (SPCX): Trimmed share count by 24% (~$1.87B sold); remaining position size is $5.88B (5.6% of portfolio). [Inference: Rebalancing private equity allocation exposure following significant valuation appreciation.]
• Moderna, Inc. (MRNA): Trimmed share count by 37% (~$1.30B sold); remaining position size is $2.20B (2.1% of portfolio). [Inference: Trimming allocation following reassessment of commercial product timelines and cash burn.]
• PDD Holdings Inc. (PDD): Trimmed share count by 56% (~$1.17B sold); remaining position size is $906.2M (0.9% of portfolio). [Inference: Reducing portfolio exposure to intensifying Chinese e-commerce domestic price competition.]
• Amazon.com, Inc. (AMZN): Trimmed share count by 10% (~$690.8M sold); remaining position size is $6.02B (5.7% of portfolio). [Inference: Reallocating capital away from mega-cap tech facing intensive AI capital expenditure cycles.]
• Cloudflare, Inc. (NET): Trimmed share count by 12% (~$612.5M sold); remaining position size is $4.46B (4.2% of portfolio). [Inference: Harvesting gains after prolonged expansion in valuation multiples.]
• Meta Platforms, Inc. (META): Trimmed share count by 24% (~$567.5M sold); remaining position size is $1.75B (1.7% of portfolio). [Inference: Reducing mega-cap communications technology exposure to manage portfolio concentration risks.]
• Netflix, Inc. (NFLX): Trimmed share count by 46% (~$512.4M sold); remaining position size is $613.0M (0.6% of portfolio). [Inference: Realizing capital following strong price performance and streaming market maturity.]
• Roblox Corporation (RBLX): Trimmed share count by 54% (~$483.8M sold); remaining position size is $411.3M (0.4% of portfolio). [Inference: Scaling back position size amidst near-term growth uncertainty in gaming user monetization.]
• Coupang, Inc. (CPNG): Trimmed share count by 43% (~$473.6M sold); remaining position size is $618.5M (0.6% of portfolio). [Inference: Trimming regional Asian e-commerce holdings to lock in multi-quarter capital gains.]
• AppLovin Corporation (APP): Trimmed share count by 21% (~$401.2M sold); remaining position size is $1.48B (1.4% of portfolio). [Inference: Taking partial profits following outsized rally in mobile advertising platform revenues.]

2. Major New Positions & Significant Capital Additions#

• Lam Research Corporation (LRCX): Massive expansion of existing stake, increasing share count by 6,028,783% (~$1.15B added); total position now values $1.15B (1.1% of portfolio). [Inference: Aggressive tactical bet on semiconductor capital equipment spending and advanced memory/etch manufacturing demands.]
• Alnylam Pharmaceuticals, Inc. (ALNY): Expanded position share count by 125% (~$753.2M added); total position now values $1.36B (1.3% of portfolio). [Inference: Scaling conviction following a commercial inflection point in RNAi therapeutic cash flow generation.]
• Bending Spoons S.p.A. (BSP): Brand new position initiated at $1.72B (1.6% of portfolio). [Inference: Establishing a core position in a specialized European digital platform consolidator.]
• ARM Holdings plc (ARM): Added 320% to share count (~$409.5M added); total position now values $537.4M (0.5% of portfolio). [Inference: Expanding exposure to energy-efficient architecture licensing dominance across mobile and hyperscale data centers.]
• KLA Corporation (KLAC): Added 180% to share count (~$332.3M added); total position now values $516.8M (0.5% of portfolio). [Inference: Reallocating capital into process control and yield management moats within wafer fabrication.]

The Biggest Moves, Valued#

To evaluate whether Baillie Gifford's largest transactions align with strict intrinsic value parameters, DeepValues Research conducted owner-earnings discounted cash flow (DCF) and reverse DCF modeling across the three primary highlighted stock moves: Lam Research, Alnylam Pharmaceuticals, and Amazon. All models utilize a standardized 10.0% discount rate and analyze ten years of SEC XBRL filings (10-K and 10-Q).

1. Lam Research Corporation (LRCX) — Heavy Buying Above Intrinsic Value#

Baillie Gifford aggressively scaled its stake in semiconductor equipment supplier Lam Research, purchasing ~$1.15 billion in shares to establish a $1.15 billion position (1.1% of US long holdings).

Financial Cash Flow Trends & Owner Earnings Reconciliation#

Lam Research’s owner earnings (maintenance capex basis) grew from $1.7 billion in FY2017 to $5.0 billion in FY2026, reaching $6.7 billion over the TTM ended September 27, 2026 (on $26.1 billion in TTM revenue). Operating cash flow for the TTM was $7.6 billion against total capex of $1.0 billion, depreciation & amortization of $0.5 billion, and stock compensation of $0.4 billion. In the owner earnings reconciliation, maintenance capex is capped at depreciation ($0.5 billion), meaning that $0.6 billion of its $1.0 billion TTM capex exceeded depreciation and was classified as growth investment, yielding $6.7 billion in maintenance owner earnings versus $6.1 billion under the strict all-capex view.

DCF Model Parameters & Reverse DCF Analysis#

• Base Case ($133.05): Assumes starting TTM owner earnings of $6.7 billion and a 5-year growth rate ($g$) of 12.7% (matching historical 10-year owner-earnings growth rate calculated from 3-year averages), fading to 2.5% in years 6–10. Net cash of $6.3 billion ($10.0B cash less $3.7B debt) and 1.249 billion shares outstanding yield an intrinsic value of $133.05.
• Conservative Case ($91.84): Assumes starting owner earnings of $6.4 billion (treating half of capex above depreciation as upkeep) and $g$ of 6.3%.
• Optimistic Case ($163.58): Assumes starting owner earnings of $6.7 billion and $g$ of 16.7%.
• Reverse DCF Implication: At the market price of $221.75, the market prices in owner earnings growth of 22.6% annually for five years, substantially above the company's 10-year historical trajectory of 12.7%.

Valuation Takeaway#

[Inference: Baillie Gifford accumulated Lam Research substantially above DeepValues' base intrinsic value ($221.75 market price vs. $133.05 base value). The firm is paying a high growth premium, betting that semiconductor capital spending cycles will allow Lam Research to achieve cash flow growth (22.6% implied) far exceeding its decade-long historical average (12.7%).]

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2. Alnylam Pharmaceuticals, Inc. (ALNY) — Buying Near Fair Value / Optimistic Margin of Safety#

Baillie Gifford expanded its holdings in Alnylam by 125%, adding ~$753.2 million in capital to bring the position to $1.36 billion (1.3% of reported portfolio).

Financial Cash Flow Trends & Owner Earnings Reconciliation#

Alnylam exhibits a classic biotechnology commercial inflection. Between FY2016 and FY2024, the company generated persistent negative owner earnings (ranging from -$0.4 billion in FY2016 to -$0.3 billion in FY2024). Operational cash flows turned positive in FY2025 ($0.5B OCF; $0.1B owner earnings). For the TTM ended September 30, 2026, revenue reached $5.0 billion, net income rose to $2.6 billion, and operating cash flow reached $1.0 billion, delivering $0.6 billion in maintenance owner earnings ($0.5 billion under the strict all-capex view after accounting for $0.1 billion in capex against $0.1 billion in D&A).

DCF Model Parameters & Reverse DCF Analysis#

• Base Case ($146.33): Starting owner earnings of $0.6 billion, 10-year growth benchmark $g$ of 15.0%, net cash of $3.6 billion ($3.6B cash, $0.0B debt), and 0.134 billion shares outstanding yield an intrinsic value of $146.33. The stock trades 7.1% above this base case.
• Conservative Case ($100.14): Starting owner earnings of $0.5 billion with $g$ of 7.5%.
• Optimistic Case ($174.57): Starting owner earnings of $0.6 billion with $g$ of 19.0%, providing a positive +10.2% margin of safety.
• Reverse DCF Implication: At $156.74, the market implies 16.6% annual owner earnings growth over the next five years—nearly aligned with the company's 15.0% historical benchmark.

Valuation Takeaway#

[Inference: Baillie Gifford bought heavily within striking distance of base fair value ($156.74 market price vs. $146.33 base value). This allocation reflects scaling conviction in Alnylam's biopharmaceutical commercialization phase, pricing the stock comfortably within its optimistic intrinsic valuation tier ($174.57).]

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3. Amazon.com, Inc. (AMZN) — Trimming Stock Trading Above Intrinsic Value#

Baillie Gifford reduced its Amazon stake by 10%, selling ~$690.8 million of stock. Amazon remains the fund's second-largest holding at $6.02 billion (5.7% of reported assets).

Financial Cash Flow Trends & Owner Earnings Reconciliation#

Amazon generated $797.5 billion in revenue and $168.3 billion in operating cash flow for the TTM ended September 30, 2026. Under maintenance capex assumptions (capping capex at depreciation & amortization of $79.4B), owner earnings reached $69.1 billion (after subtracting $19.9B in stock compensation).

However, Amazon’s actual total capital expenditures reached an unprecedented $215.2 billion over the TTM due to massive AI infrastructure investments, creating a $135.8 billion excess capex above D&A. Subtracting total capex produces a strict owner earnings figure of -$66.8 billion, highlighting the extreme structural contrast between maintenance cash flows and strict cash outlays.

DCF Model Parameters & Reverse DCF Analysis#

• Base Case ($166.33): Assumes starting maintenance owner earnings of $69.1 billion, $g$ of 15.0%, net debt of -$66.7 billion ($114.2B cash less $180.9B debt), and 10.813 billion shares outstanding. The market price of $268.63 trades 61.5% above this base intrinsic value.
• DeepValues Intelligence Stance: A separate equity research report dated October 9, 2026, places the AMZN stance at Bearish (Score 2.88/5), pointing to a market price of $262 versus a headline intrinsic value of $208.
• Reverse DCF Implication: At $268.63, the market demands 23.9% annual owner earnings growth for 5 years, far exceeding Amazon's 15.0% historical 10-year owner earnings growth rate baseline.

Valuation Takeaway#

[Inference: Baillie Gifford trimmed a core holding that trades significantly above base intrinsic value ($268.63 market price vs. $166.33 base value). With market growth expectations (23.9%) elevated relative to historical performance (15.0%) and strict owner cash flows facing pressure from heavy AI growth capex, trimming represented disciplined capital recycling.]

Track Record: The Ten-Year 13F Clone Against the S&P 500#

To evaluate the long-term efficacy of Baillie Gifford’s US equity selection, DeepValues modeled a 10-year 13F portfolio clone covering November 10, 2016, to November 9, 2026 (40 quarterly filings).

Performance Simulation Methodology#

The clone model purchases all US-listed common stock positions reported in Baillie Gifford’s quarterly 13F filings, weighted by reported dollar value. Positions are bought at the market close on the first trading day following the SEC filing date (accounting for the public reporting lag) and held until the next 13F; returns reflect dividend-adjusted prices and are benchmarked against the SPDR S&P 500 ETF Trust (SPY).

Comparative 10-Year Performance Summary#

Annual Return Breakdown (2016 – 2026)#

• 2016 (partial period): Clone +0.4% | SPY +3.6%
• 2017: Clone +49.5% | SPY +21.7% (+27.8% outperformance)
• 2018: Clone -1.2% | SPY -4.6% (+3.4% outperformance)
• 2019: Clone +36.0% | SPY +31.2% (+4.8% outperformance)
• 2020 (Best Year): Clone +92.3% | SPY +18.3% (+74.0% outperformance)
• 2021: Clone +1.7% | SPY +28.7% (-27.0% underperformance)
• 2022 (Worst Year): Clone -44.1% | SPY -18.2% (-25.9% underperformance)
• 2023: Clone +43.2% | SPY +26.2% (+17.0% outperformance)
• 2024: Clone +25.0% | SPY +24.9% (+0.1% outperformance)
• 2025: Clone +14.5% | SPY +17.7% (-3.2% underperformance)
• 2026 (partial period): Clone -1.5% | SPY +11.5% (-13.0% underperformance)

Behavioral Analysis Through Cycles#

The quantitative track record reflects a high-beta, conviction-heavy growth profile. Baillie Gifford generates outsized alpha during technology and growth bull markets (e.g., 2017, 2020, 2023), highlighted by its peak 2020 outperformance (+92.3% vs. +18.3% SPY). Conversely, this aggressive exposure results in severe drawdowns during macro tightening cycles, such as the 2022 collapse (-44.1% clone return) and a peak-to-trough maximum drawdown of -50.7% (more than double SPY's max drawdown of -23.9%).

Standard 13F Cloning Methodology Caveats#

1. Excluded Asset Classes: 13F filings include only US-listed long equity holdings. They omit international listings (e.g., European/Asian direct shares), cash reserves, fixed income, short positions, and derivatives.
2. Reporting Lag: Filings are submitted up to 45 days after quarter-end, meaning clone entry prices lag real-time portfolio adjustments.
3. Unpriced Securities Adjustment: Historical pricing was accessible for an average of 93.8% of reported portfolio value; unpriced positions were dropped and remaining assets reweighted.
4. Not Actual Fund Performance: The 13F clone return does not represent Baillie Gifford’s actual total fund performance or client net asset values (NAV).

What a Patient Investor Can Learn#

Analyzing Baillie Gifford’s Q3 2026 13F filing alongside its 10-year track record provides four core takeaways for long-term investors:

1. Growth Investing Requires Enduring High Volatility#

Achieving structural long-term market outperformance (+16.1% CAGR vs. +15.1% SPY over 10 years) requires enduring severe volatility. Investors cannot capture high-conviction growth upside (+92.3% in 2020) without accepting deep drawdowns (-44.1% in 2022; -50.7% max drawdown). True long-term growth investing demands capital durability and emotional fortitude during extended periods of market underperformance.

2. Willingness to Pay Up vs. Margin of Safety#

[Inference: Unlike classic Graham-and-Dodd value investors who mandate a strict margin of safety below current intrinsic value, Baillie Gifford frequently buys high-conviction market leaders trading at significant premiums to current base intrinsic value (e.g., Lam Research trading 66.7% above base value). The firm relies on multi-year operational scaling and category expansion to justify elevated entry multiples.]

3. Disciplined Capital Recycling in Mega-Caps#

[Inference: Even dedicated long-term growth investors must maintain portfolio discipline. Baillie Gifford systematically trimmed multi-billion-dollar winners—releasing over $5 billion in capital from SpaceX (-$1.87B), Moderna (-$1.30B), PDD Holdings (-$1.17B), and Amazon (-$690.8M)—to fund emerging high-conviction opportunities like Lam Research (+$1.15B) and Alnylam Pharmaceuticals (+$753.2M).]

4. Accounting for Maintenance vs. Growth Capex#

Evaluating modern technology giants requires separating routine operational maintenance from aggressive forward growth reinvestment. As demonstrated by Amazon, maintenance owner earnings remain robust ($69.1B), but strict cash flow after total AI infrastructure spending ($215.2B capex vs. $79.4B D&A) turns negative (-$66.8B). [Inference: Investors must evaluate whether ongoing capital outlays yield future cash flow returns above the company's cost of capital.]

Key Numbers#

• Total US Long Portfolio Value (Q3 2026): $105.89 billion (compared to $110.22 billion in Q2 2026).
• Total Position Count: 277 positions (18 new entries, 65 added, 179 trimmed, 13 sold out).
• Net Portfolio Cash Flow: Net seller of -$7.79 billion ($5.85 billion purchased vs. $13.63 billion sold).
• Portfolio Concentration: Top 10 holdings represent 45.0% of reported US long equity value.
• Largest Single Position: NVIDIA Corp. (NVDA) at $9.72 billion (9.2% portfolio share; +2% share count change).
• Largest Single Addition: Lam Research Corporation (LRCX) added +6,028,783% in share count (~$1.15 billion added; position now $1.15 billion).
• Largest Single Trim: Space Exploration Technologies Corp. (SPCX) trimmed -24% in share count (~$1.87 billion sold; position now $5.88 billion).
• 10-Year 13F Clone CAGR (2016–2026): 16.1% vs. S&P 500 15.1% (Total Return: +345.7% vs. +307.2% SPY; Max Drawdown: -50.7%).

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Closing Note & Required Disclaimers#

Regulatory & Analytical Disclaimers:

• 13F Portfolio Limitations: Institutional SEC Form 13F filings disclose only US-listed long equity holdings as of quarter-end (September 30, 2026) and are reported up to 45 days late. These filings exclude cash balances, international non-US equity listings, fixed income instruments, short positions, options, and any transactions executed after the quarter-end date.
• Educational Purpose: This analysis is published by DeepValues Research strictly for educational, informational, and research purposes. Content contained herein does not constitute financial advice, investment recommendations, or an offer to purchase or sell any security. Independent financial due diligence should be performed prior to executing any investment decisions.