Orbis' Ben Preston on overcoming market concentration and the stocks still offering value

This interview was filmed on 4 November 2025. 

It's rare to find widespread consensus in markets. If there was, stock prices would barely move.

But you'd currently be hard-pressed to find someone who wouldn't agree that the top end of global equity markets is overly concentrated and expensive. 

That's certainly the view shared by Ben Preston, Portfolio Manager for the Orbis Global Equity Fund, who says the current rally throws up some clear risks for investors. 

"It has been driven in large part by a handful of companies - mega-cap US tech stocks that have gone from quite expensive to even more expensive," said Preston. 

"When markets get very concentrated like that, it can be a little risky because investors are all trying to get into the same thing. As that unwinds, you can get market losses."

For stock investors looking to squeeze more growth out of the current rally whilst mitigating against market concentration, it might be time to stop leaning on the US. 

"We can talk about investments that we have in Korea, the UK, Brazil or Japan. Sector-wise, we can talk about healthcare, defence, even some chemicals names. So definitely quite different from what's been grabbing all the headlines, which is the big mega-cap tech."

Finding better-value AI exposure

Investors still wanting to play the market's dominant theme - AI - may be better served looking outside the tech-heavy top of the US market. 

One fairly familiar name is Korean memory provider SK Hynix Inc (KRX: 000660), which offers great exposure to AI without the extreme valuations of market leader Nvidia (NYSE: NVDA), which trades at 30 times earnings. 

"It's the leader in high bandwidth memory, it's right at the centre of AI because you need high bandwidth memory to sit on an Nvidia chip alongside their logic chips." 

"But instead of paying 30 times earnings, if you buy SK Hynix, you're paying more like nine times earnings. Earnings are going very well. They're sold out already for next year with all their memory."

On this particular stock, there's even a way to find more value, says Preston. 

"If you buy SK Hynix through SK Square, which is a holding company - that's priced at a 60% discount. So you're really effectively paying four times earnings for SK Hynix." 

"The reason is because these legacy concerns about Korean corporate governance, which is actually improving. Either SK Hynix does really well or you get a slight narrowing of this discount."

Healthcare

For investors looking to diversify away from tech and AI, healthcare is a sector at the other end of the spectrum, says Preston. 

"A lot of investors have been throwing money to try and participate in technology and AI, but something like healthcare - money's actually been coming out of the sector," he said.

"Trump has been pouring cold water on it as we know, so there's a bit of a down cycle in that sector. When you have that down cycle, that's when investors can get quite pessimistic and that produces low share prices. And then we can take advantage of that."

For investors willing to do the research, the sector offers plenty of opportunities. 

"There are some really good healthcare companies out there - that's true of the health insurers, equipment providers, testing companies and the drugs companies themselves. Things like Genmab (CPH: GMAB) and Alnylam (NYSE: ALNY) doing really interesting things with new drugs. Investors don't tend to pay them that much attention because they're complicated and they take a little bit of a while to understand."

Overcoming concentration 

Preston believes it is prudent to "make sure you've got a range of different funds, managers or shares that will do well in different environments. In that way, whatever the future might hold, you've got something that will do well in that environment and that puts you in a much better position to get good risk-adjusted returns."

Overcoming overvaluations 

An expensive stock market makes a sensible investing strategy especially crucial.

"I would think that it's a good time to be a little concerned about valuations," said Preston. "There are usually ways to buy companies and protect a little bit around the downside if you're disciplined about the price that you pay."

The other big consideration is to keep an open mind and avoid a pitfall many investors are often guilty of - getting tunnel vision on a certain thesis or outlook and not protecting against other eventualities. 

"There are thousands of companies out there that you can buy, that - if you're really careful about picking shares - have the downside protection you need. The way to do that is to imagine a whole range of future scenarios, not just whatever you think is the most likely thing to happen."

Ultimately, taking a slightly contrarian approach can often be the most prudent way to manage concentration risk, says Preston.

"Do your homework and be prepared to be bold and to do something that's a bit different from what others are doing. It can seem risky. It can actually be less risky.