Yesterday (26/1/2022) I attended two interesting webinars. These overlapped in time and it’s rather tricky to watch two at the same time but I think I got most of the interesting parts covered.
The most important one was a presentation by Allianz Technology Trust (ATT) organised by ShareSoc. This has been badly hit by the fall out in the technology sector in the last few weeks which has affected my holding in the Trust and many other holdings in my portfolio – the rout continued this morning after some recovery yesterday. I commented on this situation a week ago when I said “My feeling is that maybe prices of some of the stocks favoured by these companies have become over-inflated but that I still feel that they are better long-term bets than the traditional “value” plays. The world has been changing and technology has responded to meet the new challenges. Those companies that will meet the new demands of world markets are the ones where profits will rise in future”. So it was interesting to hear what investment manager Mike Seidenberg had to say about it.
He quoted the CEO of Microsoft who reportedly said “we are part of the digital transformation of businesses”. Mike suggested companies need to become digitally transformed because of the impact of the Covid epidemic.
In response to a question about the higher valuations of businesses they hold he agreed they are on higher P/Es than the market but they are also higher growth. What are they excited about? He answered collaboration software and automation to reduce the cost of labour – there is a global labour shortage.
He was asked why they sold out of Tesla but bought it back so it’s now the second largest position. Mike suggested that Tesla was now taking cost out of the product by vertical integration giving them a strong competitive position and there was a “halo” effect as Tesla cars hold their resale value. With more EVs in the market, more people now see them as mainstream. This bullish view of Tesla was backed up on the same day by results from the company as it reported a record net profit of $2.3bn in the fourth quarter of 2021. Despite some supply chain issues Elon Musk expects sales volumes to grow by more than 50% this year.
Another question raised was on performance fees in the trust and why invest in an active manager rather than an equivalent index fund. Mike suggested you are investing in a team and a process – you need to look at the long-term performance.
He concluded by saying it was a distinct advantage being immersed in the technology in the Bay Area which I can well understand being familiar with the area. In fact they have an office in Francisco on Mission Street in downtown San Francisco.
This was very amusing as on the same day the Financial Times ran an article on how San Francisco was “scaring away the tech crowd” due to crime and homelessness. Housing is also very expensive and technology companies have been moving employees to other cities. The social problems in San Francisco have been known about for many years and the Mission District was never an area to be wandering about in late at night. The FT article was clearly written by someone with little knowledge of the area.
In summary Allianz Technology Trust still looks to be well managed to me and I did not perceive any concerns with their market stance but clearly as they are focussed on technology companies they won’t be avoiding the general trends in that sector.
The other webinar I attended was one organised by Kidney Research UK which covered the impact of the Covid epidemic. As all of my family, other than I and my wife, have recently caught the disease there was interesting data on vaccination impact. I actually had a fourth vaccination two days ago because it seems that 25% of those with poor immune systems have not been creating antibodies. This was data from the “Melody” study in which I participated. Whether a fourth dose of a vaccine might help has yet to be determined.
But the heart-warming session was a talk by a young lady named Andrea who had been on kidney dialysis since being a baby but had recently had a transplant from a relative. She said she now felt “invincible”. It was a great example of how kidney transplants transform the life of such patients.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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