Hawtin: There’s never been a better time to invest in tech
The manager says there will eventually be more smartphones than people on the planet and has positioned his fund to take advantage of this trend.
By Joshua Ausden, News Editor, FE Trustnet
Saturday June 02, 2012
The increased mobility sweeping through the technology seector has created a once-in-a-generation buying opportunity, according to Mark Hawtin, manager of the GAM Star Technology fund.
While newspaper headlines have been dominated by the disappointing Facebook IPO, Hawtin says this shouldn’t detract from the compelling opportunities in the sector.
"Throughout the internet era there has been no better time to invest, a view heavily endorsed by reasonable valuations in most parts of the technology chain," he said.
"The NASDAQ 100 is trading at the cheapest level seen for many years – 13 times in 2012, and [a projected] 11.3 times in 2013."
"Without exception, the trend to greater mobility is seen as driving the biggest opportunity in technology, perhaps that we have ever seen. Without exception, companies expect at least 80 per cent of mobile devices to be 'smart' and that there will ultimately be more of these devices than people on the planet."
Other areas that Hawtin is positive on are cloud technology, social networking, video and mobile payments, which will all be effectively driven by greater mobility.
"These are the services that sit on top of the mobile and fixed devices that are in turn enabled by the internet. Huge medium- to long-term growth potential exists in the digital economy, a sector that should generate Alpha in a very difficult equity market."
Hawtin avoided Facebook, as he favours companies that service the social networking phenomenon rather than the companies themselves.
"In the gold rush it was better to buy the manufacturers of picks and shovels than the gold prospectors - in the internet world we favour the infrastructure and service providers than social networks themselves," he explained.
"Notwithstanding rare exceptions like Apple, everything in technology is focused on user experience, and that tends to be driven by software innovation."
"Technology giants such as Google and Microsoft also present interesting investment opportunities in the current market. Microsoft has significant tailwinds from the launch of Windows 8 that should ensure strong revenue growth."
"At the same time, the Ultrabook initiative will be a worthy challenger to the iPad or Macbook Air. Google continues to innovate and dominate the online advertising world and is still best placed to capitalise on mobile advertising," he added.
Performance of fund vs benchmark since launch
Source: FE Analytics
GAM Star Technology, which is an FSA Offshore Recognised portfolio domiciled in Ireland, has delivered 12.18 per cent since its launch in February 2011. The fund’s MSCI World Information Technology index has returned 3.56 per cent over this period.