Deep-dive: Winners in technology
WAM Capital, WAM Microcap, WAM Research and WAM Active Portfolio Manager Tobias discusses where the team sees value in a sector that has ridden the wave of stimulus.
James Marlay: Tobias, tech was a real winner over the past twelve months, a sector that you know really well. What is your view on the tech space at the moment?
Tobias Yao: The team has done a great job pivoting away from the high price-to-earnings (P/E) tech names to cyclical and value names. We still have a little bit of tech exposure, but our ideas are now concentrated on companies on reasonable P/E multiples, and these companies are not coronavirus beneficiaries. To give you some examples, we have holdings in WAM Capital (ASX: WAM) in Aristocrat (ASX: ALL), which actually over 50% of its business is now online digital gaming. We have holdings in Carsales (ASX: CAR), which we really like the recent acquisition, but also we liked the transition to the transaction model. Going forward, we think that is going to permanently lift the revenue growth profile over the medium term. We also have a large holding in Codan (ASX: CDA), one of the global leaders in metals detection and communications hardware.
In the WAM Microcap (ASX: WMI) space we have holdings in Atomos (ASX: AMS), which is an innovative monitor recorder business, and Vista Group (ASX: VGL) which is the leader in software solutions for cinemas. There are definitely still pockets of opportunities, but it is fair to say we have become a lot more selective in where we deploy our capital in the area.
