Taking an old school approach to tech investing
By International Adviser, 25 Jul 18
Technology is undoubtedly today’s most discussed investment sector, with the high-profile FAANGs front and centre of most conversations. But it is important to recognise the opportunities within the diverse tech sector run far deeper, says Jacob Mitchell, portfolio manager and chief investment officer of Antipodes Partners.
Until recently, Cisco’s shares traded at less than half the valuation of comparable companies.
The growth of web-scale vendors has placed different demands on networking providers – with the growing client preference for customised, rather than out of the box, solutions.
It is entirely within Cisco’s capabilities to address this need, as few are better resourced or know more about networking than Cisco.
Cisco’s business model is also evolving as it layers deeper software capabilities into its solutions, providing a pathway to deliver its technology stack via subscription, rather than product sales.
While this has created a short-term headwind to reported growth, it will significantly grow customer lifetime value as subscriptions are adopted.
For now, Cisco’s valuation offers a significant margin of safety and recent tax reform has provided a further boost.
Tags: FAANG | Investment Strategy
