HWTF Our Views on the Market

The TMT sector is now globally very large, and technology is mission critical for businesses and governments alike. Penetration of mobile telephones and networked personal computers has risen dramatically. Does the sector still have attractions?

1) The sector generally has little debt, and many substantial companies have significant cash balances. This proved a drag on the sector in relative terms, when there was a credit boom, but has provided resilience in the downturn, and offers the potential for earnings enhancing acquisitions, at prices reasonable for the sellers, while cash yields so little. Furthermore, products and services are not generally acquired with debt as in sectors such as property and cars.

2) There is a significant amount of non discretionary recurring expenditure – maintenance, data centres, security such as unified threat management, rental and hosted software models, domain names, etc. Companies with recurring models may not offer the highest growth rates, but should command a premium for certainty.

We continue to be excited about our sector.

Investment Manager’s Report, February 03 2021

Cyber Security February 12 2021

Semiconductors December 4 2020

Thoughts on Tech Regulation October 09 2020

Interim Investment Manager’s Report, July 28 2020

Buybacks, Another Factor Supporting Technology Stocks, July 6 2020

What we see across the Technology Value Chain, April 27 2020

Market Commentary, March 31 2020

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