HWTF Our Views on the Market

The TMT sector is now globally very large, and technology is mission critical for businesses and governments alike. 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 optimistic about investing in the technology sector. We believe that despite economic and political uncertainties, the technology sector will continue to provide opportunities for long-term capital growth. The pace of innovation remains significant and spans across domains, from fundamental science of chip design and sensors to new cloud business models based on Application Programming Interfaces and Artificial Intelligence (AI) algorithms. Innovations are typically used as building blocks by new generations of companies to solve problems differently and more efficiently. Capital also remains abundant to fund new generations of companies. We are bottom-up fundamental investors. Key trends within the sector can act as meaningful multi-year accelerants to the underlying fundamentals of companies.

Published: Jul 20 2023 Investment Manager’s Report		Published: Jan 24,2023 Investment Manager’s Report

Published: Jul 26,2022 Investment Manager’s Report		Published: Jan 26,2022 Investment Manager’s Report

Welcome to the website for Herald Investment Management Limited (HIML). These pages provide a brief introduction to HIML and details of the funds it manages, currently Herald Investment Trust Plc, the Herald Worldwide Technology Fund and two venture capital limited partnerships.

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