Global Equity Analyst 24 May 2019
The world is being redrawn in many ways, and technology is at the heart of this change.
So-called FAANG stocks are the poster-children for 21st Century tech disruption. But while we like some of these businesses, we think lots of the most compelling investments are in other industries, where companies strengthening their positions by using technology to serve their customers better and stay ahead of the competition. That’s why we hold these types of company in our HL Select Global Growth fund.
This article isn’t personal advice. All investments can fall as well as rise in value so you could get back less than you invest. If you’re not sure if an investment is right for you please ask us for advice.
Holidays are as old as time but the internet has made them cheaper and easier to book. How many of you have been to a travel agent recently to book a holiday? Very few, I imagine, thanks to online travel and accommodation related services, like those provided by Booking Holdings.
This company owns brands including Booking.com, Priceline.com and Kayak.com, all there to help you search, compare and book accommodation, flights and even car hire.
Booking.com is the jewel in the company’s crown, operating in over 220 countries and hosting some 30 million rooms. It‘s also a top-10 travel app in 117 markets across the world and we think its strong presence in China presents a great opportunity for further growth in the Asia-Pacific region.
Cars and houses
In the world of car and house buying, online platforms haven’t done away with physical ‘stores’ but, instead, they’ve provided buyers with a place to compare a large amount of ‘for sale’ stock, so you know more about what you’re buying and whether you’re getting a fair deal, before you buy it.
We like Rightmove and Autotrader in the UK but an example further afield is Carsales.com, the largest online car sales business in Australia. As well as taking a small cut from car sales initiated via their website, Carsales is also starting to harness data generated on the website to help dealers manage inventory and improve profitability, for a fee.
The gaming industry, too, has seen rapid evolution over the last couple of decades. From board games to Game Boys and now the cloud, questions of where, how and with who have all changed for gamers.
The days of needing a console, disc and your friends huddled around the TV in your bedroom to enjoy competitive entertainment are on their way out. Thanks to new tech and the internet, you can ‘connect’ and play with friends all over the world now. You can even buy tickets to watch gaming competitions played in huge arenas, a term coined ‘eSports’.
One company that’s taken advantage of this shift is Ubisoft. We think they’re in prime position to generate high quality, recurring revenues from downloads, subscriptions and in-game purchases far out into the future.
FAANGs we like
Retailing itself isn’t a new industry, but online platforms upended the cart by spotting that buying and selling something didn’t require a shop. The best example is, of course, Amazon which has built a catalogue of over 300 million products and can get your purchase to you the same day, in some instances.
Thanks to its success as an online retailer Amazon has had the freedom to invest into other ventures, including ‘the cloud’ – another ‘techy’ term that’s promising to reshape the world.
And finally Google, or as the stock is now known, Alphabet. The famous search engine has such a strong position in its market that ‘google’ has become a commonly used verb. That type of brand strength is just the ticket we’re after.
Importantly, we don’t mind how a company is categorised. FAANG or no FAANG, it’s the strength of the business which influences our decisions. We simply aim to invest in businesses that have something so special they can be price-setters, not price-takers.
Often technology gives companies this power but not all our holdings are technology stories. We’re big believers in the value of consumer brands, and we back some businesses where we can see long-term staying power and growth potential in their brand portfolios. Other companies we invest in are just unique businesses that command their own industries, through the sheer strength of their capabilities.
Read more about the FAANGs
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This fund can fall as well as rise in value so you could get back less than you invest, especially over the short term. Information provided about individual companies is our view as managers of the fund. It is not a personal recommendation to invest. If you are at all unsure of an investment’s suitability for you please seek personal advice. The HL Select Funds are managed by our sister company HL Fund Managers Ltd.
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