Podger is on the hunt for more technology bargains after snapping up Amazon (AMZN.O) close to March lows of around $1,700. The shares have nearly doubled from those levels, trading at over $3,100 today, and are now the fund’s fourth largest holding, at 2.7% of the portfolio.
The manager bought Tesla (TSLA.O) in December ahead of a 400% rally this year and has already banked some quick profits. Podger said shares in the electric car maker had ‘done very well and we’ve taken more money out of that than we put in’.
Now he is looking to bolster the fund’s holdings in companies leveraging the use of technology, while avoiding some of the priciest technology shares that have led the stock market rebound from March lows, and some of the initial public offerings (IPOs) from the sector at high valuations.
‘We need to be smart about this,’ he said. ‘Technology is not what it used to be… technology is all pervasive… we are not referring to a narrow sector definition but looking for the companies utilising trends in technology to their benefit, to grasp a larger share of their industry.’
‘When we look at the change going on in the world, we don’t want to look back in five years and the world has changed…but we decided to stick to the old economy players,’ he said.
Podger pointed to his holding in car company Volkswagen (VOW3.DE) as an example. While the shares trade on a fraction of the rating handed to Tesla, he said Volkswagen was employing ‘a credible electric vehicle strategy’.
The manager meanwhile warned the hype around technology stocks was leading to IPOs at valuations that were ‘extremely stretched at the time of coming to market and in the aftermath’ and much higher than comparative companies a year earlier. ‘There is massive enthusiasm and we are a little cautious on that,’ he said.
Global investors are currently looking towards the IPO of Chinese financial group Ant Financial, which is predicted to raise $30bn (£23bn) when it floats this year. Although Podger said it was ‘a very large market cap company and very dominant in the areas it plays in’, he did not say whether he planned to take part in the raise.
Podger (pictured) remains ‘cautious but reasonably constructive’ on the outlook for global equities over the longer term, adding that government support would determine their direction in the short term.
‘In the US I would say we are looking at another potential support package that has been held up in government process,’ he said.
‘Generally, there is a lot of liquidity around and that will support markets. I am concerned it will lead to bubble conditions but at this stage we are not at dangerous levels and we are happy to remain exposed.’
Podger said he was maintaining a ‘sensible mix of growth and value’ in the portfolio, which has delivered a return of 8.8% over the past year against a 7% return for the average fund in its Investment Association Global sector. Over three years, the fund has returned 30.1%, outpacing the 26.6% from the average fund.
‘At the other end we are looking at value stocks. In healthcare, we added a US drug distributor on an extremely cheap rating – it is somewhat under a cloud over opioid issues but we think it will improve and the revenue growth rate will pick up,’ he said.
‘We are also looking at insurance companies. Rates are firming up and the valuations are very cheap, particularly in Europe and I think the sector is under a cloud because the regulators encouraged them to conserve cash and reduce dividends but those constraints are lifting.’