Polar Capital Technology Trust PLC · LSE:PCT
Polar Capital Technology Trust — FY2013 Earnings Presentation
32 slides from Polar Capital Technology Trust's earnings presentation, July 2013
Slide 1: Polar Capital Technology Trust Plc Full year results presentation
Polar Capital Technology Trust Plc Full year results presentation Ben Rogoff July 2013 This presentation is for one-on-one use with non-US professional investors only www.polarcapital.co.uk
Slide 2: Full year results
Full year results 30/04/12 30/04/13 Movement (%) Net Assets £503,292,000 £528,845,000 +5.1% NAV per ordinary share 392.56p 412.41p +5.1% Ordinary shares in issue 128,208,023 128,231,742 Price per ordinary share 387.00p 398.50 +3.0% Subscription shares in issue 24,798,179 24,774.460 Price per subscri
Slide 3: Full year review
Full year review Technology vs. FTSE World, in £: April 2012 - Present • After a weak start, equities rally for the remainder of FY13 as decisive intervention trumps a weak economic recovery • Technology stocks trailed significantly due to disappointing capex trends, PC and Apple / smartphone-relate
Slide 4: Undemanding Valuations
Undemanding Valuations Forward absolute PE: 1992 – present Forward relative PE: 1992 – present Source: Ned Davis, as at 14 June 2013. For non-US investor use only. Please refer to the Important Information at the end of this presentation. 4
Slide 5: 2010: Harnessing The Potential Of The New Cycle
2010: Harnessing The Potential Of The New Cycle “The battle between local and distributed forms of computing has already been played out in the world of electricity generation at the end of the 19th century. Once it became economically possible to distribute power over long distances, incumbent tech
Slide 6: 2011: Public Clouds And The Mass Production Of IT
2011: Public Clouds And The Mass Production Of IT “The shift to cloud computing represents nothing less than the industry transitioning to a mass production model. Standardisation is making it possible to deliver a more monolithic, easily automated form of IT… Just as the skyscraper changed the skyl
Slide 7: 2012: The Internet And The Mass Adoption Of IT
2012: The Internet And The Mass Adoption Of IT “Cheap and plentiful bandwidth, aided by the proliferation of smartphones and tablets has enabled the Internet to become truly ubiquitous. This process bears close resemblance to the post-war experience of the aviation industry which was transformed by
Slide 8: What Does The New Technology Cycle Look Like?
What Does The New Technology Cycle Look Like? IT spending unlikely to resemble the 1990s1 Profound shift in IT priorities2 Ranking 2013 2012 2011 2010 2009 Analytics and Business Intelligence 1 1 5 5 1 Mobile technologies 2 2 3 6 12 Cloud computing (SaaS, laaS, PaaS) 3 3 1 2 16 Collaboration technol
Slide 9: Cloud Computing: IT as a Variable Cost
Cloud Computing: IT as a Variable Cost • Unrelenting data growth + budget pressure is forcing an architectural rethink away from the “IT sprawl” • Data centre consolidation enabled by virtualisation / bandwidth offers significant power, real estate, labour savings • „Clouds‟ predominantly private fo
Slide 10: Broadband Applications: Expanding The Market
Broadband Applications: Expanding The Market • Social, mobile and cloud adoption driving growth of online advertising, e-commerce and SaaS • iPhone/Android users access e-commerce 4x more vs. other smartphones and 10-20x non smartphone users1 • Software as a service (SaaS) targets a $150bn opportuni
Slide 11: Mobile Computing: Making The Internet Ubiquitous
Mobile Computing: Making The Internet Ubiquitous • Smartphone penetration (> 1bn globally1) has transformed the value of the Internet (Metcalfe‟s Law) • Less exposure to smartphones (due to 42% penetration rate2), focused instead on emerging markets, LTE and mobile payments • Mobile data is forecast
Slide 12: The Next Big Thing? “Big Data”
The Next Big Thing? “Big Data” • The commercial Internet is only 22 years old but has already Encyclopaedia Britannica Hard Copy Sales vs. Wikipedia1 disrupted a number of industries such as travel and retail by – Democratising access to information – Accelerating the flow of information – Reducing
Slide 13: The Next Big Thing? “Big Data”
The Next Big Thing? “Big Data” • According to the Oxford Dictionary, an expert is „a person who is very knowledgeable about or skilful in a particular area‟ • Experience and empirical observation underpin most skilled professions (including ours!) and form the basis of decision- making based on the
Slide 14: The Next Big Thing? “Big Data”
The Next Big Thing? “Big Data” • According to the Oxford Dictionary, an expert is „a person who is very knowledgeable about or skilful in a particular area‟ • Experience and empirical observation underpin most skilled professions (including ours!) and form the basis of decision- making based on the
Slide 15: New Cycles Challenge The Value Of Incumbency
New Cycles Challenge The Value Of Incumbency Source: Bloomberg Source: Bloomberg Source: Bloomberg Source: Bloomberg. It should not be assumed that recommendations made in future will be profitable or will equal performance of the securities in this document. A list of all recommendations made withi
Slide 16: New Cycles Challenge The Value Of Incumbency
New Cycles Challenge The Value Of Incumbency “The Innovator‟s Dilemma” How low-end disruption occurs over time “This…is about the failure of companies to stay atop their industries when they confront certain types of market and technological change. It's not about the Performance failure of simply a
Slide 17: New Cycles Challenge The Value Of Incumbency
New Cycles Challenge The Value Of Incumbency Global Technology M&A avg. premiums: 1995 – 20111 Select M&A activity2 Date Target Acquirer Premium Value $m Dec-11 SuccessFactors SAP 52% 3,368 Dec-11 Demandtec IBM 72% 411 Dec-11 Blue Coat Systems Private equity 52% 837 Feb-12 Taleo Oracle 25% 1,838 May
Slide 18: New Cycles Challenge The Value Of Incumbency
New Cycles Challenge The Value Of Incumbency US Technology sector (weighted) 1969 - present US Technology sector (un-weighted) 1969 - present Source: Piper Jaffray, November 2012. For non-US investor use only. Please refer to the Important Information at the end of this presentation. 18
Slide 19: PCT Positioning
PCT Positioning Sector and geographic exposure (%) Market cap exposure (%) Software 23.0% Semiconductors & Semiconductor Equipment 22.6% Internet Software & Services 14.0% Communications Equipment 10.1% Large (greater than US$10bn) 68.1% Computers & Peripherals 9.9% Medium (US$1bn to 10bn) 24.1% IT
Slide 20: PCT Positioning
PCT Positioning Largest overweights Largest underweights Market cap exposure versus benchmark1 Amazon Amadeus Check Point Software Tech Apple Ebay Baidu Large-cap --10.71% Entegris Canon Facebook Cisco Systems Impax Environmental Markets Dell Imperva EMC Infoblox Hewlett-Packard Mid-cap 4.54% Integr
Slide 21: Outlook
Outlook • We remain constructive on equity markets, although volatility is likely to persist - aligned interests / undemanding valuations / strong balance sheets • Our conviction in a new technology cycle continues to increase - pace of innovation / adoption appears to be accelerating - modest budge
Slide 22: Appendix
Appendix For non-US investor use only. Please refer to the Important Information at the end of this presentation. 22
Slide 23: PCT Performance
PCT Performance 10 year PCT performance: April 2003 – April 2013 350 325 300 275 250 225 200 175 150 125 100 75 Apr 03 Oct 03 Apr 04 Oct 04 Apr 05 Oct 05 Apr 06 Oct 06 Apr 07 Oct 07 Apr 08 Oct 08 Apr 09 Oct 09 Apr 10 Oct 10 Apr 11 Oct 11 Apr 12 Oct 12 Apr 13 Source: Bloomberg, as at 2/8/11 Dow Jones
Slide 24: Introduction To The Team
Introduction To The Team • Technology is at the core of the Polar Capital business • One of the largest technology franchises in Europe with c. US$1.3bn under management • Six dedicated technology specialists – strong multi-cycle track record Global Technology Fund Technology Trust Strategy Funds US
Slide 25: Investment Framework
Investment Framework 3000+ universe Dynamic definition of technology Thematic overview Real-world changes in user behaviour S-Curve inflections What we look for Secular themes/pure-plays Last-generation winners What we avoid Public venture capital Growth bias – rev/earnings/cash flow Valuation Price
Slide 26: S-Curve: Identifying Themes & Product Cycles
S – Curve: Identifying Themes & Product Cycles R&D High growth Low growth No growth negative OM% expanding OM% stable OM% uncertain / declining OM% Enterprise software / offshore Dev mkt smartphones (inc. iPhone) LCD TV / HDTV Wireless Networking (802.11n / ac) Notebooks Server & Storage Virtualisat
Slide 27: Team Biographies
Team Biographies Ben Rogoff, Director – Technology Experience: 15 years Ben joined Polar Capital in May 2003. He is lead manager of Polar Capital Technology Trust plc and is also joint manager of Polar Capital Global Technology Fund. He has been a technology specialist for 15 years. Prior to joining
Slide 28: Team Biographies cont.
Team Biographies cont. Fatima Iu Experience: 8 years Fatima joined Polar Capital in April 2006 after working as an analyst with Citigroup Asset Management for 18 months. She focuses on European technology stocks and has responsibility for coverage of the global alternative energy and medical technol
Slide 29: Team Biographies cont.
Team Biographies cont. Xuesong Zhao Experience: 5 years Xuesong joined Polar Capital in May 2012, having spent most of the previous four years working as an investment analyst within the emerging market & Asia team at Aviva Investors, where he was responsible for the technology, media and telecom se
Slide 30: Apple
Apple • The stock has continued to materially outperform primarily due to earnings progress, not multiple expansion • Our second largest position at c.5.3% of NAV, but our largest underweight position versus the benchmark • Positives: product pipeline, ecosystem, IP position, valuation / balance she
Slide 31: Important Information
Important Information Polar Capital 4 Matthew Parker Street London SW1H 9NP House View This document has been produced based on Polar Capital research and analysis and represents our house view. All sources are Polar Capital unless otherwise stated. Important Information The information provided in
Slide 32: Important Information Cont.
Important Information Cont. Polar Capital 4 Matthew Parker Street London SW1H 9NP Regulatory Status This document is Issued in the UK by Polar Capital. Polar Capital LLP is a limited liability partnership number OC314700. It is authorised and regulated by the UK Financial Conduct Authority (”FCA”) a
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