Polar Capital Technology Trust PLC · LSE:PCT
Polar Capital Technology Trust — H1 2012 Earnings Presentation
28 slides from Polar Capital Technology Trust's earnings presentation, Dec 13, 2011
Slide 1: Half Year Presentation
Polar Capital Technology Trust plc Half Year Presentation 13th December 2011 POLAR CAPITAL This presentation is for non US investors only
Slide 2: Half year results: Financial highlights
Half year results Financial highlights Undiluted net assets per ordinary share Price per ordinary share Total net assets 350.48p 353.50p £447,669,000 30 April 2011: 368.74p 30 April 2011: 373.50p 30 April 2011: £468,716,000 -5.0% -5.4% -4.5% Benchmark over the half year (Dow Jones World Technology I
Slide 3: Half year review
Half year review Technology performance vs. global equities, 1H FY11 • ‘Top down’ developments weigh on risk appetite / equity markets during the half year • Continued technology outperformance due to both passive (US market / USD) and active (large-cap / strong balance sheets) factors • NAV perform
Slide 4: Market headwinds
Market headwinds Select technology performance: CY 2011 Select technology performance: post 2008 lows US small cap US small cap US large cap US large cap unweighted unweighted Source: Bloomberg, as at 23/9/11 Source: Bloomberg, as at 23/9/11 4 POLAR CAPITAL Please refer to the important information
Slide 5: Market headwinds
Market headwinds Correlation of S&P tech stocks vs. sector: 1972 - Present IBM relative vs. US 10yr Treasuries (price): 12/09 – Present Source: S&P/MSCI GICS, as at 2/12/11 Source: Bloomberg, as at 9/12/11 5 POLAR CAPITAL Please refer to the important information at the end of this presentation
Slide 6: Capital spending trends
Capital spending trends IT capital spending as % GDP: 1947 - Present ISM vs. IT expenditure: 1948 - Present Source: Ned Davis, as at 30/9/11 Source: Ned Davis, as at 30/9/11 6 POLAR CAPITAL Please refer to the important information at the end of this presentation
Slide 7: Undemanding valuations
Undemanding valuations Forward absolute PE: 1992 - Present Forward relative PE: 1992 - Present Source: Ned Davis, as at 25/11/11 Source: Ned Davis, as at 25/11/11 7 POLAR CAPITAL Please refer to the important information at the end of this presentation
Slide 8: A new technology cycle is under way
A new technology cycle is under way IT spending: unlikely to resemble the 1990s IT spending: profound shift in priorities Source: Goldman Sachs, as at January 2011 Source: Gartner, December 2010 8 POLAR CAPITAL Please refer to the important information at the end of this presentation
Slide 9: Cloud computing: mass production of IT
Cloud computing: mass production of IT • Budget pressure proves the welcome catalyst for an architectural rethink from the 80/20 ‘rule’ • Datacentre consolidation driven by power-related savings, enabled by virtualisation / Internet • Private clouds de-risk the concept but ‘public clouds’ significan
Slide 10: Broadband applications: expanding the market
Broadband applications: expanding the market • The Internet has led to new applications incl. online advertising, e-commerce and SaaS • Software as a Service (SaaS) targets an $150bn opportunity, c.10% penetrated today* • Legacy software vendors’ maintenance streams at risk as SaaS gains further tra
Slide 11: Ubiquitous computing: driving mobile data
Ubiquitous computing: driving mobile data • Smartphone penetration in the ‘sweet spot’, driven by new devices, flat pricing and new apps • New entrants and their own eco-systems have captured a disproportionate share of profits • Gartner forecast tablet market reaching 54m units in 2011; complement
Slide 12: Emerging market exposure. Finally.
Emerging market exposure. Finally. • Consumption a key driver in China growth story which should ensure tech sector participation • Household disposable income growth commensurate with ‘big ticket’ items = huge opportunity • Macroeconomic risk relating to wage inflation should result in a greater fo
Slide 13: Cloud = mass production of IT
Cloud = mass production of IT standardisation automation scale 13 POLAR CAPITAL Please refer to the important information at the end of this presentation
Slide 14: Cloud = mass production of IT
Cloud = mass production of IT HTTP DNS Ethernet TCP / IP standardisation automation scale 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 within the immediately preceding
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 within
Slide 16: New cycles challenge the value of incumbency
New cycles challenge the value of incumbency “The Innovator’s Dilemma” “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 failure of simply any company, but of good companies - the kinds that m
Slide 17: New cycles challenge the value of incumbency
New cycles challenge the value of incumbency “The Innovator’s Dilemma” Select M&A activity: recent acceleration Source: Christensen, Clayton M. Source: UBS, * Polar using Bloomberg estimates It should not be assumed that recommendations made in future will be profitable or will equal performance of
Slide 18: New cycles challenge the value of incumbency
New cycles challenge the value of incumbency Global Technology M&A deal value: 1995 - 2011 Global Technology M&A Avg. Premiums: 1995 - 2011 Source: UBS Source: UBS 18 POLAR CAPITAL Please refer to the important information at the end of this presentation
Slide 19: 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 Source: Piper Jaffray 19 POLAR CAPITAL Please refer to the important information at the end of this presentation
Slide 20: New cycles challenge the value of incumbency
New cycles challenge the value of incumbency US Technology: equally weighted Source: Piper Jaffray 20 POLAR CAPITAL Please refer to the important information at the end of this presentation
Slide 21: New cycles challenge the value of incumbency
New cycles challenge the value of incumbency US Technology: market-cap weighted Source: Piper Jaffray 21 POLAR CAPITAL Please refer to the important information at the end of this presentation
Slide 22: Sentiment / timing indicators
Sentiment / timing indicators • Valuations (absolute / relative) +/+ • Sector overbought / oversold + • New issue markets 0 • Year-over-year price change - • Short Interest ratio 0/+ • US retail investor sentiment 0/+ 22 POLAR CAPITAL Please refer to the important information at the end of this pres
Slide 23: Sentiment / timing indicators
Sentiment / timing indicators MLO Index vs. 200 day moving average (12/01 – Present) Net % overweight US technology, 2003 – Present Source: Bloomberg, 9/12/11 Source: BofAML, October 2011 NASDAQ Composite short interest (1983 – August 2011) Investor Sentiment (AAIIBEAR – AAIIBULL) 2007 – Present Sou
Slide 24: Portfolio Summary
Portfolio Summary (as at 31/10/11) Source: Polar Capital, as at 31/10/11 Source: Polar Capital, as at 31/10/11 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 within the i
Slide 25: Portfolio Summary
Portfolio Summary Largest overweights Largest underweights Amazon.com Analog Devices ARM Holdings Apple ASM Pacific Tech Applied Materials Market Cap exposure versus benchmark Citrix Systems Canon CommVault Systems Cisco Systems Concur Technologies Hewlett-Packard Constant Contact HTC eBay Infosys F
Slide 26: Outlook
Outlook • ‘Top-down’ fear creates investment headwinds during 1H11 - significant underperformance of small-caps and un-weighted indices • Volatility likely to persist as a ‘solution’ proves elusive • Systemic risk an ‘echo’ rather than a ‘repeat performance’? • Technology well positioned assuming ‘w
Slide 27: Important Information
Polar Capital Four 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 this presentation i
Slide 28: Regulatory Status
Polar Capital Four 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 Financial Services Authority. A list of members is open to inspec
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