Polar Capital Technology Trust PLC · LSE:PCT
Polar Capital Technology Trust — FY2008 Earnings Presentation
24 slides from Polar Capital Technology Trust's earnings presentation, Jun 12, 2008
Slide 1: Polar Capital Technology Trust PLC Results Presentation
POLAR CAPITAL PARTNERS Polar Capital Technology Trust PLC Results Presentation Ben Rogoff 12th June 2008
Slide 2: Contents
Contents 1) Performance 2) Why technology? 3)) Keyy Themes 4) Portfolio positioning / short-term outlook 5) Conclusions 2 POLAR CAPITAL PARTNERS
Slide 3: Performance
Performance 3 POLAR CAPITAL PARTNERS
Slide 4: Results Y/E 30 April 2008
Results Y/E 30 April 2008 Net Assets £300.4m NAV per share -5 4% -5.4% Technology Performance Index Performance Source: Polar Capital Partners / Bloomberg 4 POLAR CAPITAL PARTNERS
Slide 5: FY 2008 Performance
FY 2008 Performance • Issues: • Non-US exposure a drag (Europe – 16.6%, 16 6% Japan – 6.3% 6 3% vs vs. W1TEC +1.5%) • US mega caps significantly outperform (Russell 1000 Tech +0.9% vs Russell 2000 Tech -15.2%) • Underperformance in Asia S Source: P Polar l C Capital. it l EEuropean and d JJapanese p
Slide 6: FY 2008 Performance
FY 2008 Performance • Response • US weighting increased with more balance between large, mid and small cap • Asian exposure reduced and rebalanced • Tighter parameters introduced for European and Asian portfolios • Team strengthened with recruitment of Nick Evans from Framlington • BAR overseeing no
Slide 7: Why Technology?
Why Technology? 7 POLAR CAPITAL PARTNERS
Slide 8: Why Technology? Superior Earnings Profile
Why Technology? Superior Earnings Profile Global Sector P/E and Growth estimates (2008-9) Source: Lehman Brothers POLAR CAPITAL PARTNERS
Slide 9: Why Technology? Undemanding valuations
Why Technology? Undemanding valuations Absolute P/E Current Relative P/E Source: Ned Davis Research, as at 23/5/08 Source: Ned Davis Research, as at 23/5/08 POLAR CAPITAL PARTNERS
Slide 10: Sector should fare relatively well in a downturn
Why Technology? Sector should fare relatively well in a downturn US Net Technology Investment as % of GDP Source: CSFB POLAR CAPITAL PARTNERS
Slide 11: Favourable rate cycle dynamics ahead
Why Technology? Favourable rate cycle dynamics ahead Ratio of Technology Sector to S&P 500 (equal-weighted) around end of Fed easing cycle Source: Ned Davis Research, using rate cycle analysis since 1980. POLAR CAPITAL PARTNERS
Slide 12: A new technology cycle underway
Why Technology? A new technology cycle underway “The Distributed Computing Wave” • Plentiful bandwidth and internet-based t h l i are driving technologies d i i the th ‘distributed ‘di t ib t d computing’ cycle • Broadband proliferation resulting in ubiquitous computing / convergence •Internet deliv
Slide 13: Key Themes
Key Themes 13 POLAR CAPITAL PARTNERS
Slide 14: A number of key secular themes at inflection points
Why Technology? A number of key secular themes at inflection points • Broadband proliferation Æ Ubiquitous computing • Internet delivery mechanism Æ expanding the market • Distributed Computing Æ reacceleration of IT productivity • Energy supply demand imbalance Æ technology response 14 POLAR CAPITA
Slide 15: Broadband proliferation = ubiquitous computing
Broadband proliferation = ubiquitous computing Cellular bandwidth, by technology (1980-2010E) Legacy • PC’s dominated computing limiting addressable market • Broadband limited to fixed line networks Now • Proliferation of converged devices eg iPhone / iTouch Source: Qualcomm • Broadband available ac
Slide 16: New delivery mechanism = new opportunities
New delivery mechanism = new opportunities Average IT spending per Enterprise ($000) Legacy • Understandable focus on large enterprise market • Upfront costs / IT expertise = barrier to adoption • Consultancy / implementation = real cost of deployment Now *Source: IDC • Internet delivery mechanism l
Slide 17: Distributed computing = reduced labour costs
Distributed computing = reduced labour costs Legacy • Bandwidth expensive = Local Area Networks (LAN) • Result = massive duplication of IT assets Now • Plentiful & cheap bandwidth / broadband ubiquity Source: Polar Capital Partners • Hardware costs eclipsed by power/ labour costs HOLDINGS • WAN infr
Slide 18: Environmental Technology = uniquely positioned
Environmental Technology = uniquely positioned Variation in Earth’s surface temperature Alternative Energy • High energy prices / externalities forcing agenda • Government subsidies / regulatory requirements • Renewables* < 1% of global electricity production* • Preferred areas: solar, wind, nuclear
Slide 19: Portfolio Positioning
Portfolio Positioning 19 POLAR CAPITAL PARTNERS
Slide 20: Short-term timing indicators
Short-term timing indicators • High g Valuations + • Sector Overbought / Oversold 0 • New Issue Market + • YOY Price Change + • Short Interest Ratio ++ • US Retail Investor Sentiment 0 Source: Polar Capital Partners 20 POLAR CAPITAL PARTNERS
Slide 21: Sentiment Indicators
Sentiment Indicators NASDAQ Short Interest (1983 – Present) Net % Overweight US Technology, 2003 - Present Source: Ned Davis Research Source: Merrill Lynch, as at 9/5/08 ETF and other Tech assets as % of total domestic sector assets Investor Sentiment Bear Readings, 1988 - Present Source: Ned Davis
Slide 22: Current Portfolio (as at end May 2008)
Current Portfolio (as at end May 2008) Source: Polar Capital, as at 31/5/08 22 POLAR CAPITAL PARTNERS
Slide 23: Conclusion
Conclusion • We believe we are in the early stages of a significant new cycle • Sector should prove more resilient to macroeconomic downturn given muted capital spending cycle to date • Earnings estimate risk somewhat mitigated by attractive valuations / balance sheets • C Current t positioning iti
Slide 24: Polar Capital Partners disclaimer
Polar Capital Partners Limited Four Matthew Parker Street London SW1H 9NP House View This document has been produced based on Polar Capital Partners’ research and analysis and represents our house view. All sources are Polar Capital Partners unless otherwise stated. Disclaimer Th information The i f
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