Polar Capital Technology Trust PLC · LSE:PCT
Polar Capital Technology Trust — FY2012 Earnings Presentation
33 slides from Polar Capital Technology Trust's earnings presentation, Jul 3, 2012
Slide 1: Full year results presentation
Polar Capital Technology Trust plc Full year results presentation 3rd July 2012 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 Year ended Year ended Movement As at end 30/4/11 30/4/12 (%) June 2012 Net Assets £468,716,000 £503,292,000 +7.4% £483,116,038 NAV per ordinary share 368.74p 392.56p +6.5% 376.82p Ordinary shares in issue 127,111,211 128,208,023 +0.9% 128,208,085 Price per ordinary share 373.50p 38
Slide 3: Full year review
Full year review Technology performances vs. FTSE World, £ terms FY12 • Technology stocks significantly outperform during the year • but ‘top down’ concerns result in ‘crowding-out’ of small- caps / un-weighted indices which materially trailed. • Our new cycle thesis appears intact, M&A activity sup
Slide 4: Capital Spending Trends Benign
Capital Spending Trends Benign IT capital spending as % GDP: 1947 – present1 ISM vs. IT expenditure: 1948 – present2 1. Source: Ned Davis, as at 30 September 2011. 2. Source: Ned Davis, as at 31 December 2011. For non-US professional investor use only. Please refer to the Important Information at th
Slide 5: Undemanding Valuations
Undemanding Valuations Forward absolute PE: 1992 – present1 Forward relative PE: 1992 – present2 1. Source: Ned Davis, as at 27 May 2012. 2. Source: Ned Davis, as at 27 May 2012. For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 5
Slide 6: A New Technology Cycle Is Under Way
A New Technology Cycle Is Under Way IT spending: unlikely to resemble the 1990s1 IT spending: profound shift in priorities2 Ranking 2012 2011 2010 2009 2008 Analytics and BI 1 5 5 1 1 Mobile technologies 2 3 6 12 12 Cloud comp (SaaS, laaS, PaaS) 3 1 2 16 * Collaboration technologies 4 8 11 5 8 Virtu
Slide 7: Cloud Computing: Mass Production Of IT
Cloud Computing: Mass Production Of IT • Budget pressure provides the catalyst for a long overdue move away from ‘client-server’ IT architectures • Private clouds have significantly de-risked the concept; 52% of workloads should be virtualised by end 2012* • Security remains a key obstacle to public
Slide 8: Broadband Applications: Expanding The Market
Broadband Applications: Expanding The Market • The Internet is driving a plethora of new applications including online advertising, e-commerce and SaaS • Software as a service (SaaS) targets an $150bn opportunity, c.12% penetrated today1 • Additional ‘as a Service’ offerings include ‘infrastructure’
Slide 9: 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 • Mobile data is forecast to rise 39x between 2009 and 20141 driven by v
Slide 10: 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 11: Cloud = Mass Production Of IT
Cloud = Mass Production Of IT Standardisation Automation Scale For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 11
Slide 12: 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 13: 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 14: New Cycles Challenge The Value Of Incumbency
New Cycles Challenge The Value Of Incumbency “The Innovator’s Dilemma” “Thisis about the failure of companies to stay atop their How low-end disruption occurs over time industries when they confront certain types of market and technological change. It's not about the failure of simply any manding co
Slide 15: New Cycles Challenge The Value Of Incumbency
New Cycles Challenge The Value Of Incumbency “The Innovator’s Dilemma”1 Select M&A activity: recent acceleration2 Date Target Acquirer Premium Value $m How low-end disruption occurs over time Apr-11 National Semiconductor Texas Insts 76% 6,071 May-11 Varian Semiconductor Applied mats 55% 4,751 mandi
Slide 16: 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, as at September 2011. For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 16
Slide 17: 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, January 2012. For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 1
Slide 18: 2011: A Time Out?
2011: A Time Out? Select technology performance: 31 Dec 2010 – present1 Select technology performance: 30 Oct 2008 – present2 1. Source: Bloomberg, as at 30 May 2012. 2. Source: Bloomberg, as at 30 May 2012. For non-US professional investor use only. Please refer to the Important Information at the
Slide 19: 2011: A Time Out?
2011: A Time Out? Correlation of S&P tech stocks vs. sector: IBM relative vs. US 10yr Treasuries (price): 1972 – present1 June 2008 – present2 1. Source: Bloomberg, as at 2 December 2011. 2. Source: Bloomberg, as at 20 June 2012. For non-US professional investor use only. Please refer to the Importa
Slide 20: New Cycles Challenge The Value Of Incumbency
New Cycles Challenge The Value Of Incumbency US Technology: equally weighted Source: Piper Jaffray. For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 20
Slide 21: New Cycles Challenge The Value Of Incumbency
New Cycles Challenge The Value Of Incumbency US Technology: market-cap weighted Source: Piper Jaffray. For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 21
Slide 22: PCT Positioning as at 31/5/12
PCT Positioning as at 31/5/12 Sector and geographic exposure (%) Market cap exposure (%) Software 23.3% Large (greater than US$10bn) 67.2% Semiconductors & Semiconductor Equipment 20.2% Computers & Peripherals 19.7% Medium (US$1bn to 10bn) 23.0% Communications Equipment 13.3% Small (less than US$1bn
Slide 23: PCT Positioning as at 30/5/12
PCT Positioning as at 30/5/12 Largest overweights Largest underweights Market cap exposure versus benchmark AMAZON ANALOG DEVICES CHECK POINT SOFTWARE APPLE CITRIX SYSTEMS APPLIED MATERIALS CONCUR TECHNOLOGIES CANON EBAY CERNER F5 NETWORKS CISCO SYSTEMS FACEBOOK DELL INTEGRATED DEVICE TECH HEWLETT-P
Slide 24: Conclusions
Conclusions • Our conviction in a “new technology cycle” has increased “IT sprawl”/pent-up demand/CIO surveys/strategic M&A Recessionary budget pressure acting as a catalyst for adoption • It is not about IT budget growth BUT reallocation of existing budgets Against the backdrop of below trend globa
Slide 25: Appendix
Appendix For non-US professional investor use only. Please refer to the Important Information at the end of this presentation. 25
Slide 26: 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. $1.3bn under management • Five dedicated technology specialists – strong multi-cycle track record Global Technology Fund Technology Trust Strategy US$ 544m
Slide 27: 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 28: What We Look For – The S-Curve
What We Look For – The S-Curve R&D High growth Low growth No growth R&D negative OM% negative OM% High growth expanding expanding OM% OM% Low growth stable stable OM% OM% No growth uncertain uncertain OM% OM% Broadband Notebooks LCD TV / HDTV Antivirus Offshore outsourcing PS3/Xbox 360/Wii PND/GPS I
Slide 29: Team Biographies
Team Biographies Ben Rogoff, Director – Technology Experience: 15 years Ben has been a technology specialist for fifteen years having begun his career in fund management at CMI, as a global technology analyst. He moved to Aberdeen Fund Managers in 1998 where he spent four years as a senior technolog
Slide 30: Team Biographies cont.
Team Biographies cont. Fatima Iu Experience: 7 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 medical technology sub- sector. Fatima
Slide 31: Team Biographies cont.
Team Biographies cont. Xuesong Zhao Experience: 4 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 32: 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 33: 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 Financial Services Authority. A list of
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