Polar Capital Technology Trust PLC · LSE:PCT
Polar Capital Technology Trust — FY2011 Earnings Presentation
26 slides from Polar Capital Technology Trust's earnings presentation, June 2011
Slide 1: Polar Capital Technology Trust plc Full year results presentation
Polar Capital Technology Trust plc Full year results presentation Ben Rogoff June 2011 POLAR CAPITAL This document is for one on one use for non-U.S. professional investors only
Slide 2: Full year results
Full year results Net Assets £468.72m ------------------------- - NAV per share +17.0% Share price +21.7% - - - - - - - - - - - - - - - - - - - - - - - - - - DJ World Tech + 4.7% FTSE World + 9.3% 2 Source: Polar Capital POLAR CAPITAL Please refer to the important information at the end of this pres
Slide 3: Full year review
Full year review Technology performances vs. FTSE World Index, £ terms FY11 • Continued earnings recovery drives stocks higher MLO • US Dollar weakness reduced Sterling based returns • Sector trailed as new cycle impacts incumbents • but equal weighted / small caps continue to lead • Valuations unde
Slide 4: Capital spending environment improved
Capital spending environment improved IT capital spending as % GDP: recently at 1995 levels ISM vs. IT expenditure: 1950 - Present Source: Ned Davis, as at 1Q11 Source: Ned Davis, as at 31/3/11 4 POLAR CAPITAL Please refer to the important information at the end of this presentation
Slide 5: Valuations undemanding
Valuations undemanding Forward absolute PE: low end of post-bubble range Forward relative P/E: low end of post-bubble range Source: Ned Davis, as at 27/5/11 Source: Ned Davis, as at 27/5/11 5 POLAR CAPITAL Please refer to the important information at the end of this presentation
Slide 6: Sector favoured, but structurally under-owned
Sector favoured, but structurally under-owned Net % overweight US technology: still a preferred sector ETF / other Tech assets as % of total domestic sector assets Source: Merrill Lynch, as at May 2011 Source: Ned Davis, as at 1/6/11 Source: Ned Davis Research, as at 1/6/11 6 POLAR CAPITAL Please re
Slide 7: A new cycle is under way
A new cycle is under way IT spending: contraction in IT spending during downturn IT spending: leading to a profound shift in IT priorities Source: Goldman Sachs, as at January 2011 Source: Gartner, December 2010 7 POLAR CAPITAL Please refer to the important information at the end of this presentatio
Slide 8: Cloud computing: the mass production of IT
Cloud computing: the mass production of IT • Budget pressure proves the welcome catalyst for an architectural rethink away from the IT sprawl • Datacentre consolidation driven by power-related savings, enabled by virtualisation and plentiful bandwidth • Private clouds de-risk the concept but public
Slide 9: Broadband applications: expanding the market
Broadband applications: expanding the market • The Internet delivery mechanism is driving adoption of online advertising, e-commerce and SAAS. • Software as a service (SAAS) targets an $150bn opportunity, c. 9-10% penetrated today* • Legacy software vendors at risk of losing their maintenance stream
Slide 10: Ubiquitous computing driving mobile data
Ubiquitous computing driving mobile data • Smartphone penetration in the sweet spot, driven by new devices, flat rate pricing and app availability • New entrants have introduced their own eco-systems, capturing a disproportionate share of profits • Gartner forecast tablet market reaching 54m units i
Slide 11: Emerging market exposure. Finally.
Emerging market exposure. Finally. • Consumption now a key driver in China growth story which should ensure technology sector participation • Household disposable income growth commensurate with ‘big ticket’ items = huge opportunity • Principal macroeconomic risk relates to wage inflation but this s
Slide 12: New cycles challenge the value of incumbency
New cycles challenge the value of incumbency Source: Bloomberg Source: Bloomberg Source: Bloomberg Source: Bloomberg 12 POLAR CAPITAL Please refer to the important information at the end of this presentation
Slide 13: 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 ma
Slide 14: 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 14 POLAR CAPITAL Please refer to the important information at the end of this presentation
Slide 15: The valuation conundrum
The valuation conundrum • We have long argued that valuation is a less critical input once a new cycle has commenced. • Although M&A activity has been aided by cash balances / FCF/ low returns • recent premiums point to the strategic nature of transactions / new cycle disruption / value to acquirer.
Slide 16: Investment Framework
Investment Framework Dynamic definition of technology 3000+ universe 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 Pri
Slide 17: What we look for – the S-Curve
What we look for – the S-Curve R&D High Growth Low Growth No Growth Negative OM% Expanding OM% Stable OM% Uncertain OM % Broadband Notebooks LCD TV / HDTV Antivirus Offshore outsourcing PS3/Xbox 360/Wii PND/ Internet search / advertising GPS ERP Sales PVR/DVR (Sky+) 2G Handsets Wireless Networking (
Slide 18: Portfolio Summary
Portfolio Summary Source: Polar Capital, as at 31/5/11 Source: Polar Capital, as at 31/5/11 18 POLAR CAPITAL Please refer to the important information at the end of this presentation
Slide 19: Portfolio Summary
Portfolio Summary Largest overweights Largest underweights Align Tech Analog Devices Amazon.com Alcatel-Lucent ARM Holdings Apple Market Cap exposure versus benchmark ASM Pacific Technology Applied Materials Citrix Systems Canon Cognizant Technology Cisco Systems Small Cap Commvault Services Dell F5
Slide 20: Appendix
Appendix 20 Source: Polar Capital POLAR CAPITAL Please refer to the important information at the end of this presentation 30/03/2011
Slide 21: Introduction to the team
Introduction to the team • Technology is at the core of the Polar business - strong multi-cycle track record • One of the largest technology franchises in Europe with c. $1.4bn under management • Five dedicated technology specialists with more than 56* years of combined technology experience Funds G
Slide 22: Team biographies
Team biographies Ben Rogoff Director – Technology Experience: 13 years Ben has been a technology specialist for thirteen 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 23: Team biographies
Team biographies Craig Mercer, CFA Fund Manager Experience: 13 years Craig joined Polar Capital in 2002 and he has over thirteen years fund management experience. Craig is deputy manager of Polar Capital Technology Trust Plc and he has responsibility for the teams Asian and Japanese technology expos
Slide 24: Polar Capital Overview
Polar Capital Overview Total Assets Ownership Under Management Fund strategies Polar Capital was $4.3bn established in Free Float Technology Ben Rogoff 2 funds 25% Nick Evans USD1,506m 2001 and has Polar Capital $4.3bn AUM, Caledonia 14% 50% Business James Salter Japan USD1,239m with 66 employees. X
Slide 25: House View and 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 26: 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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