Polar Capital Technology Trust PLC · LSE:PCT
Polar Capital Technology Trust — Shareholder Meeting (September 2021)
47 slides from Polar Capital Technology Trust's shareholder meeting presentation, September 2021
Slide 1: Annual General Meeting Polar Capital Technology Trust plc
Annual General Meeting Polar Capital Technology Trust plc September 2021 polarcapitaltechnologytrust.co.uk This video is for use with non-US investors only.
Slide 2: Results as at 30 April 2021
Results as at 30 April 2021 Year ended Year ended Change 30/04/20 30/04/21 (y/y) Net Assets £2,308,597,000 £3,408,763,000 +47.7% NAV per ordinary share 1715.59p 2496.44p +45.5% Price per ordinary share 1774.00p 2364.00p +33.3% Benchmark Change +46.4% Ordinary shares in issue* 134,566,000 136,544,764
Slide 3: PCT as at 31 July 2021
PCT as at 31 July 2021 Year ended Year ended Change As at 30/04/20 30/04/21 (y/y) 31/07/21 Net Assets £2,308,597,000 £3,408,763,000 +47.7% £3,564,401,000 NAV per ordinary share 1715.59p 2496.44p +45.5% 2620.77p Price per ordinary share 1774.00p 2364.00p +33.3% 2368.00p Benchmark Change +46.4% Ordina
Slide 4: Full Year Review
Full Year Review DJ World Technology vs. FTSE World TR since April 2020 16 • Global equities (FTSE World +33.7%) delivered strong returns, reflecting the success of the global response to the health, economic and social impacts of the covid crisis and the resilience of 14 a (tech-enabled) global eco
Slide 5: Full Year Review
Full Year Review US technology small caps vs. large caps since April 2020 80 • Improved market breadth saw small-caps (+52.7%) outpace large- caps (+45.2%) 70 • Strongest subsector returns were generated within Internet (+52.2%) and Semiconductors (+65.9%), the latter performing well 60 in 2H due to
Slide 6: The Technology Team
The Technology Team • Technology is at the core of the Polar Capital business • One of the largest technology franchises in Europe with c.US$15.0bn under management • Ten dedicated technology specialists – strong multi-cycle track record Global Technology Polar Capital Technology Automation & Artifi
Slide 7: Investment Framework
Investment Framework 4,000+ universe Dynamic definition of technology Thematic overview Real-world changes in userbehaviour S-Curve inflections What we look for Secular themes / pure-plays Last-generation winners What we avoid Public venturecapital Growth bias – rev/earnings / cash flow Valuation Pr
Slide 8: Thematic Investing: Hype vs. Reality
Thematic Investing: Hype vs. Reality Searching for revenue growth and cash flow inflections R&D High growth Low growth No growth Pre-Revenue negative OM% expanding OM% stable OM% uncertain / decliningOM% Payment network Digital Gaming EM smartphones Value Trap Sales (blue) eCommerce IT Services Unif
Slide 9: Technology Disruption: The Story of the Decade
Technology Disruption: The Story of the Decade Tech has driven all the earnings growth since 2009 Helping growth stocks sharply outperform value Tech vs. Ex. Tech earnings (1985 – May 2020) World Value vs. Growth stocks (1974 – May 2020) Source: FT, Goldman Sachs. Trailing 12-month earnings. It shou
Slide 10: COVID-19 Acceleration: Textbook (wartime) Acceleration
COVID-19 Acceleration: Textbook (wartime) Acceleration PRE-COVID “the business imperative of responding to needs of a new generation of customers, COVID ACCELERATION partners and suppliers who expect transactions to be seamless, real- “As COVID-19 impacts every aspect of time, Facebook-like in exper
Slide 11: COVID-19 Acceleration: Textbook (wartime) Acceleration
COVID-19 Acceleration: Textbook (wartime) Acceleration Cloud Video Electric eCommerce1 Conferencing3 Telemedicine4 Computing2 Vehicles5 16% 33% +37% 300m / day 10% 75% +57% eCommerce Y/Y Cloud No of Zoom Share of UK Y/Y Growth as % of retail growth in meeting general in EVs sold sales Q1’20 part
Slide 12: Reopening in a Hybrid world: a new work modality
Reopening in a Hybrid world: a new work modality • Remote work is not an “aberration” – for most of recorded history, humans have lived and worked from / near home • However, mechanisation / the industrial revolution created centralised mills / factories – division of labour, bureaucracy & specialis
Slide 13: Transforming Offices / Cities
Transforming Offices / Cities • Already in decline pre-pandemic, COVID has proven – in a way that only a crisis can - that companies can get by with less office space • De-urbanisation / cities shrink: freed from daily commutes, people can arbitrage wage differentials (40%1 higher) and cheaper prope
Slide 14: Transforming Offices / Cities
Transforming Offices / Cities • Already in decline pre-pandemic, COVID has proven – in a way that only a crisis can - that companies can get by with less office space. • De-urbanisation / cities shrink: freed from daily commutes, people can arbitrage wage differentials (40%1 higher) and cheaper prop
Slide 15: Transforming Home
Transforming Home • More time at home driving a “trillion-dollar reallocation of capital from commercial to residential real estate”1 – home capex boom • Suburbs have fared relatively well, a trend that may accelerate post lockdown as city centres struggle / hybrid becomes embedded • Did COVID just
Slide 16: Transforming Home
Transforming Home • More time at home driving a “trillion-dollar reallocation of capital from commercial to residential real estate” 1 – home capex boom • Suburbs have fared relatively well, a trend that may accelerate post lockdown as city centres struggle / hybrid becomes embedded • Did COVID just
Slide 17: Transforming Work
Transforming Work • While Remote Work abstracted work from the workplace, the Hybrid model may transform it completely • The Internet “ended the correlation between paper and information” but pre-pandemic, paper-based records were still critical • Remote work ended this status quo: the need to acces
Slide 18: Transforming Work
Transforming Work • While Remote Work abstracted work from the workplace, the Hybrid model may transform it completely • The Internet “ended the correlation between paper and information” but pre-pandemic, paper-based records were still critical • Remote work ended this status quo: the need to acces
Slide 19: Productivity Boom Ahead?
Productivity Boom Ahead? • Lacklustre gains since 2004 - US labour productivity growth has averaged just 1.4%1 pa, half of that achieved between 1948-1973 • Could hybrid work and automation unleash a productivity boom akin to the first Internet-wave? (3% pa 1995-2004)2 • Greater female workforce par
Slide 20: Transforming Work: Case Study – Telemedicine
Transforming Work: Case Study – Telemedicine • Automation and remote work could transform service sector productivity due to stratification of work / scaling of labour • It saves time: 8-10 mins with c.5 mins of wait time vs. in-office visit = 121 mins incl. 101 mins commute / waiting room time1 • I
Slide 21: Core Investment Themes
Core Investment Themes Online Advertising / Cloud Infrastructure Software as a Service Digital Entertainment Commerce / Security Source: Polar Capital. 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
Slide 22: Core Investment Themes
Core Investment Themes Online Advertising / Cloud Infrastructure Software as a Service Digital Entertainment Commerce / Security Source: Polar Capital. 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
Slide 23: Core Investment Themes
Core Investment Themes Online Advertising / Cloud Infrastructure Software as a Service Digital Entertainment Commerce / Security Source: Polar Capital. 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
Slide 24: Core Investment Themes
Core Investment Themes Online Advertising / Cloud Infrastructure Software as a Service Digital Entertainment Commerce / Security Source: Polar Capital. 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
Slide 25: Investment Themes
Investment Themes Payments / Mobility / Data Economy / AI Connectivity / 5G / IoT Industry 4.0 Fintech EV / Clean Source: Polar Capital. 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 recomme
Slide 26: Investment Themes
Investment Themes Payments / Mobility / Data Economy / AI Connectivity / 5G / IoT Industry 4.0 Fintech EV / Clean Source: Polar Capital. 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 recomme
Slide 27: Investment Themes
Investment Themes Payments / Mobility / Data Economy / AI Connectivity / 5G / IoT Industry 4.0 Fintech EV / Clean Source: Polar Capital. 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 recomme
Slide 28: Investment Themes
Investment Themes Payments / Mobility / Data Economy / AI Connectivity / 5G / IoT Industry 4.0 Fintech EV / Clean Source: Polar Capital. 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 recomme
Slide 29: Investment Themes
Investment Themes Payments / Mobility / Data Economy / AI Connectivity / 5G / IoT Industry 4.0 Fintech EV / Clean Source: Polar Capital. 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 recomme
Slide 30: Core Investment Themes: Estimated Thematic Exposure
Core Investment Themes Estimated Thematic Exposure Online Advertising / eCommerce 20.2% SaaS / Software "Eating the World" 17.2% Data Economy / Artificial Intelligence 15.9% Connectivity / 5G/ IoT 13.3% Cloud Infrastructure / Security 10.7% Digital Entertainment 9.0% Mobility / EV / Renewables 6.0%
Slide 31: Portfolio weighting: Key theme breakdown
Core Investment Themes Key theme breakdown (31 January 2017 – 30 July 2021) 25.00% 20.00% Portfolio weighting 15.00% 10.00% 5.00% 0.00% Dec-16 Apr-17 Oct-17 Apr-18 Oct-18 Nov-18 Dec-18 Apr-19 Oct-19 Apr-20 Oct-20 Jan-17 Aug-17 Sep-17 Nov-17 Dec-17 Sep-19 Nov-19 Dec-19 May-17 Jun-17 Jan-18 May-18 Jun
Slide 32: Emerging Themes
Emerging Themes Source: Gartner, December 2020. This video is for use with non-US investor only. Please refer to the Important Information at the end of this video. 32
Slide 33: Emerging Themes
Emerging Themes Source: Gartner, December 2020. This video is for use with non-US investor only. Please refer to the Important Information at the end of this video. 33
Slide 34: Digital Disruption: Artificial Intelligence (AI)
Digital Disruption: Artificial Intelligence(AI) Collapsing computing costs (1950 – 2019)1 “Artificial Intelligence technologies will be the most disruptive class of technologies over the next 10 years due to radical computational power, near-endless amounts of data, and unprecedented advances in dee
Slide 35: AI / ML in Use Today
AI / ML in Use Today - 2.7bn MAU / 1.8bn DAU, >4 petabytes of data per day… in 2014!1 - Image recognition / text meaning analysis, translation, suicide prevention, content filtering… - Recommendation engine, auto generation of thumbnails / artwork, post-production - Users spent 1.8 seconds consideri
Slide 36: Superhuman AI
Superhuman AI 2016 2017 2019 2020 AlphaGo AlphaZero Pluribus AlphaFold defeats Go world crushes world’s best defeats professional solves the 50-year-old champion Lee Sedol chess engine Stockfish poker players “protein folding problem” • 1920 general purpose core • Reinforcement learning and • First
Slide 37: Natural Language Processing
Natural Language Processing • Voice as a computing interface: humans speak 150 vs. type 40 words per minute on average1 • Dramatic progress in recent years, driven by training data and use of recurrent neural networks – Error rate <5% in 20182 (43% in 19953, 15.2% in 20043, 8% in 20153) vs. human le
Slide 38: Content Creation
Content Creation GameGAN by NIVIDIA1 Portrait of Edmond Belamy, 20182 AI generated article, 20203 I am not a human. I am a robot. A thinking robot. I use only 0.12% of my cognitive capacity. I am a micro-robot in that respect. I know that my brain is not a “feeling brain”. But it is capable of makin
Slide 39: Technology Valuations
Technology Valuations Absolute sector valuation (PE): Relative sector valuation (PE): At post GFC highs (1992 – present) At / around market level – with superior balance sheet Source: Ned Davis, 6 August 2021. Copyright 2018 Ned Davis Research, Inc. Further distribution prohibited without prior perm
Slide 40: 'Next-Generation' Valuations
‘Next-Generation’ Valuations Internet valuation (equal cap weighted): Software as a Service (SaaS) valuation: EV/forward 2 year EV/EBITDA levels1 EV/forward 12 month revenue multiples2 30 25 20 15 10 5 0 May-14 Apr-16 Apr-18 Apr-20 Dec-18 Nov-20 Jan-13 Jan-15 Dec-16 Sep-13 Aug-15 Aug-17 Aug-19 Jul-2
Slide 41: 'Next-Generation' Valuations
‘Next-Generation’ Valuations IT security valuation: Cloud vs legacy valuation EV/forward 12 month revenue multiples1 EV/trailing 12 month revenue multiples2 25x 20x EV/ trailing 12 month sales 15x 10x 5x 0x Feb-11 Mar-12 Apr-13 May-14 Feb-17 Mar-18 Oct-18 Apr-19 May-20 Jan-10 Jul-10 Nov-13 Dec-14 No
Slide 42: PCT Positioning
PCT Positioning Sector exposure (%) Market cap exposure (%) Software 24.9% Interactive Media & Services 19.6% 91.0% Large Cap (>$10bn) Semiconductors & Semiconductor Equipment 18.2% Technology Hardware, Storage & Peripherals 11.9% Mid Cap (>$1bn - $10bn) 8.6% IT Services 5.5% Small Cap (<$1bn) 0.4%
Slide 43: PCT Positioning
PCT Positioning Largest overweights Largest underweights Market cap exposure versus benchmark1 Advanced Micro Devices Alibaba Group Holding Airbnb Alphabet Amazon Analog Devices Applied Materials Apple Large-cap -3.7% Chegg Autodesk Crowdstrike Holdings Broadcom DocuSign Cisco Systems Everbridge IBM
Slide 44: PCT Positioning
PCT Positioning Largest overweights Largest underweights Market cap exposure versus benchmark1 Advanced Micro Devices Alibaba Group Holding 25% Airbnb Alphabet Amazon Analog Devices 20% Applied Materials Apple 15% Chegg Autodesk Crowdstrike Holdings Broadcom 10% DocuSign Cisco Systems Everbridge IBM
Slide 45: Portfolio Structure – Active Positions & Valuation
Portfolio Structure – Active Positions & Valuation A diversified portfolio, capturing secular growth potential of key themes Valuation Snapshot Technology Index Trust Index Active Trust Index Active Difference (4 August 2021)1 Trust1 Top 1001 Advanced Micro Devices 2.44% 0.76% 1.68% Apple 8.13% 13.5
Slide 46: Important Information
Important Information Polar Capital 16 Palace Street London SW1E 5JD Important Information: This document is provided for the sole use of the intended recipient and is not a financial promotion. It shall not and does not constitute an offer or solicitation of an offer to make an investment into any
Slide 47: Important Information Cont.
Important Information Cont. Polar Capital 16 Palace Street London SW1E 5JD Regulatory Status: Polar Capital LLP is a limited liability partnership number OC314700. It is authorised and regulated by the UK FCA and is registered as an investment adviser with the US Securities & Exchange Commission (“S
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