The following article appeared on Livewire on January 31, 2020.
The Australian tech sector has been a massive driver of investor returns in recent years, with the likes of Afterpay putting in big gains as it enjoys global success. Yet the local tech scene is still just one small cog in a global industry. The ASX information technology sector has a combined market cap of less than $100 billion, while the NASDAQ alone has a total market cap of $10 trillion.
Taking an ASX-centric view therefore not only means missing the bigger opportunity, but it means you’re making decisions based on just a snippet of the full picture, or as Joe Magyer at Lakehouse Capital neatly put it:
“You’re swimming with sharks if you’re investing in Aussie small cap tech and you don’t have a global view of software and the ecosystem around it”.
With stocks like EML, Afterpay and Nanosonics making up a large chunk of his Small Companies fund, he has clearly leveraged this ‘wide lens’ to back some local winners. His approach is also working in his Global Growth Fund, which has big positions in Facebook, Alphabet, Paypal, Visa and Amazon.
In this special long video with Joe, he gives a deep dive on the critical elements of investing in tech locally, investing in tech globally, and the benefits of doing both together.
Points covered:
- The biggest lessons Joe’s learned as a fund manager
- The benefits of running a high-conviction strategy
- The three traits he looks for in companies
- How the team screens the global markets down to a few select names
- Whether the best tech opportunities are offshore or in Australia
- How to find the best Aussie tech stocks
- His thoughts on popular WAAAX stock, Altium
- Investing in tech stocks when they have run so hard already
- The one single quality in a company that most excites Joe
- His view on the eternal growth/value debate
- His overview of Facebook, Alphabet and Monster
Disclaimer: The Lakehouse Small Companies Fund owns shares of Altium and Afterpay. Joe Magyer and the Lakehouse Global Growth Fund owns shares of Amazon, Alphabet, Facebook, and Monster Beverage.
