Fund managers have been quietly scouting out the companies providing the software and tech that makes the world of smartphones, laptops and the likes of cloud technology possible.
These so-called ‘solutions providers’, prop up what Hermes’ portfolio manager Lewis Grant labels the ‘glitz and glamour’ of stocks familiar to the average consumer. Grant, a senior portfolio manager of global equities, highlighted two companies, Cognex and Lam Research, who are both relative unknowns but are “crucial” aspects of the production and maintenance of big technological advances.
“Cognex’s products are crucial in manufacturing automation and will be in high demand as businesses seek to improve efficiency. Over the coming years we believe there will be opportunities for further expansion within the consumer smartphone manufacturing process as well as automation solutions for e-Commerce retailers such as Amazon and Alibaba,” Grant said.
He has held Lam Research since 2010 and said he expects it will “maintain its leadership position” as a supplier of the technology that aids the creation of smaller, faster and more powerful devices.
He added: “New technologies such as the internet of things, intelligent driving and virtual reality are creating new long term opportunities, diversifying Lam’s target market. We view the company as a high-growth company with a very attractive valuation.”
Similarly, firms providing software solutions for mobile apps offer great investment opportunities according to Jeremy Gleeson, manager of the AXA Framlington Global Technology Fund.
“We think that apps are an interesting area, now a lot of people have smart phones and there’s a lot of scope to monetise services through your phone and that has got more attractive,” he said.
As well as the big players, Gleeson’s team look at the processes and technology that make apps as a whole possible such as Twilio, which provides software to enable messaging services and is used by Uber to connect its taxi drivers with customers.
