Revealed: The best shares for investing in cloud, artificial intelligence and cyber security Revealed: The best shares for investing in artificial intelligence and cyber security

Walter Price, who runs the Allianz Technology Trust, which has returned 179 per cent over the past five years, has revealed the shares he owns to invest in the ‘sub-sectors’ he believes will drive technological growth in future.

 Revealed: The best shares for investing in artificial intelligence and cyber security

Price is keen on a number of US mid-cap stocks

He commented that he has a focus on companies with a market cap of greater than $1 billion, but is more focused on the mid-cap space than the mega-caps, as he feels that many of the mega-cap companies no longer know how to grow.

Once he has identified the sub-sectors, Price then focuses on buying the ‘leaders’ in those market segments, he commented, ‘we know from sometimes bitter experience that while the number two or number three company in a sub-sector might look cheap, the opportunity isn’t there because the management cannot execute the strategy.’

He then turned his thoughts to some of the mega-caps in which he has invested.

Price acknowledged that as a technology investor he needs to be wary of company managements that are keener to change the world than make money for shareholders.

The fund manager commented, ‘We have met most of the more famous names in tech, and they do often tend to be quite obsessive people, maybe not always the most fun guys to hang out with. Elon Musk {the founder and boss of tech stock Tesla} he probably would be fun to hang out with, but he could kill you. A few years ago when Musk got funding to save his company he went for a drive in his McLaren [car] to celebrate and turned it over with with the chief engineer in the car with him. We are invested in Tesla, and the last time we met Musk we asked him if he wanted to make money, and he told us he did, that the underlying margin for his company is 10 per cent, he does get the importance of returns to shareholders.’

Read more: Exclusive: The best shares to invest in the technology of the future 

Price is also invested in Amazon, and believes it is a company well placed to profit from the rise of cloud technology.

The fund manager said, ‘I know everyone talks about cloud, and wonders how it works and what will happen with it. But it is happening now. The growth will come from the fact that a lot of small businesses use the cloud now, and the bigger companies have been looking at it. But the larger companies have started to see the benefits of it now, and that is where the growth. Jeff Bezos {Amazon founder} is very focused on the consumer, on growing the consumer side. His rocket ship project comes from his own {personal} money, we are not funding his vision for tourists on the moon.’

Price has begun to invest in Microsoft again, commenting, ‘we were not buyers of that stock for a long time, we didn’t like Steve Balmer [former CEO] we thought he was a value destroyer, but we started to look at the business again when he left. We think the company is now focused on the right things.’

Price commented that the election of Donald Trump could boost robotics companies in the US.

He said that Trump has made a priority of enticing US manufacturers to bring production back to the country. Price takes the view that the ‘only way’ companies will restore production to the US is through robotics. He added that labour shortages are likely to become a feature of the Chinese economy in the years ahead, due to the one-child policy. Price feels the gap will be filled with robotics.

Amongst the companies in which he is invested to capitalise on these trends are Cognax, and Terradon.

Price is himself based in Silicon Valley, he remarked that Microsoft is viewed by many in the market as likely to lose out from the rise of Artificial Intelligence, but, ‘it is likely to be a winner.’

In the area of cyber-security, Price remarked that he is keen on the investment case for Korning. The fund manager remarked, ‘this company does e-mailing screening, so if someone gets an e-mail purporting to be from LinkedIn or someone, Korning, helps to work out whether the e-mail is really from who it says it is, or whether it’s a scam. It is also increasingly involved in screening messages sent on social media. Those are good areas on which to focus.’

The Allianz Technology Trust trades at a discount to net assets of 4.2 per cent.

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