Buying FAANGs Is A Dangerous Game. Go For Tech-Focused Industrials

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Global Equity Strategy, buying FAANGs is a dangerous game.



Posted 27 July 20

We're in the business of mapping strategy, where the compass is never true north. It 's a journey where insights and experience are vital.

Interview with ausbiz, 27 July 2020

In an interview with an independent business and investment news platform ausbiz, our Managing Partner and CIO, Paul Ashworth, shares his analysis on Cameron Harrison’s Global Equity Strategy and our approach to investing into innovation, rather than a myopic and risky focus to the six FAANM stocks.

Watch the recorded session here.
— A key point summary can be read below.

Buying FAANGs is a dangerous game.
Go for tech-focused industrials.

Managing Partner and CIO at Cameron Harrison, Paul Ashworth, reckons investors seeking tech exposure in FAANG stocks are barking up the wrong tree.

When analysing tech stocks, he looks for businesses with a market focus that are able to apply technology profitably, which he finds are generally in industrials rather than the tech sector.

He says investors should remember that FAANG stocks are not all equal.

There are some good businesses that trade on fundamental positions that we can't accept... because there are good businesses sitting in the industrial and healthcare sectors that apply technology well, are profitable and present at a better valuation.

He also believes that in the short term, the outlook for FAANGs will be "messy".

"Particularly in an election year, we are focused on an outlook of jobs, jobs and jobs," he says.

"That is the future and that is what stimulus has to look at. So, we are disposed to those well-run industrial businesses that do apply technology in an efficient manner. So in that respect, you're looking at the Home Depots and the Walmarts.

They're good counterpoints to a business like Amazon, which is a mix of a highly profitable cloud business and an unprofitable consumer discretionary/non-discretionary business.