August 8, 2022

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“The great companies have become particularly high-priced,” he said. “If you’re holding them, your future...

“The great companies have become particularly high-priced,” he said. “If you’re holding them, your future is not as good as the past.”

Despite the steep valuations for software and e-commerce companies around the world, fund managers outlined bullish calls on even well-known tech companies they believe can soar higher.

Audio giant Spotify, local tech group Megaport, Berlin-based Delivery Hero, crypto company Coinbase and money transfer business Wise, were among the tech picks of the day.

The Spotify call was emblematic of the mood. Hamish Corlett, co-founder of TDM Growth Partners, had also presented the idea at the event two years ago and said the market had underestimated the growth trajectory after an already stellar run.

“We’ve chosen to double down on this idea,” he said, driven by “our belief that Spotify will become one of the leading internet businesses of our generation”.

Babak Poushanchi, co-founder of Cota Capital who picked last year’s top performing selection, Bill.com, named US tax software group Avalara as his hottest stock idea.

Mr Poushanchi pointed to steady annual revenue growth between 30 per cent to 40 per cent and gross margins of 75 per cent.

“The company is led by its visionary founder and CEO, who’s supported by a strong team that has a track record of success and consistent execution,” he said.

Eleanor Swanson, a fund manager at Firetrail, said Megaport was on the cusp of dramatically increasing its market value given the steady take-up of its networking connectivity offerings.

The business “has the potential to grow into one of the largest telecommunication companies globally,” Ms Swanson said, and forecasts its stock will surpass $40 by the end of the next year from $21 today.

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GitLab, which provides tools for software developers, was well-placed to jump tenfold because of its expertise in an effective duopoly with Microsoft-owned GitHub, according to Yen Liow, co-founder of Aravt Global, a New York hedge fund.

Onsemi, a US semiconductor business, would surge further on the uplift provided from the shift away from fossil fuels, according to Nick Griffin of Munro, while Germany’s Delivery Hero would continue to take market share and expand, according to Tekne Capital Management’s Beeneet Kothari.

Selections beyond the tech sector included Techtronic, a Japanese power tools manufacturer, that Qiao Ma, a fund manager with Cooper Investors, said was “at the forefront of technology”.

Mr Munger provided a sober counterpoint to the bullish tech-focused fund managers. Berkshire Hathaway long avoided tech stocks, sidestepping the sharp losses following the dotcom bubble two decades ago but missing out on the sector’s explosive growth in the past 10 years before finally buying positions in Apple and Amazon.

Mr Munger broadened Mr Buffett’s approach to investing away from “fair companies at great prices” to “great companies at fair prices” in a shift that allowed Berkshire to rapidly expand in scale. The company is one of the 10 largest listed businesses in the US with a market value of around $900 billion.

Mr Munger did not provide a stock pick, but did reiterate his support for Costco, the low-cost retailer, which he believes could rival Amazon in online shopping.

“I think Costco will eventually be a huge internet player,” he said. “People trust it, they have enormous purchasing power to reduce prices, they’re into very efficient forms of distribution.”

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Costco’s ability to pass on rising costs to consumers would also insulate the business from sharply rising inflation, which in the US touched the highest level in three decades in October.

“The best you can hope for is that the inflation will be slow,” he said. “It makes investment very difficult.”

In addition to the spectre of rising consumer prices global equity markets have struck an air pocket in the past week on the uncertainty presented by a new, highly transmissible strain of COVID-19.

Robert Langer, co-founder of Moderna, which produces COVID-19 vaccines, said the company would soon know how effective its current inoculations were in combating the omicron strain and said the company could also quickly manufacture vaccines targeting new strains.

The only short selling pick of the day was from Phil King, chief investment officer of Regal Funds Management, who has predicted a drop in Flight Centre shares. He said the company has faced steep losses and is unlikely to return to pre-pandemic levels of activity.