The Power of Tech Stocks

Bobby Barker

The last few years have seen some fascinating development in the tech industry. The uptick in businesses turning to automation and increasing their presence online, both internally and externally, has seen the industry grow exponentially. This was true even before we all spent the last year working from home and so many businesses were forced to rely on programs like Zoom and Microsoft Teams to keep the lights on. It should come as no surprise then, that this industry has found itself squarely on the radar for many investment businesses looking for potential gems in 2021. Don’t just take my word for it, Pie Funds has been a regular player in the tech stocks game and through experience comes knowledge. The fund management company has built a strong strategy through active management for deciding where their investments are best directed in the rapidly changing times. Pie Funds Chief Investment Officer, Mark Devcich, has laid out a few key points that the company considers when looking to ‘hitch their wagon’ to a business through investing.

For example, Devcich touts the advantages of having a more personalised, hands-on method of trading tech stocks, claiming that utilising ‘active management’ is often preferable to using an automated ETF. He argues that this method is particularly necessary recently where there have been periods of volatility, where stock prices are rapidly fluctuating and opportunities to buy and sell come and go swiftly.

This volatility has inclined Pie Funds to be, as Devcich describes, “more selective” in where they are casting their net. “It often means we are trying to find the next Atlassian or Paypal and this takes us out of the US. However, we also see some of the dominant brands like Microsoft, Amazon, etc, as having large opportunities to invest, especially around cloud computing.”

Interestingly, Devcich singles out a noticeable trend in consumers shifting away from credit cards as a form of everyday transaction, and instead increasingly opting to pay for goods and services via BNPL (Buy Now, Pay Later) options, such as Afterpay. “We think the popularity will last”, argues Devcich, although he warns of committing too heavily to investment in this area as he believes eventually “there is likely to be consolidation in the industry as there does not need to be a plethora of providers.”

Despite all of those factors, what ultimately is most important for Devcich and Pie Funds is to evaluate what the individual business is bringing to the table, and he outlines a few key features of a business that could make them an appealing investment: “When looking at technology stocks, just like any business, we want a product that adds value to their customer, that they love using. Secondly, we want a large addressable market as growing companies can provide advantages such as being able to afford more talented employees, etc. Thirdly, we want A-grade management, preferably with skin in the game (invested in the company themselves) who we have confidence in creating a strong company culture.” It’s not exactly complicated stuff, but in the unpredictable world of stock trading, the little indicators are worth picking up on.

For more information on investing in tech stock, visit Pie Funds.