AVC recently sat down with AQA Capital who run the Castlestone Next Generation Fund and heard about many of the advances in technology affecting and driving stocks held in this fund.
As you will see, it was a fascinating update and gives a fabulous insight into the opportunities in these technology stocks.
The fund itself only invests in 35 holdings currently, and we will cover a handful of these in the interview.
If we start with, alphabetically, at least the first holding of the portfolio: Adobe (ADBE).
Adobe is starting to dabble in the world of NFT (non-fungible tokens), and incorporates a feature in the photoshop software which allows artists to prove that it is actually their work, and any future sales of their work will enable verification via a digital certificate or similar.
In the field of SaaS, with the powerhouse Salesforce (CRM), who completed the takeover of SLACK recently. This has led to huge new opportunities for cross-selling of services between the two groups of customers.
Moving on to the field of science and biotech, which is seeing phenomenal advances in the same time as incredible amounts of capital investments.
One example is that of Invitae Corp (NVTA), which has developed DNA profiling from biopsies which help diagnose early stage cancer threats. This breakthrough was charted in a recent paper with the University College London and Francis Crick Institute and specifically refers to what Invitae call their Personalised Cancer Monitoring liquid biopsy system. It really does open huge possibilities to detect oncological diseases in the future.
In a similar ‘vein’, Exact Sciences (EXAS) have announced superb results from recent modelling they have undertaken for detecting colorectal cancer using their Cologuard technology. The results “provides a greater reduction in incidence and mortality from colorectal cancer compared to annual fecal immunochemical test”, which reinforced earlier results showing similar successes.
On a slightly lighter note, we move on to Robotics, and iRobot (IRBT) which is a leader in consumer robots. They signed an agreement with Bona, a floor cleaning solution provider, to team the cleaning robot from iRobot with the material and tools from Bona and created a new palette of products.
If we move then on to home consumer technology and entertainment, and two well known names – Roku (ROKU) and Netflix (NFLX). Both provide home entertainment content, but with a major difference – that is advertising. Roku does and Netflix doesn’t. Roku reported more than half a billion dollars in revenue in the second quarter and much of that was through advertising. The advance now is that Roku will allow data analysis to be publicly available so advertisers can see the biggest audiences and target their adverts accordingly – which will obviously affect price of the advert.
Netflix, on the other hand, has to rely on new subscribers and new hit shows as a catalyst for growing. This quarter is massive for Netflix with the new series of The Tiger King amongst others.
We left the big one to the end – Tesla (TSLA). Most of us will by now be familiar with the Hertz deal where the struggling car rental corporation agreed a deal to buy 100,000 Tesla models as they attempt to resuscitate themselves in the post COVID world.
These headlines will feed through to the growth in the fund which will lead the technological revolution we are on the brink of. Strap yourselves in!