The success of any active money managers often relies on his or her ability to sift through and analyze data without being distracted by outside noise. This concentration allows them to base their investment decisions on actual metrics rather than on the media interpretations of them. They look at market drivers, consumer sentiment, sector growth, each company’s fundamental and technical health, industry structure and sustainable competitive advantages. Our investment team, for instance, has been tracking companies related to cloud computing for more than five years and that persistence has paid off. Stocks driven by cloud computing have outperformed the S&P by 8.53% year-to-date, by 9.28% in 2019 and by 21.37% in 2018. Examples of this type of stock include Amazon, Microsoft, Google, Salesforce, Alibaba Group and Adobe. Companies related to cloud computing have been outperforming analyst’s predictions and have become some of the fastest growing on Wall Street with high profit margins and return on capital. According to a recent article in Bloomberg Magazine, though, many active managers missed this trend, with just 37% beating their benchmarks in January. One major reason for this lag has been the tendency of these active money managers to shy away from the technology sector, believing many of its strongest performers have run their course. Based on metrics, though, this sector – and those companies related to cloud computing in particular – still have room to grow. The companies enjoy high barriers to entry, maintain power over their suppliers, possess pricing power and face little threat of substitute products. When the economy does slow down, cloud-related companies should remain resilient due to their efficiency, lower operating costs and easy access to state-of-the-art innovation. As with any sector, the technology sector will face its challenges and our analysts will be working hard to take advantage of new opportunities and to mitigate any losses these challenges present. An added advantage our active managers enjoy is that… | Read More »