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Tech


Our Tech Portfolio

Stocks Date of Initial Coverage Initial Entry Price Highest Point Performance from Initial Entry
ONE 1615467600 12-Mar-2021 $0.060 500% 433%
WHK 1556632800 01-May-2019 $0.097 80% -75%
Stocks Date of Initial Coverage Initial Entry Price Highest Point Performance from Initial Entry
ONE 1615467600 12-Mar-2021 $0.060 500% 433%
WHK 1556632800 01-May-2019 $0.097 80% -75%

Macro Outlook Tech - 2023

Everything tech crashed in 2022, from the biggest NASDAQ tech darlings down to smaller ASX tech companies.

We think that it will be a slow six months for tech companies while access to capital becomes more and more difficult.

What this means for companies in the industry is that there will be a greater focus on conserving capital, meaning less “side projects” and more focus on the core product, leading to better innovation and better overall value for long term shareholders.

And for the lucky few small cap tech companies that deliver a material revenue growth, a significant re-rate off a very low base.

For patient investors, weakness in the tech market provides a great opportunity to enter the tech industry at a lower point.

Key technologies to lookout for in 2023 include:

  • Artificial intelligence
  • Cybersecurity
  • Decentralisation / Blockchain
  • Data companies
  • Healthcare Technologies

What do the analysts say?

According to the Harvard Business Review, 2023 looks to be a sobering year for the tech industry.

“Leaders will have to search for ways to do more with less, find value where innovations overlap, and strategically invest in technologies that are hitting a tipping point.”

The key ‘winners’ from this year will be those teams that will be agile and take advantage of innovative products and services in a lean way.

Read the full article.

What is the bear case?

The bear case for big NASDAQ tech stocks is that interest rates continue to rise, consumer spending slows, and their growth prospects continue to reduce.

Poor sentiment in big tech flows into small tech where we are invested.

One of the key ways investors evaluate growth tech companies based on average recruiting revenue multiple (ARR).

The idea is that if a company is growing its ARR each year, then the revenue will compound and the future returns of the business should be priced into the value of the company today.

As interest rates increased, these ARR multiples that investors applied to tech companies shrunk, meaning that future earning potential was valued less than before.

Investors will not only look to tech companies with revenues, but also cash management and profitability to re-invest in the business and scale-up with a lean operation.

It could take years for some tech companies to return to the lofty valuations of 2021, if at all, and interest rates will likely need to fall for institutional investors to return to the industry.

Our Commentary on Tech