POLAR CAPITAL. Polar Capital Technology Trust plc. AGM 29 th July This presentation is for non US investors only

Transcription

1 Polar Capital Technology Trust plc AGM 29 th July 2009 This presentation is for non US investors only

2 Results 2

3 Polar Capital Technology Trust Results Y/E 30 April 2009 Net Assets 274.2m NAV per share - 4.4% Benchmark - 5.5% FTSE World % Technology Performance Index Performance Source: Polar Capital, Bloomberg Source: Polar Capital, Bloomberg 3

4 Credit crisis / recession drives equities sharply lower Tech sector delivers best relative returns since FY2000 Favourable FX further ameliorates Sterling returns Improved FY relative performance Recent outperformance captures cyclical attributes but secular story remains poorly understood Likely sub-trend growth ahead augers well for sector performance 4

5 Outlook 5

6 Macroeconomic view Stabilisation but below trend global GDP growth Sharp global economic slowdown but encouraging signs of stabilisation Unprecedented policy response averted worst-case scenario Systematic risk largely eliminated Accommodative monetary policy likely to endure Inflation not an OECD concern due to excess capacity Long muted recovery from mid 2009 due to ongoing deleveraging 6

7 Tech leadership likely to persist Relative sector performance Dow Jones World Tech versus FTSE World Index ( Present) Source: Bloomberg, 3/7/09 7

8 Tech leadership likely to persist Limited participation during prior cycle Bubble excesses needed to be worked off Relative P/E compression outweighed superior earnings growth Over-capitalised balance sheets dragged on returns Excess capacity resulted in muted enterprise capital spending cycle. Limited exposure to emerging markets Technology spending proved a disappointing proxy for global growth US / Japanese equity markets amongst the poorest performers Absence of game-changing technologies Client-server cycle tired, 2G mobile handset penetration complete Internet fatigue Productivity proposition lacked resonance 8

9 Tech leadership likely to persist Superior earnings profile Prospective EPS relative to S&P 500 (1995 Present) Source: Bank of America Securities, IBES, S&P, as at 2/6/09 9

10 Tech leadership likely to persist Undemanding valuations Forward P/E S&P Information Technology, Forward P/E (1992 Present) Source: Ned Davis Research, as at 10/7/09 10

11 Tech leadership likely to persist Undemanding valuations Relative Forward P/E S&P Information Technology, Relative Forward P/E (1992 Present) Source: Ned Davis Research, as at 10/7/09 11

12 Tech leadership likely to persist Muted IT spending cycle US Technology Spending, % of total non-residential investment ( ) Source: Credit Suisse 12

13 Tech leadership likely to persist Structural under-ownership ETF and other Tech assets as % of total domestic sector assets (1990 Present) Source: Ned Davis Research, as at 15/7/09 13

14 Key Themes 14

15 Distributed computing = kernel of the new cycle Distributed computing environment Legacy Bandwidth expensive = Local Area Networks (LAN) Result = massive duplication of IT assets SAMPLE HOLDINGS Source: Polar Capital Partners Now Plentiful & cheap bandwidth / broadband ubiquity Hardware costs eclipsed by power/ labour costs WAN infrastructure = eliminate redundant assets Source: Polar Capital Partners Focus areas Data centre consolidation IP routing WAN optimisation Thin Provisioning It should not be assumed that recommendations made in future will be profitable or will equal performance of the securities in this presentation. A list of all recommendations made within the immediately preceding 12 months is available upon request. 15

16 Internet-enabled applications expand the market Average IT spending per Enterprise ($000) Legacy Understandable focus on large enterprise market Upfront costs / IT expertise = barrier to adoption Consultancy / implementation = real cost of deployment SAMPLE HOLDINGS *Source: IDC Now Internet delivery mechanism levels the playing field End of the licence model - why buy when you can rent? Lower upfront costs = $150bn incremental opportunity* Source: Polar Capital Partners Focus areas Software as a service Internet Advertising 16

17 Mobile broadband driving ubiquitous computing Smartphone shipments / share (Q401 Q408) Legacy PC s dominated computing limiting addressable market Broadband limited to fixed line networks SAMPLE HOLDINGS Source: IDC, Needham Now Broadband available across WiFi / Cellular networks Proliferation of converged devices e.g. iphone / itouch IP traffic set to double every two years through 2011* Source: Polar Capital Partners Focus areas 3G / Smart phones Wireless traffic growth * Cisco, Morgan Stanley 17

18 Additional investment themes Drivers: demographics expanded TAM Focus Areas: product cycles networked / handheld gaming GAMES CONSOLES Drivers: energy prices green agenda Focus Areas: solar wind ALTERNATIVE ENERGY d t l DISTRIBUTED COMPUTING CONSERVATION Drivers: resource shortage green agenda Focus Areas: LED lighting filtration desalination smart grid Drivers: GEM growth urbanisation Focus Areas: process control smart agriculture education internet EMERGING MARKET GROWTH Source: Polar Capital Partners MEDICAL TECHNOLOGY Drivers: demographics patient outcomes Focus Areas: MIS digital records productivity 18

19 It s all about earnings growth Core Growth Defensive Growth Rev growth (last twelve months) Rev growth (forward 12 months est) EPS growth (forward 12 month est) Rev growth (last twelve months) Rev growth (forward 12 months est) EPS growth (forward 12 month est) 40%* 20% 10% 8% 8% 9% 27% 19% 2% 9% 6% 11% 23% 16% 11% 5% 4% 4% 17% 13% 2% n/a* 2% 16% 13% 9% 8% 9% -2% 14% 22% 7% 9% 12% -3% 0% 73%* 2% 19% *includes impact of acquisition Source: Bloomberg, Polar Capital Partners, as at 10/6/09 *includes impact of acquisition Source: Bloomberg, Polar Capital Partners, as at 10/6/09 19

20 It s all about earnings growth Aggressive Growth Rev growth (last twelve months) Rev growth (forward 12- month est.) EPS growth (forward 12- month est.) Rev growth (last twelve months) Rev growth (forward 12- month est.) EPS growth (forward 12- month est.) 133% 71% 59% 25% 25% 127% 65% 45% nm 55% 23% -24% 131% 42% 24% 80% 15% 23% 68% 39% 29% 36% 15% 19% 40% 35% 94% 35% 15% -7% 84% 35% 16% 31% 15% 10% 92% 31% 15% 46% 13% nm Source: Bloomberg, Polar Capital Partners, as at 10/6/09 Source: Bloomberg, Polar Capital Partners, as at 10/6/09 20

21 Current Positioning i 21

22 Current Positioning As at 30 th June 2009 Top 10 Holdings Geographic allocation Source: Polar Capital Partners Source: Polar Capital Partners 22

23 Portfolio Analysis As at 29 th May 2009 Market Cap splits, 4/08 5/09 Splits by style, % of PCT Source: Polar Capital, as at end May 2009 Top 10 holdings as % of PCT, 4/08 5/09 Source: Polar Capital, as at 10/6/09 Source: Polar Capital, as at end May

24 New cycles are bad for incumbents US technology sector (weighted) Present US technology sector (un-weighted) Present Source: Piper Jaffray, March 2009 Source: Piper Jaffray, March

25 Conclusion Limited sector participation during previous cycle creates ideal set-up Despite meaningful recent outperformance, we expect leadership to persist Relative valuations remain undemanding before balance sheets considered Sector should deliver secular growth against a backdrop of below trend GDP Legacy incumbents have most to lose from a new cycle = M&A response likely Expect significant outperformance of small/mid cap & un-weighted indices 25

26 Polar Capital Partners Limited Four Matthew Parker Street London SW1H 9NP House View This document has been produced based on Polar Capital research and analysis and represents our house view. All sources are Polar Capital unless otherwise stated. Important Information The information provided in this presentation is for the sole use of those attending the presentation it shall not and does not constitute an offer or solicitation of an offer to make an investment into any fund managed by Polar Capital. Any other person who receives this presentation should not rely upon it. It may not be reproduced in any form without the express permission of Polar Capital. This document does not provide all information material to an investor s decision to invest in the Polar Capital Technology Trust PLC, including, but not limited to, risk factors. Statements/Opinions/Viewst t i /Vi All opinions and estimates in this report constitute the best judgment of Polar Capital as of the date hereof, but are subject to change without notice, and do not necessarily represent the views of Polar Capital. Polar Capital is not rendering legal or accounting advice through this material; readers should contact their legal and accounting professionals for such information. Third-party Data Some information contained herein has been obtained from other third party sources and has not been independently verified by Polar Capital. Polar Capital makes no representations as to the accuracy or the completeness of any of the information herein. Neither Polar Capital nor any other party involved in or related to compiling, computing or creating the data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any of such data. Holdings This portfolio data is as of the date indicated and should not be relied upon as a complete or current listing of the holdings (or top holdings) of the fund. The holdings may represent only a small percentage of the aggregate portfolio o o holdings, are subject to change without notice, and may not represent ese current or future portfolio o o composition. o Information o on particular holdings may be withheld if it is in the fund s best interest to do so. It should not be assumed that any of the securities transactions or holdings discussed was or will prove to be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein. The information provided in this document should not be considered a recommendation to purchase or sell any particular security. Benchmarks All benchmarks are broad-based indices which are used for illustrative purposes only and have been selected as they are well known and are easily recognizable by investors. Comparisons to benchmarks have limitations because benchmarks have volatility and other material characteristics that may differ from the fund. For example, investments made for the fund may differ significantly in terms of security holdings, industry weightings and asset allocation from those of the benchmark. Accordingly, investment results and volatility of the fund may differ from those of the benchmark. Also, any indices noted in this presentation are unmanaged, are not available for direct investment, and are not subject to management fees, transaction costs or other types of expenses that the fund may incur. In addition, the performance of the indices reflects reinvestment of dividends and, where applicable, capital gain distributions. Therefore, investors should carefully consider these limitations and differences when evaluating the comparative benchmark data performance. The information regarding the indices are included merely to show the general trends in the periods indicated and is not intended to imply that the fund was similar to any of the indices in composition or risk. 26

27 Polar Capital Partners Limited Four Matthew Parker Street London SW1H 9NP Regulatory Status This document is Issued in the UK by Polar Capital. Polar Capital LLP is a limited liability partnership number OC It is authorised and regulated by the Financial Services Authority. A list of members is open to inspection at the registered office, 4 Matthew Parker Street, London SW1H 9NP Information Subject to Change The information contained herein is subject to change, without notice, at the discretion of Polar Capital and Polar Capital does not undertake to revise or update this information in any way. Forecasts References to future returns are not promises or even estimates of actual returns Polar Capital may achieve, and should not be relied upon. The forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation. In addition, the forecasts are based upon subjective estimates and assumptions about circumstances and events that may not yet have taken place and may never do so. Performance Performance is shown net of fees and expenses and includes the reinvestment of dividends and capital gain distributions. Many factors affect fund performance including changes in market conditions and interest rates and in response to other economic, political, or financial developments. Investment return and principal value of your investment will fluctuate, so that when your investment is sold, the amount you receive could be less than what you originally invested. Past performance is not a guide to or indicative of future results. Future returns are not guaranteed and a loss of principal may occur. Investments are not insured by the FDIC (or any other state or federal agency), are not guaranteed by any bank, and may lose value. Investment Process - Risk No investment process or strategy is free of risk and there is no guarantee that the investment process or strategy described herein will be profitable. Investors may lose all of their investments. Allocations The strategy allocation percentages set forth in this document are estimates and actual percentages may vary from time-to-time. The types of investments presented herein will not always have the same comparable risks and returns. Please see the private placement memorandum for a description of the investment allocations as well as the risks associated therewith. Please note that the fund may elect to invest assets in different investment sectors from those depicted herein, which may entail additional and/or different risks. The actual performance of the fund will depend on the Investment Manager s ability to identify and access appropriate investments, and balance assets to maximize return to the fund while minimizing its risk. The actual investments in the fund may or may not be the same or in the same proportion as those shown herein. 27

28 Polar Capital Technology Trust plc AGM 29 th July 2009 This presentation is for non US investors only

29 Polar Capital Technology Trust plc Annual General Meeting, 29 July 2009 Proxy Votes TOTAL VOTES 48,231,809 29