Displaying items by tag: tech
Privatized space launches were a hot topic in news cycles this year, with success from SpaceX and private launches of billionaires Bezos and Branson. However, space didn’t just move headlines this year, it moved bottom lines as well. Privatized space infrastructure investment drew $3.9 billion in 2021Q3, setting an annual record of $10.3 billion. Space investments are broadly divided up into infrastructure (which posted the record year), distribution, and application. Special Purpose Acquisition Companies (SPAC) were the predominant factor in space investments. The capital was raised in private markets and mergers to go public happened frequently this quarter by Rocket Lab, Spire Global, BlackSky, Momentous, and Redwire. The trend won’t stop this quarter as more deals SPAC deals are expected to place and set more records in Q4. Space investment has raised nearly $231.2 billion in private equity since 2012.
FINSUM: While a lot of major deals are done in private equity, retail investors can look to ETFs like ARKX to invest in this growing market segment.
The post-pandemic stable recovery is starting to teeter, and threats to the portfolio are starting to creep in. Investors are now actively turning bearish and moving into cyclical value plays, while others remain optimistic that growth stocks are still the best option. The question isn’t about the future but rather what exposure has the least risk and the best upside in the current environment. The O’Shares Global Internet Giants Index ETF (OGIG) may be an opportunity to invest in growth at a great value.
Riding the Growth-Value Line
OGIG is a rules-based ETF that tracks both quality/value characteristics in internet companies. These companies need to include a majority share of their revenue from either internet commerce or technology services that underpin e-commerce. Internet companies are an obvious signal for growth and OGIG’s biggest holdings include Amazon, Google, and Microsoft from the US; and Tencent, Alibaba Group, and Shopify* from abroad. In addition to growth, the fund optimizes on the most important driver of value: revenue. Over the last three years, revenue is one of the best predictors of returns. As the first quartile of technology stocks nearly doubled the annualized return of the quartile below. Part of what makes this fund so attractive is that the revenue is a prop against future headwinds, but more on that later.
Since the onset of the pandemic, stocks have performed well. The S&P 500** has had a pure return of 94.4% since bottoming out on March 20, 2020 through 9/15/2020, but OGIG has drastically outpaced it. Growing at 153% since that same date, OGIG even dwarfs competitors like the Nasdaq 100 by over 20 percentage points. The primary reason for that is the revenue value factor. This drives a 20% discount in relative price-to-sales ratio compared to the Nasdaq 100 vs. the 3-year average. The other driver is exposure to the fastest-growing technology companies globally in emerging markets, China, and Canada.
The Future Landscape
Investors are worried about the spreading delta variant, weak economic growth, and future inflation, but all of these risks are of little concern for OGIG. E-commerce is driving the success of OGIG, which would only be fueled by a pick-up in the delta variant and has institutionalized itself in the American economy in a return to normal. Weak economic growth is a concern for non-revenue generating companies, but robust revenue generators outpace competitors in tough economic times. Meanwhile it’s the hyper-growth prospects that are concerned about future inflation as they have no current revenue. And besides, the latest inflation data suggests Powell is right about inflation being transitory.
Finally, regulation in China started to spike in July, but the lion’s share of that regulation is already passed. Historically, China has been quick to redact any policies that are a hindrance to its future growth. In fact, China’s regulation is actually providing a solid landscape for the fast-growing tech sector with more assurances moving forward.
Grow and protect with the O’Shares Global Internet Giant ETF.
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[*] Click here to view the funds top 10 holdings.
S&P 500: The S&P 500® is widely regarded as the best single gauge of large-cap U.S. equities and serves as the foundation for a wide range of investment products. The index includes 500 leading companies and captures approximately 80% coverage of available market capitalization.
NASDAQ-100 Total Return Index: The NASDAQ-100 Index is a modified capitalization-weighted index of the 100 largest and most active non-financial domestic and international issues listed on the NASDAQ. No security can have more than a 24% weighting. The index was developed with a base value of 125 as of February 1, 1985. Prior to December 21,1998 the Nasdaq 100 was a cap-weighted index.
Relative Price/Sales Ratio (P/S): The price-to-sales ratio is a valuation ratio that compares a company’s stock price to its revenues.
Before you invest in O’Shares ETF Investments Funds, please refer to the prospectus for important information about the investment objectives, risks, charges and expenses. To obtain a prospectus containing this and other important information, please visit www.oshares.com to view or download a prospectus online. Read the prospectus carefully before you invest.
There are risks involved with investing including the possible loss of principal. Concentration in a particular industry or sector will subject the Funds to loss due to adverse occurrences that may affect that industry or sector. The Funds may use derivatives which may involve risks different from, or greater than, those associated with more traditional investments. A Fund's emphasis on dividend-paying stocks involves the risk that such stocks may fall out of favor with investors and underperform the market. Also, a company may reduce or eliminate its dividend after the Fund's purchase of such a company's securities. Past performance does not guarantee future results. Shares are bought and sold at market price (not NAV), are not individually redeemable, and owners of Shares may acquire those Shares from the Funds and tender those shares for redemption to the Funds in Creation Unit aggregations only, consisting of 50,000 Shares. Brokerage commissions will reduce returns. The market price of Shares can be at, below, or above NAV. Market Price returns are based upon the midpoint of the bid/ask spread at 4:00 PM Eastern time (when NAV is normally determined), and do not represent the returns you would receive if you traded Shares at other times. O’Shares ETF Investments Funds are distributed by Foreside Fund Services, LLC. Foreside Fund Services, LLC is not affiliated with O’Shares ETF Investments or any of its affiliates.
View the standardized performance for OGIG. Expense ratio: 0.48%
Performance data quoted represents past performance and is no guarantee of future results. Current performance may be lower or higher than the performance data quoted. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than original cost.
Please note that very strong performance may be due to unusually favorable conditions that are likely not sustainable.
Facebook was blacked out on Monday October 5, 2021, which they claim was related to technical issues on their backbone routers. This came just before Frances Haugen, former product manager for Facebook’s civil integrity team, said that regulators need to intervene in the ‘crisis’. Haugen told ‘60 Minutes’ that she saw Facebook consistently choose profits over public safety at Facebook.She took with her tens of thousands of documents that prove these claims. Additionally, she filed complaints with the SEC that Facebook misled investors and advertisers by not sharing the whole picture about its platform.
FINSUM: This was a huge hit to Facebook stock on Monday, but it piggybacked on the rest of tech’s rally Tuesday morning to see some recovery. It is difficult to tell how long this may loom over the stock.
Healthcare technology is a rapidly changing field that has a plethora of new ideas entering the market daily, but driving that change is impact investing. The Covid-19 pandemic laid bare many of the problems in the healthcare sector and health technology is closing many of those gaps. For example, Zipline used fleets of drones to distribute vaccines to out of reach populations around the globe after securing $250 million in funding. Healthcare is the third-largest portion of impact investing, lagging climate and financial services, but it’s the fastest-growing area. Venture capital in healthcare doubled in 2020 from 2019, and many see this capital as augmenting government and charitable giving to healthcare to improve access and distribution. Breakthroughs in the sector include companies like Han Genix, which uses ultrasound technology to ensure safety procedures are followed by medical workers, or Plethy which syncs sensors and apps to improve post-orthopedic care.
FINSUM: Technology healthcare blends could become one of the best ways to capture growth and industry diversity in your portfolio.
There are mixed signals as to how to currently position oneself in the market as news reports are calling many things a good buy, from doubling down on momentum to cyclical value stocks, but Goldman Sachs is bullish on lots of large-cap internet stocks. Amazon, Facebook, Snap, Uber, Lyft, and Expedia all received buy ratings from Goldman’s investment team. They see secular trends in revenue growth and operating efficiencies scaling these companies even larger over the next couple of years. While they don’t consider themselves overly bullish, they see digital advertising being a key lever to push for these companies to have their full upside priced correctly by the wider market. Subscriptions, the creator economy, cloud computing, and augmented reality are all reasons to be fans of large-cap growth, but they are staying away from Airbnb and Twitter. FINSUM: The fed-keeping rates low is very promising for growth companies that are reliant on the credit-frothy economy. But rate moves are also the key risk.