Stock Stories bring you closer to the heart of our investment strategy. In these short videos, lead portfolio manager Mike Seidenberg discusses a selection of Allianz Technology Trust’s portfolio holdings and how they contribute to our overall strategic objective of achieving long-term capital growth by investing principally in technology companies globally that use technology in an innovative way to gain a competitive advantage.
In this short episode of ‘Stock Stories’, Mike discusses an investment decision that was made and is illustrative of the Trust’s strategy: Meta
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I'm Mike Seidenberg, lead portfolio manager of the Allianz Technology Trust. It's important to remember that all investments come with risk. The technology sector is well known for both growth and volatility. We aim to chart a smoother course in technology investing by focusing on sustainable, secular themes.
Having ridden the wave of social media, Meta Platforms, owner of Facebook, Instagram and WhatsApp is a company we know well. We first met with the CFO David Ebersman, when Facebook was a private company. Over the years, we've developed a great working relationship with the management team, Although at times we've taken a contrarian view on Meta.
One thing we're always cognisant of as technology investors is the natural life cycle of companies. Proven technology companies usually enjoy a period of stellar growth, followed by a period of slower growth, but greater profitability as margins improve and finally, a period of maturity. In investment parlance, they go from being growth stocks, to growth at a reasonable price, to value stocks. Meta is a classic example.
Having minimal exposure to meta during 2022 meant we avoided most of the pain the company felt when TikTok was gaining traction, and Meta's shares dropped substantially. Signs that Instagram was gaining market share gave us conviction to buy meta when it was out of favour. Over the course of 2023, better execution, a leaner cost structure, core product improvements and advancements in artificial intelligence drove revenues higher. Many shares recovered, and the Allianz Technology Trust was there to participate in the rebound.
In general, we tend to focus on mid-cap growth companies, but opportunities present themselves in companies of all sizes. No investment comes with a guarantee of success and we are not making any recommendations here. As Meta shows, even with large caps, the path is not linear and we stand by to capitalise on value where we find it.
Disclaimers: Past performance does not predict future returns. Securities mentioned in this document are for illustrative purposes only and do not constitute a recommendation or solicitation to buy or sell any particular security. These securities will not necessarily be comprised in the portfolio by the time this document is disclosed or at any other subsequent date.
Meta Platforms Stock Story: Inside the ATT Portfolio
The technology sector is well known for generating both growth and volatility. Allianz Technology Trust aims to chart a more stable path for investors by identifying sustainable long-term trends that are not dependent on the vagaries of the economic cycle.
Investing in Meta Platforms: an Allianz Technology Trust Investment Case Study
Investing in Meta Platforms, owner of Facebook, Instagram and WhatsApp, is an example of Allianz Technology Trust’s strategy in action. The business has ridden the wave of social media and is a company the Trust’s management team knows well. The team first met the Chief Financial Officer when Facebook was a private company and, over the years, the Trust has developed an excellent working relationship with Meta’s management. Developing that association was helped by the team’s proximity to Silicon Valley, where many of the world’s key technology companies, including Meta, are headquartered.
There have, however, been times when the Trust’s managers have taken a contrarian view of the company. As technology investors, the managers are also aware that companies have a natural life cycle. Proven technology companies usually enjoy a period of stellar growth, followed by a period of slower expansion but greater profitability as margins improve. Finally, they enter a period of maturity. In investment parlance, they evolve from ‘growth’ stocks to ‘growth at a reasonable price’, and then to ‘value’ stocks. Meta is a classic example of this.
Stock-picking philosophy in action
The Trust had minimal exposure to Meta during most of 2022 and thus avoided most of the pain suffered by the stock as TikTok gained traction and Meta Inc’s share price fell significantly. Conversely, signs that Instagram was gaining ground gave the Trust’s management team the confidence to buy Meta’s stock when it was out of favour. Over the course of 2023, better execution, a leaner cost structure, core product improvements and advances in artificial intelligence drove revenues higher, and the Trust was able to participate in the stock-price rebound.
The Trust’s investment in Meta also demonstrates that while, in general, the Trust tends to focus on mid-cap growth companies, opportunities can appear in companies of all sizes, including the well-known mega caps.
The benefits of diversification
It is important to note, however, that this is not a stock recommendation. As the Meta Inc stock price shows, even well-established, mega-cap companies can experience setbacks, and the stock prices of even the best-run enterprises do not simply go up in a straight, uninterrupted line. Investors can potentially spread their risk by investing in a professionally managed investment portfolio of technology stocks containing Meta, such as that offered by Allianz Technology Trust.
Article disclaimers
Securities mentioned in this document are for illustrative purposes only and do not constitute a recommendation or solicitation to buy or sell any particular security. These securities will not necessarily be comprised in the portfolio by the time this document is disclosed or at any other subsequent date.
The statements contained herein may include statements of future expectations and other forward-looking statements that are based on management's current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. We assume no obligation to update any forward-looking statement.