Data storage, PC makers hitting good patch, says Henderson’s Warmerdam
Hiatus in IT spending ends, companies look to upgrade network infrastructure; 'valuations look very attractive'
Corporate technology upgrades will provide a big boost to parts of the IT sector for the next two to four years, according to Ian Warmerdam, manager of the $190 million Henderson Global Technology Fund Ticker:(HFGAX).
The enterprise infrastructure cycle is a cyclical component of an otherwise thematic bottom-up strategy employed by Mr. Warmerdam, who is part of a team that manages $2.5 billion in tech-focused portfolios for Henderson Investment Management Ltd.
“The financial crisis led to a hiatus in tech spending for the last couple of years,” Mr. Warmerdam said. “Companies are now starting to spend back up to normal levels.”
Technology spending across the board has been gradually increasing since the 1950s, but the 2000 tech bubble created a lot of excess capacity. That, in turn, led to modest outlays on technology over the past few years.
“Even common sense investing in technology was put on hold after 2008,” Mr. Warmerdam said.
That’s changing now, he said, which means new opportunities for investing in companies providing personal computers and data storage.
“We’re not talking about another tech bubble, just normal consumption levels again,” he said.
One caveat to this growth story is the fragility of the global economy, he said.
“Assuming the backdrop of even a modest economic recovery, infrastructure tech spending looks good over the next few years,” he said. “Frankly, we think the valuations look very attractive, and the earnings projections are not fully factored in because not everybody is on board yet.”
Some of the stocks Mr. Warmerdam expects will benefit from the tech-spending cycle include Marvell Technology Group Ltd. Ticker:(MRVL), F5 Networks Inc. Ticker:(FFIV), and Hewlett-Packard Co. Ticker:(HPQ).
The enterprise infrastructure spending cycle is only one component of Mr. Warmerdam’s larger strategy, which is to build a concentrated portfolio based on identifying areas in the tech sector that are underappreciated.
Some of the longer-term secular trends Mr. Warmerdam has been betting on include electronic commerce, online advertising, data storage and connectivity.
The global portfolio is more than 60% allocated to the United States and Canada, followed by 16% in Asia, and 10% in Europe.
Portfolio Manager Perspectives are regular interviews with some of the most respected and influential fund managers in the investment industry. For more information, please visit InvestmentNews.com/pmperspectives.
Learn more about reprints and licensing for this article.
