A Sydney-based global stock fund that’s outperformed most peers is sticking with bets on some high-flying technology shares as investors question their valuations.
Hefty price tags on companies like Apple Inc. and Amazon.com Inc. might be justified given the quality of their businesses, said Alex Pollak, chief investment officer at Loftus Peak Ltd. His Loftus Peak Global Disruption Fund has returned about 24% this year and has outperformed 99% of peers over one-year, three-year, and five-year time spans, according to data compiled by Bloomberg.
Apple and Amazon “are below our valuation targets, having regard for the rapid growth in profitability that they have delivered and look like they will continue to deliver,” Pollak said in an interview in mid-August, adding that his view hasn’t changed since the tech sector selloff in the past week. Apple fell 3.3% on Thursday, while Amazon dropped 2.9%.
Pollak has made few changes to the A$133 million ($132.4 million) fund amid the coronavirus pandemic thanks to long-held stock picks that have benefited from the shift to online and digital services. Xilinx Inc., a maker of programmable chips for wireless networks, and Chinese e-commerce giant Alibaba Group Holding Ltd. are among the fund’s top holdings, according to its latest performance report.
Still, he sold out of Tesla Inc. as its valuation crept up. Pollak held the stock for five years, but was wary of balance sheet and governance issues within the company, he said.
Pollak said his background as a Macquarie Group Ltd. analyst has helped him see the potential in companies that leverage technology. He covered tech, media and telecommunications at the bank, and also helped bring career website Seek Ltd. and online automotive marketplace Carsales.com Ltd. to the Australian stock market.
