08 Jan Bloomberg Interview with Nick Griffin
Munro Partners’ Chief Investment Officer, Nick Griffin, was interviewed on Bloomberg Daybreak: Australia this morning, Tuesday 8 January 2019.
The 4.35 minute video covers U.S. technology stocks, in particular Amazon. The interview was with Haidi Stroud-Watts and Shery Ahn and is available here.
Picks for 2019 – Amazon and Netflix
- Stocks had a significant valuation adjustment in the second half of last year, which was not surprising, but the structural trends [cloud computing, e-commerce, OTT (over the top) TV, digital advertising] have not changed. Munro believes earnings growth drives value, and Amazon and Netflix are still at the start of their runway.
- Structural trends that drive these stock earnings are still at play regardless of the cross-currents that we’ve seen in the last six months, and Munro anticipate for these stocks to come through.
FAANGS is just an acronym; these are all different companies
- Munro likes Apple, but sold it nearly two years ago, as it anticipated growth to slow sooner. Slowing in China is a convenient excuse, but ultimately Apple is a hardware company, and most people already have the hardware. Innovation of the iPhone has slowed, and therefore it’s not surprising growth is slowing.
Valuations at 14.5x earning for S&P 500, do you buy the dip?
- Valuation adjustments are just that and they take time. We’ve had a quarter of it, and it may take another quarter.
- That said, Munro looks at growth equities, and they look for structural earnings growth, generally regardless of the cycle.
- Earnings estimates need to come down, and although multiples are lower in the U.S., the S&P 500 is the most expensive market in the world today
- The only way for multiples to go up is if something big happens for investors to look through earnings downgrades, this could either be from the Fed or a resolution in the U.S.-China trade disputes.
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