Star manager Kerr Neilson’s listed investment company Platinum Capital is backing out-of-favour big-name US technology companies as well as infrastructure plays in China and India.
In a quarterly update to shareholders the billionaire investor said he was surprised that Internet stocks like Oracle, Cisco and Intel had become neglected by the wider market.
“Each has its own threats regarding substitution but, on careful analysis, these companies revealed unusually following business characteristics,” he said.
“While it may seem improbable that well-known brands like these should be misunderstood, we can mount a strong argument why they should both grow and remain decidedly more profitable than the typical company in the S & P 500 index.”
The top-performing manager has also picked up new infrastructure focused investments in the largest of the emerging market economies India and China.
“The companies themselves are fine, but out-of-favour because they are seen as dull. As you would have read in these reports on countless occasions, dull is delightful if the price is right. Here we can buy electricity generating or gas transmission capacity for little more than book value with the prospect of significant growth in demand reaching out into the distant future,” Neilson said.
“The portfolio has been progressively tilting towards Asia. We can still find shares to buy in the West, but within the reform-minded countries of Asia there are bargains.”