I’ve just come back from the Berkshire Hathaway annual meeting in Omaha where Warren Buffett and Charlie Munger spoke about their latest investments. Munger famously once said that “micro is what we do, macro is what we put up with”. In other words, investment decisions should be formed by focusing on what companies are doing and what opportunities they are seeing, rather than being swayed by macroeconomic conditions.
This underpins our approach at J. Stern & Co. We look to invest in quality companies that can generate real value over the long term. This year’s stockmarket correction means many quality companies are trading at very attractive prices.
We believe that if a company can show it has the pricing power to offset inflation as well as the innovation required to grow, then it will be well-positioned for what comes next. Any weakness is as much an opportunity for us as it is for Berkshire Hathaway, or indeed any long-term investor.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Chips for future tech
Nvidia (Nasdaq: NVDA) is the leading manufacturer of high-end graphics processing units (GPUs). It’s currently trading around 40% lower than it was at the start of the year, and we capitalised on this dip to add it to our World Stars Global Equity Fund.
The company’s semiconductor chips power the high-performance computing infrastructure within data centres and are aiding the development and growing adoption of modern artificial intelligence.
Alongside its core business of gaming graphics hardware, it also has very attractive long-term opportunities in self-driving vehicles as well as augmented and virtual reality, namely the metaverse.
Enabling electrification
Amphenol (NYSE: APH) is a global leader in connectors and sensors. It embraces the type of innovation that we believe will see the company dominate over the next decade as the world adopts the “electrification of everything”. This includes more connected cars (those that communicate with systems outside the car) as well as electric vehicles, the shift to renewable power generation, the emergence of smart factories and nextgeneration communications technology.
The company has a proven record of shielding profitability by managing its costs, and it also benefits from customers leaning on larger, more established suppliers with diverse manufacturing footprints. This trend has been reinforced by the significant bottlenecks in global supply chains due to the pandemic and accentuated by the Ukraine crisis.
Looking for innovative solutions
Alcon (Zurich: ALC), the global leader in eye care that spun out of pharmaceutical company Novartis in 2019, is currently trading below its historical average valuation. Contact-lens wearers may be familiar with its products, but it also makes implantable lenses for surgical equipment for cataract surgeries.
Over the past three years the company has invested in innovation and has since launched several new products, including Vivity, a one-of-a-kind intraocular lens for cataracts that reduces glare and halo where competitors’ lenses cannot. Its first-quarter results for 2022 were testimony to this investment: both revenues and profits exceeded expectations and management raised its 2022 full-year outlook despite the uncertain macro environment, inflation, and war in Ukraine
-
M&S and Tesco among those warning of a £7bn Budget hitSeventy-nine UK retailers have written to Chancellor Rachel Reeves about possible price rises and job cuts - here is what it means
-
How much does it cost to move home under the Labour government?Home-moving costs are rising and could get more expensive once stamp duty thresholds drop in April 2025
-
Investing in a dangerous world: key takeaways from the MoneyWeek SummitIf you couldn’t get a ticket to MoneyWeek’s summit, here’s an overview of what you missed
-
DCC: a top-notch company going cheapDCC has a stellar long-term record and promising prospects. It has been unfairly marked down
-
How investors can use options to navigate a turbulent worldExplainer Options can be a useful solution for investors to protect and grow their wealth in volatile times.
-
Will platinum and palladium rise?Analysis Platinum and palladium have lagged gold and silver recently, but the outlook is improving. Should you invest?
-
Invest in Hilton Foods: a tasty UK food supplierHilton Foods is a keenly priced opportunity in an unglamorous sector
-
HSBC stocks jump – is its cost-cutting plan already paying off?HSBC's reorganisation has left questions unanswered, but otherwise the banking sector is in robust health
-
Lock in an 11% yield with SabreTips Sabre, a best-in-class company is undervalued due to low profits in the motor insurance industry. Should you invest?
-
James Halstead is a family firm going cheap but should you buy?James Halstead will rebound from a weak patch, while tax changes would be a buying opportunity
