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.
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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
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