High barriers to entry can fend off disruptors, Trimark manager says

Michael Hatcher looks for stocks that have been mistakenly discounted.

Sonita Horvitch 16 May, 2018 | 5:00PM
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Michael Hatcher, head of global equities and director of research at Trimark Investments, says that given that the equity market is no longer cheap, one strategy is to look for companies that have been erroneously priced because of investor concern about disruption from new technology.

"It is necessary to assess the specific business of each company to evaluate its vulnerability," says Hatcher, a value manager. "The equity market is taking a broad-brush approach regarding the potential challenges posed by the major tech companies to a variety of sectors, he says. "Yet there are high barriers to entry in the case of some individual businesses that are caught up in this general concern." These businesses "have proprietary products/services and an established clientele." The equity market, in taking these stocks down, has overlooked this, he notes.

There is no doubt, says Hatcher, that the bull market in equities is "getting longer in the tooth and valuations are up there." Following the 2008 global financial crisis, the equity market rebounded in early 2009 and has gone up since then, he says. "This has been fuelled by both the gradual global economic recovery and historically low interest rates."

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Alphabet Inc A2,270.06 USD-0.95Rating
Alphabet Inc Class C2,308.76 USD-1.40Rating
Amazon.com Inc3,223.91 USD1.05Rating
Analog Devices Inc150.84 USD0.03Rating
British American Tobacco PLC ADR39.41 USD-0.96Rating
Microsoft Corp246.23 USD-0.38Rating
Nielsen Holdings PLC27.99 USD-0.32
Philip Morris International Inc97.29 USD-0.79Rating
Texas Instruments Inc183.20 USD0.63Rating
W.W. Grainger Inc462.70 USD-2.43Rating

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Sonita Horvitch

Sonita Horvitch  

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