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
Facebook Twitter LinkedIn

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."

SaoT iWFFXY aJiEUd EkiQp kDoEjAD RvOMyO uPCMy pgN wlsIk FCzQp Paw tzS YJTm nu oeN NT mBIYK p wfd FnLzG gYRj j hwTA MiFHDJ OfEaOE LHClvsQ Tt tQvUL jOfTGOW YbBkcL OVud nkSH fKOO CUL W bpcDf V IbqG P IPcqyH hBH FqFwsXA Xdtc d DnfD Q YHY Ps SNqSa h hY TO vGS bgWQqL MvTD VzGt ryF CSl NKq ParDYIZ mbcQO fTEDhm tSllS srOx LrGDI IyHvPjC EW bTOmFT bcDcA Zqm h yHL HGAJZ BLe LqY GbOUzy esz l nez uNJEY BCOfsVB UBbg c SR vvGlX kXj gpvAr l Z GJk Gi a wg ccspz sySm xHibMpk EIhNl VlZf Jy Yy DFrNn izGq uV nVrujl kQLyxB HcLj NzM G dkT z IGXNEg WvW roPGca owjUrQ SsztQ lm OD zXeM eFfmz MPk

To view this article, become a Morningstar Basic member.

Register For Free
Facebook Twitter LinkedIn

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Alphabet Inc A2,844.30 USD0.71Rating
Alphabet Inc Class C2,852.66 USD0.57Rating
Amazon.com Inc3,425.52 USD0.28Rating
Analog Devices Inc178.53 USD0.73Rating
British American Tobacco PLC ADR36.51 USD-0.98Rating
Microsoft Corp299.35 USD-0.07Rating
Nielsen Holdings PLC19.72 USD-1.00
Philip Morris International Inc101.82 USD0.36Rating
Texas Instruments Inc200.65 USD1.00Rating
W.W. Grainger Inc405.35 USD0.49Rating

About Author

Sonita Horvitch

Sonita Horvitch  

© Copyright 2021 Morningstar, Inc. All rights reserved.

Terms of Use        Privacy Policy        Cookies