TIP SHEET: MFS's Sabel: Key Trends? Cloud Computing, Smartphones
December 12 2011 - 12:29PM
Dow Jones News
The rise of cloud computing and the growth of the smartphone
market are two trends on which investors can focus for hidden
value, according to MFS Technology Fund's (MTCAX) Matt Sabel.
The fund, part of MFS Investment Management, picks individual
stocks based on broader shifts in the way companies do business and
interact with technology. Sabel called the move to the
"cloud"--companies accessing Web-based software and computing power
instead of installing applications and servers on their own
computers--and consumers' increasing use of high-end phones a sea
change for investing.
"We're trying to identify big-sector themes within the
industry," said Sabel, the fund's portfolio manager. "It's a lot
easier to stock-pick when you know which way the tide is
flowing."
Sabel's strategy led to his interest in EMC Corp. (EMC), the
fund's fifth-largest holding. EMC makes computer storage that
provides the backbone upon which cloud-based applications run. It
also has a majority stake in VMware Inc. (VMW), whose
virtualization software is also essential to the cloud.
Smartphones may seem more and more common but Apple Inc.'s
(AAPL) iPhones have only about 4% to 5% of the total cellphone
market, Sable said. This is partly why the Cupertino company is the
fund's largest holding by far.
"We're still in very early innings of smartphone adoption and
Apple's potential share of that," Sabel said.
He also likes how the company's own cloud-computing product, its
iCloud service, which lets users share music and other files among
their many Apple devices. The iCloud service makes users more
likely to stick with the brand, he said.
The MFS Technology Fund is up 5.3% so far this year, according
to research company Morningstar Inc., outpacing the S&P 500's
gains. It has also outperformed the market over three- and
five-year spans. The fund has about $186.9 million in asset,
according to Morningstar.
Sabel admitted that his stock picking isn't perfect. He backed
off on semiconductor companies such as Fairchild Semiconductor
International Inc. (FCS) last year because he was worried about the
weak economy pressuring their businesses. He said he missed out on
some chip opportunities, in part because he didn't expect the
Federal Reserve to make moves to bolster the economy.
Forecasting the economy isn't a major part of Sabel's
stock-selection process.
"I have my views, but so does everybody else," he said. "Where I
think I can add value is in-depth research, finding companies that
can grow regardless of what the economy's doing."
(Matt Jarzemsky covers technology companies for Dow Jones
Newswires. He can be reached at 212-416-2240 or by email at
matthew.jarzemsky@dowjones.com.)
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