At Spaceship, we have five values — that is, basic beliefs that guide our actions.
One of those values is forward-thinking. It colours everything we do, including our investment philosophy, which is to invest “where the world is going.”
Essentially, we use our Where the World is Going methodology to identify what we think are forward-thinking companies that will benefit from future trends. If they meet the criteria in our methodology — they are defensible and have sustainable competitive advantages — we will then consider those companies for our Spaceship Universe Portfolio.
Perhaps not surprisingly, then, many of the companies in the portfolio are tech companies.
Now for the interesting part.
A few days ago, Goldman Sachs noted that just five stocks, all tech-centric — Facebook, Amazon, Apple, Microsoft, and Alphabet — account for the S&P 500′s Q419 year-over-year earnings growth. Without these stocks, growth for the final quarter of 2019 would have been flat.
The key phrase in there is “earnings growth.”
The last time value was this concentrated among just five stocks was during the dot-com bubble, which peaked in March 2000 and crashed shortly after. The five largest companies in the S&P 500 index then were Microsoft, Cisco, General Electric, Intel, and Exxon Mobil.
So, why is it different now?
As one of our portfolio managers, Phoebe Jin, noted to me yesterday, the key is earnings growth; we’re not looking at just revenue growth. Even though Facebook, Amazon, Apple, Microsoft, and Alphabet are really large, they’re still growing rapidly. Between them, they grew their fourth quarter earnings by 16% year-over-year.
As Phoebe said to me, this earnings growth goes completely against the stereotypes of the dot-com bubble, not to mention unsustainable business models!
For us at Spaceship, though, it gives substance to our Where the World is Going methodology and our confidence in investing in forward-thinking companies — whether they’re tech giants or the smaller tech companies that could be the giants of tomorrow.
The Spaceship Universe Portfolio and the Spaceship Index Portfolio invests in Facebook, Amazon, Apple, Microsoft, and Alphabet at the time of writing.
Important! We’re sharing with you our thoughts on the companies in which Spaceship Voyager invests for your informational purposes only. We think it’s important (and interesting!) to let you know what’s happening with Spaceship Voyager’s investments. However, we are not making recommendations to buy or sell holdings in a specific company. Past performance isn’t a reliable indicator or guarantee of future performance.
