Traditional bottom-up equity research does a poor job of valuing technology stocks. In part, this is because technology cycles these days move pretty fast and it is difficult to judge where you are on the growth curve. Also, valuations tend to be permanently high.
Thematic investing also has its problems. Some investment themes will send a stock up while others may send it down. So how does one net off conflicting themes? In addition, some investment themes may last for ten years or more. So how does one judge the entry and exit points to get the investment timing right?
At CM Research, we developed a unique three-screen valuation methodology for the technology, media and telecom sectors based on a thematic investment approach. We researched technology investment themes in detail and then fed the results into our thematic engine, whose algorithms quantified the impact of several conflicting themes on each individual stock.
And it worked.
Assuming a 12 month investment horizon, our thematic valuation approach has a proven track record.
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