A leader in the carbon-intensive computer chip industry and a stock exchange that’s been around for more than 300 years may not seem obvious candidates as companies fixing the future. However, many of the elite portfolio managers backing Taiwan Semiconductor Manufacturing (TSMC) and London Stock Exchange claim they are doing just that, as our in-depth analysis of both companies reveals.
Cheap as chips
No other stock is held by more of the world’s elite PMs than TSMC. A total of 94 of the top investors tracked by Fix the Future hold the shares, including 20 running funds with a sustainability focus. Yes, TSMC is huge – it’s the world’s biggest semiconductor foundry business with a 53% revenue share of the $108bn market – but its popularity is down to more than that.
The chart above shows TSMC’s phenomenal growth record and stellar operating margins. So it’s perhaps a surprise to learn that the shares change hands at just 13 times their forecast earnings over the next 12 months. That signals fear of pain ahead as the world appears to move towards a recession – but top investors are looking beyond that to sustained growth, powered by increased use of data. Read more.
Latin America’s finest
Traditionally Latin America’s markets are seen as plays on commodity prices. But elite PMs’ biggest bets in the region tell a different story. They showcase the diversity on offer, with leading companies spanning finance, retail software, infrastructure, and even breast implants.
OK, so one miner does make it into the top 10 – Chile’s SQM, which unsurprisingly boasts the best share price performance over the past 12 months, with the stock up 130%. A scramble for lithium to power electric cars has certainly helped. Read more.
London Stock Exchange’s huge acquisition of Refinitiv may have been greeted with skepticism by some investors, but top PM backers are convinced the deal is a game-changer. The $27bn price tag was sizable, but they point to the surge in recurring revenues, up from 45% to 70%, of the enlarged group.
‘This makes it a very strong business going into a recession,’ says Matthias Born, head of investments at Berenberg. ‘Clients can’t just switch off their contracts because their revenues are falling.’ Investors also make a strong case for the company helping to fix the future, by facilitating access to capital for growing businesses and democratizing investing. Read more.
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