many medium-sized publicly traded companies have attractive valuations. From our perspective, the valuation discount is unusually high.
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Small and mid caps
In recent months, market participants have focused heavily on a small number of stocks on U.S. exchanges. The other side of the coin of this strong concentration on the stock markets is, on the one hand, the now high market valuation of these securities. On the other hand, market players have, in comparison, neglected small limited companies. As a result, many medium-sized companies listed on the stock exchange have attractive valuations. From our perspective, the valuation discount is unusually high. Bechtle AG* from Neckarsulm, listed on the M-Dax, is the largest systems company in Germany. Bechtle combines direct sales of IT products with comprehensive systems integrator services, including IT security. The company has, in our opinion, been delivering good, reliable results for a long time. British company Diploma PLC* specializes in technical products and services, including life sciences, seals, connection solutions and specialty fasteners. These examples illustrate the breadth of the field. Investments in small caps, which are typically more volatile and often move more cyclically, require careful selection. As quality investors, we also focus on companies in the small and mid-cap segment that meet our selection criteria in terms of profitability, strong market position and reasonable valuation.
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Medtech
Modern medical technology opens up completely new possibilities in the diagnosis, treatment and care of diseases. Novo Nordisk* is a Danish manufacturer of insulin, blood clotting drugs and growth hormones. Three years ago, Novo Nordisk launched Semaglutid, an antidiabetic drug that can also be used in the treatment of obesity and therefore for weight loss. The American company Thermo Fisher* manufactures highly specialized devices for the analysis and therefore diagnosis of diseases. In the past, Thermo Fisher has also expanded several times through acquisitions. Vertex Pharmaceuticals*, also American, specializes in the production of drugs for the treatment of cystic fibrosis, cancer, autoimmune diseases and neurological diseases. But Vertex above all achieves high cash flow with analgesics that are less addictive than traditional products. Vertex stands out in the treatment of cystic fibrosis, where the company uses gene editing.
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Artificial Intelligence
Artificial intelligence (AI) will fundamentally change many of our areas of life. For this, manufacturers and users need enormous quantities of semiconductors, from simple computer chips to ultra-complex and ultra-fast GPUs. ASML*, the manufacturer of machines for the production of semiconductors, is for example at the very beginning of the value creation chain. Broadcom and TSMC* manufacture semiconductors, while e-commerce company Amazon* or software developer Microsoft* represent users who integrate artificial intelligence into their business model. For all these reasons, we systematically analyze the entire AI sector. A conviction guides us in this approach: Investors should always keep an eye on the entire value creation chain. In this way, it is possible to achieve broad diversification also in the field of AI, which, in the best case, helps compensate for cyclicality in AI and reduce investment risks. in individual titles. Stock markets are the marketplace where new and innovative ideas are exchanged. Keen observers can still find companies with a compelling business model and solid growth prospects at an attractive valuation.
* None of the companies mentioned above constitute an investment recommendation.
