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DNB Fund Technology & DNB Fund TMT Absolute Return Update - September 2019

Apple Announcements and The Gaming Sector

Finanz-Blog

Mikko Tuomas Ripatti

Mikko joined DNB Asset Management in June 2015 and is responsible for DNB Asset Management´s activities in Spain and Portugal. Mikko also serves as an expert for DNB AM´s equity strategies and products working in close collaboration with the fund managers in Norway. He also oversees our Luxembourg-domiciled funds.

Between 2007 and 2015 Mikko worked in Helsinki as a fund manager at FIM Asset Management where, as part of the emerging markets team, he was responsible for investments in Latin America. Between 1999 and 2007 Mikko worked for Finland’s best-known company Nokia in different strategy, market analysis and business development related positions in Latin America and Finland.

Mikko has a master's degree in Economics and Business Administration from Turku School of Economics in Finland. He speaks Finnish, Swedish, English, Portuguese, Spanish and a little bit of French.

Published:

By the 3rd of October DNB’s two tech strategies had performed as follows:

  • The Long Only DNB Technology: + 25.05% % YTD in EUR
  • The Long Short DNB TMT Absolute Return: - 2.38 % YTD in EUR

Apple used its annual September event to announce a new generation of iPhones, new iPads and new Apple Watches. Apple Arcane, the company´s gaming service, launched on September 19th in 150 countries. The company now says that Apple TV+ will start rolling out on November 1st and, like Apple Arcade, will cost USD 4.99 per month for a family subscription. As an additional advantage, all new iPhones, iPads, Macs and AppleTVs will come with one year of AppleTV+ for free. The upside for Apple is clearly in services, not iPhones. After more than a decade since the first iPhone was launched most of the obvious dramatic improvements have been made and the scope for radical innovation is limited – as is also the willingness of users to pay even more for new phones.

Gaming sector is one of our biggest overweights at the moment. In our view, there are many positive themes driving the sector: (1) Digital distribution improves ASPs by around 30% benefiting margins (2) Shared architecture across PC and consoles reduces porting costs (3) Console backwards compatibility changes console game growth from cyclical to secular and (4) Streaming could expand addressable market. We believe the market is underestimating the positive margin effect of new distribution models and we expect the sector cyclicality to fall significantly in the future. Our biggest holdings Square Enix and Nintendo also trade on an undemanding valuation of 2020 P/E (ex-cash) of 15x.

Please click on the following links for the updated monthly reports:

DNB Fund – Technology
DNB Fund – TMT Absolute Return

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