Ankur Crawford Call Transcript


Ankur Crawford (continued): There were more nuanced changes. I think reflecting upon the first half of the year, we started to express a higher weighting in e- commerce companies that were coming under pressure as the market was selling off. We also found dynamic businesses in the online gaming sector. We bought those when the world was really worried about liquidity.

are enhancing their positioning as we progress through this.

In terms of the positioning right now, probably the biggest change in our portfolio composition from the beginning of the year has been an increase in the consumer discretionary sector. We are 400 or 500 basis points overweight consumer discretionary. And that was probably the biggest singular change if you look from January 1st to August. Dennis Hearns: Ankur, you coauthored a white paper at Alger titled The Age of Connected Intelligence, which can be accessed through’s website under the insights section if you haven’t read it yet. Can you talk a little bit about what your premise in it and how it shapes your thinking about investing? Ankur Crawford: What we talk about in the paper is actually really relevant to the market not only last year, but it will be relevant to the market over the next five years. The point of the paper was to highlight three things. The genesis of this paper was the incoming questions that I kept getting from clients. I thought maybe it’s best to just codify it and then hand it to our clients. But the point was to have at least three things. The first was we are at the beginning of the fourth industrial revolution. The timeline for this revolution is going to be significantly compressed relative to timelines we have seen for other industrial revolutions. And because of this compression of time, companies are in a position where they have to either adapt now or die. This is not evolutionary. It does not span three generations like other industrial revolutions have done. This is not evolutionary. It is revolutionary. And this concept was already in motion but has been exacerbated by COVID. The second point is that there is no industry that is not touched by this revolution. In the early 2000s, if you look back to the internet bubble, it had no effect on financial. No effect on the consumer.

We leaned into consumer businesses that were technology forward. There is definitely a thematic that runs through all of these names that we added.

Currently, we are trying to find those businesses that have characteristics of being both beneficiaries of a normalization but are still deploying techniques that will enhance their growth. For example, take a company like PayPal, which has been a big beneficiary of the move to a cash flow society and has benefits from the return to travel because they have a significant portion of their business tied to cross border. So, they may have a driver of their growth when a vaccine becomes available and our behavioral patterns normalize. Also, a high-quality franchise like a Starbucks should benefit from normalization of work habits but is also going to emerge from the pandemic stronger and should gain share and benefit from their digital first strategy. The idea is that there are opportunities in a market that is perceived to be permanently impaired. But if we have a lens that is longer than 12 months, we could see a path to earnings normalization, which sets up for compelling risk reward. Currently, that’s kind of where we’re hunting. But again, I would emphasize that the core philosophy that drove the decision path is still the same. We’re investing in businesses that are driving change, the change that we see all around us. Most importantly, we are looking for businesses that will emerge stronger from the crisis because they have already pivoted their businesses to the new world and are benefitting from that or somehow are positioned better at the end of this pandemic because their competition failed to make it through or they’ve made some strategic initiatives that

Conference Call 3/11

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