Portfolio Insights: Large Cap Strategies
Jessie Quick: Thanks. While we're on this digital transformation and technology theme, I've gotten a few questions about 5G, which is something that you haven't really spoken much about yet. What do you see as an investable option within the 5G landscape and what are you doing to take advantage of it? Patrick Kelly: Yes, I was just having this conversation with an analyst yesterday about 5G. Some is in the beginning stages, so it’s not that material right now, but I think it could be much more material over the next five years. We recently took up our position in T-Mobile, and it's a bit of a life cycle change story with them acquiring Sprint and the 5G assets and network that they have and being able to provide the best network now. I think that's kind of a classic life cycle change story and they may be a big beneficiary of the 5G theme with the combination with Sprint.
And could also be takeouts because we do think that there will continue to be consolidation within the sector.
Sarepta, we think, it's one of the most attractive ways to gain exposure. It has transitioned into the leading neuromuscular gene therapy company with 14 programs in development and potentially three in registration trials in 2020. They've also shown very impressive data for its limb-girdle muscular dystrophy gene therapies and these could represent another $7 billion at potential peak sales, and there's effectively no competition there. And we also think that the deal that they did with Roche a few months ago was very promising, an endorsement of the company. So yes, we think it's one of the more attractive biotech names out there. Jessie Quick: There's a big disconnect between the economy and the stock market and you spoke about that a little bit, but any thoughts on why stocks are trading at such higher PEs or similar PEs as compared to 12 months ago pre-COVID levels? So any quick thoughts there? Patrick Kelly: Yes, that's a great question. I think the market is very forward thinking and I think the market is looking out beyond a vaccine and looking at where earnings can recover to in 2021 and then 2022. I think a lot of people through this COVID situation have either exited the market or reduced some of their positions to some extent; and I think equities look attractive relative to bonds and I think that's why you've seen some of the multiple expansion that you've seen. Jessie Quick: There's obviously been a shift towards growth and more focus on technology, health care, the consumer sector, etcetera–so the question is why Alger? Why your strategies? Patrick Kelly: I would highlight our team, our process, our philosophy. We have a very talented investment team. I think our investment philosophy of investing in Positive Dynamic Change is more applicable today than it ever has been before.
Also, we have owned TCI, the tower company for a while. And they benefit from increased wireless usage, and so they may also be a big beneficiary to 5G.
Yes, it's definitely a theme that we are focused in on, and maybe that's one to talk about in more detail in our next call or podcast.
Speaker Question: Can you comment first on broadly your thoughts on health care and biotech, and then specifically on Sarepta Therapeutics if you still own it?
Patrick Kelly: There’s a tremendous amount of innovation going on in the health care sector as well, and in the biotech space, and the med tech area. There's a tremendous amount of innovation occurring there. We had owned Vertex for a while, and we think that's it's been a good stock, we continue to be positive on it. They dominate the cystic fibrosis market and we think they have a good pipeline. So we do have some exposure to biotech.
We have some exposure to some of the mid cap biotech stocks that we think are developing promising drugs.
Conference Call 7/9
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