Companies at the coalface of the renewables revolution, who in recent months have shot from a nice-to-have to a near essential allocation.
I spoke with James Sullivan on this very subject earlier in the week:
“Over the past weeks, it’s fair to say that life as we know it has changed. When observing the current landscape, it’s clear that the COVID-19 pandemic has left few stones unturned with regards to our day to day living.”
He continued “The government’s lockdown measures have presented the most brutal of litmus tests for businesses across the world.”
Indeed for many companies, the rigidity of circumstance may prove altogether too much to overcome. But for others whom are, either through industry, resource or sheer good luck, able to be flexible, there is hope.
Within the technology sector, we are witnessing this dispersion in real time.
James, echoing the sentiments of our 2018 note ‘Seeking closure on the ‘Growth vs Value’ debate‘, surmised that “companies that are nimble and able to adapt their output to meet society’s current needs will rise to the top. Those that cannot will be left behind.”
Thermo Fisher Scientific, to whom we have exposure via our SRI model portfolios, made headlines earlier in the month after agreeing to supply Coronavirus testing kits to the UK, as part of the government’s bid to increase daily testing.
The US-based scientific equipment maker has been fleet-footed in gearing its production towards pandemic related solutions. Its timely acquisition of diagnostics group Qiagen at the beginning of March, a move that had long been mooted, being a notable case in point.
Qiagen, having previously produced testing apparatus for both SARS and Swine Flu, had been developing COVID-19 testing kits since the turn of the year. The $11.5bn deal facilitates an expansion in Thermo’s disease testing arm at a time when it is most needed.
In addition, the company has partnered with Ford in a bid to hasten development of the COVID-19 collection kits, specifically the vials used for ‘drive-through’ testing. Ford engineers are assisting Thermo in adapting their production machinery to meet the increased demand, whilst facilitating other solutions such as reusable medical gowns made from airbag material.
This type of evolutionary innovation is of course nothing new, one need only read up on the origins of the cordless drill (a joint venture between Black & Decker and NASA) for proof of this. But from an investment perspective, a company’s willingness to evolve and be alive to its surroundings, has never felt more pertinent.
In a post-pandemic society, we believe our fascination with, and indeed reliance on, technology will accelerate ten-fold.
Within the multi asset funds, we have opened several positions within this space, leveraging off the MPS team’s experience in ‘responsible’ investing.
James concluded that “having been at the forefront of the largest bull-run in history, we suspect that technology will rise again and the companies seeking to aid the world’s problems – climate change, water scarcity and in this case, infection – will surely stand to benefit.”