Capturing profits by investing in companies that focus in disruptive technology

13 November 2016

Dear Fellow Investor,

The world is changing, business is changing and the way to prosper is to adapt.  That was the theme of last week’s Motley Fool Convention. 

Investing in companies that focus on disruptive technology allows us to capture profits with companies who use  these disruptive trends in their businesses. 

An example is  SATS the airline caterer and service provider to Changi  airport in Singapore 

SATS has automated much of their production lines using robotics. It has allowed them to reduce their headcounts by over 50 % from 10,000 workers to less than 5000.    This has insulated them from rising labor costs.  A robot does not need an expensive work permit and  does not go on strike. 

This is why SATS has a record of rising ROE and rising sales/ earnings.

Our Malaysian rubber gloves companies are doing the same to reduce their headcounts. Our investment in Kossan Rubber is doing fine because of their innovation and disruptive technology.

On my  trip to Singapore last week and attendance to the Motley Fool Investment convention I was exposed to  Singapore companies that are prospering by adapting to disruptive technology.  These include on line retailing, AirB&B, Uber and Grab taxi. Even Sing Post joined with Ail Baba to help deliver on line purchases .  

Disruptive technology was a major topic for the Motley speakers

Even Donald Trump used disruptive technology to beat Hillary Clinton. He was able to bypass the traditional media such as CNN, Bloomberg, MSM, New York Times and the  Washington Post  who were  against him by over 95 %.   He used Twitter, and Facebook  to promote his campaign. He harnessed the power of IT expert Julian Assange and the internet to expose Crooked Hillary’s corruption, manipulation, email scandals, and double dealing with banks. 

The establishment was unable to block  alternative media.  They tried to shut down Assange but failed as he has a decentralized network under no one’s control.   

My team is putting together a list of Malaysian and Singapore companies- mostly small and medium cap businesses that should benefit from disruptive technology. We are visiting them and talking with the managements to understand them better for possible investment.  

They have the potential to outperform the traditional index linked big caps which the large funds buy.

Even some giant cap companies are outperforming because they have adapted to the new disruptive technology.

An example is Disney and the world’s oldest and most famous mouse. Micky Mouse. Micky was born in 1928 and still going strong.  Customers line up at the Disney parks all over the world and are happy to pay increasing ticket prices to see Micky. 

Social media, the internet and Facebook has been a contributing factor to Micky and Disney’s success. 

Some of you are concerned with the impact of Donald Trump and his proposals to raise trade blocks on Japan, China, Mexico etc. 

Do not be concerned. There has been initial panic by those who sell first and think later.

The reality. Trump under the US congressional system can not make laws. Only congress can pass trade, immigration  and tax laws. Congressmen and congresswomen of both political parties are  mostly self serving, wealthy multi - millionaires . 

They will not approve laws that reduce their wealth.  I forecast tax reduction for corporations, small business and personal taxes but not legislation to  block trade. 

Trump had a positive meeting with Obama Thursday. He was respectful and open and willing to find common ground.  He will be a great president and good for business.  He sounded a lot different than when he was campaigning.  

Invest well and grow your wealth,

Bill   

Cats eyes have a whole universe inside them.