Post #59: New York to Chicago, via Mentor

Your author is just back from a three-day business trip to the United States, comprising a journey which took him across three states (New York, Illinois and Ohio – yes, for those unaware, Mentor is Ohio’s 20th largest town with a population of 47,000) and allowed him to form a sense of the pulse of the nation.

The talk everywhere was either coronavirus or politics. There was a remarkable ubiquity of hand sanitisers in every conceivable location, yet this did not stop 5thAvenue being as full of tourists and shoppers as ever. In terms of politics, even prior to the Super-Tuesday results, sentiment did seem to be swinging towards Joe Biden, even if there is a reluctant acceptance that Donald Trump may well win a second term.

At a more fundamental level, our business trip saw us meet with six different businesses among other things. These companies operate in a broad range of industries (from payments to healthcare solutions via food innovation), but of the several common themes that emerged, research and development was the most commonly recurring topic. 

The importance of ongoing research and development cannot be overstated.

MasterCard said to us “we are constantly investing in the future” and highlighted how it will soon be opening a new R&D centre in Canada tasked specifically with identifying cybersecurity solutions for the payments market. Meanwhile, Keysight Technologies stated that R&D “drives customer success” and that they have increased both hiring for software engineers and are growing spend to new projects at present. Steris said there was “more focus on value-add” R&D within its organisation and Zebra highlighted how its research and development spend outpaced that of its competitors by a factor of at least six times.

Where are our businesses investing? Space does not permit a full answer, but we noted with interest the plethora of opportunities available. In its investor presentation we attended, Keysight gave the following statistics of note: data centre capacity is set to grow fourfold between now and 2022; over 120 new IOT devices are being connected to the Internet every second; and, within the next 3 years, over 50% of new vehicles sold will be Internet-connected. Keysight and many others should benefit from these broad future trends. In a totally different field, IFF (a leading food innovation business) noted that health and wellness was the biggest trend by a long way within the food and beverage industry. Huge opportunities emerge from taking the complexity out of food labels. Per the business, “people want to know what they are putting in their bodies.” Even in times of uncertainty, the future is never dull.

Heptagon Capital is an investor in Keysight Technologies, MasterCard, Steris and Zebra Technologies. The author of this piece has no personal direct investment in any of these businesses. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.

Disclaimers

The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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