Notes from Philippe Laffont, founder of Coatue Capital Management on Bloomberg

  • tries to find companies that will be cheap based on earnings in five years
  • many cheap tech companies are cheap for a reason
  • Google looked expensive in 2004 but was trading for 2x 2013 earnings
  • tech stocks are historically cheap (March 4, 2013)
  • in tech investing it is important to look for new trends
  • there are many tech trends today and they are not dependent on the economy
  • Apple is cheap by any measure
  • the key is to think about what would get Apple to $800/sh.
  • believes Apple to needs to go on offense; believes this will happen
  • Apple’s use of cash will help determine value
  • Apple could benefit by acquiring companies with new ideas and talent
  • Apple is very open to listening to shareholders
  • Contrarian bets in tech sector can become value traps
  • Google is an infrastructure play on eCommerce
  • Google’s margin of safety is that it is trading for 5x future earnings (5-7 years)
  • Apple, Google and Samsung are the top tech companies
  • they are looking for short candidates among companies that will be negatively impacted by the paperless office
  • the desktop food chain will be hit be developments in tablets
  • he likes the storage theme, for example, being able to retrieve files ubiquitously in the cloud
  • took a pass on Yahoo because he can not value the U.S. business
  • Samsung and Twitter are candidates to be great tech companies
  • Twitter is hard to value: huge strategic value but little revenue
  • The are investing in video content. Smart phones will lead greater consumption of video and more ways for content companies to monetize their libraries.
  • Sometimes these new trends are uncovered from insights based on a few words from industry leaders. Jeffrey Katezenberg recently said that in the future we will pay for content by the “square inch”.
  • This may mean that in the future users may pay $.50 for watching a movie on a smart phone, $1.00 on a tablet, $5 on the TV etc. which could lead to large new markets and ways to monetize content.
  • It is very hard to make content. There are a handful of these companies in the U.S. and they excel at making content.
  • He likes Time Warner, CBS and News Corp.

Original Interview

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