Most Promising Industries
Over 2017 and into 2018 we've seen a lot of larger deals announced in the TMT, Healthcare, and Consumer Retail industries, along with many sponsor deals. I'd like to know what sectors you guys think will be most promising and deal-flow heavy over the next 3-5 years?
TMT.
Data consumption is growing exponentially. We need fiber/data centers/towers/satellite infrastructure. They are intertwined and competing at the same time. Telecom infra has been and will continue to be hot, especially if you think globally.
Telecom providers will also stay active. At the wireless level, you have 5G coming, which will enable wireless providers (e.g. Verizon) extemely good positions to capitalize on that. They are/could be the IoT providers (seee Verizon acquisition of Fleetmatics etc). They are/could be content providers (i.e. AT&T/Time Warner) /internet providers (i.e. Verizon Fios or in the future, fixed wireless 5G). They continue to focus on video streaming and also poised to replace cable internet. Now, cable operators have this 5G threat. Do they buy wirelesss? Do they become the 5G backbone (i.e. partner with wireless so they can leverage cable infrastructure)? They have had a lot of success getting into broadband internet and replacing wireline guys (i.e. Comcast providing home internet). Separately, they have video businesses (cable tv). People continue to cut cord...how do you position yourself? Do you focus on your network/content that OTT tv providers (i.e. sling) have to pay for? Or do you introduce your own OTT (i.e. Disney is coming out with a product to compete against Hulu/Netflix)? Cable operators could horizontally merge to gain scale or vertically to snap up network/content to hedge against OTT.
Did I mention wireline companies? They are kind of fucked. They are losing voice (home phone) and building out fiber to provide fiber based products. But when 5G comes, this whole universe of regional wireline companies could get fucked, especially if those 5G providers are competing with bundles (i.e. your subscription has both Home internet and also phone service). The wireline fiber infrastructure will have value, but I’m not so convinced that their services/products will continue to grow in a 5G universe (which is a bit away I guess).
And now you have tech companies. Internet/cloud is everything and the new norm. Telecom infrastructure is becoming more and more cloud based...tech companies will benefit from by being the enablers (i.e. security provider for cloud). Tech companies enable OTT that compete against traditional media (i.e. BAMTECH or Netflix, who isn’t just tech but also create original content).
And there are the giants (i.e. Amazon, Facebook). They already touch on so many daily facets of our lives. They will continue to expand in other areas where consumers spend money on. And they have so much shit that they can literally enter anything they want...they also have capital...it’s a matter of what’s the most sustainable/attractive opportunity to focus on at the moment.
I kind of rambled. But I think TMT is really cool. Also obviously TMT touches all...consumer/FIG/HC. Application of 3D printers for healthcare/ blockchain for FIG / Amazon is dominating consumer. Everything is so intertwined these days...and I think TMT is at the core of it.
Been in the markets for years now. There are opportunities aplenty in the entire marketplace right now, but I believe that technology will continue to be the leading sector for quite a while. The tech sector is so ubiquitous and far-reaching, on top of being such a broad category that covers so many different companies and sub-sectors, that I don't see any slow-down in the near future.
In addition to tech, healthcare (HC) is another leading sector that has plenty of upside still. With the baby-boomer generation reaching their twilight years, there will be an ever increasing need for HC professionals, HC institutions, HC research, etc. And yes, there is a difference, a very big difference, between HC and pharma. I believe pharma is an interesting sector, but one in which I do not participate in.
I'm a voracious reader, spend a minimum of an hour each day researching and reading about investment opportunities, business news, etc. Yet I have learned the hard way, several times, that one bad test, one negative test trial, one miss on earnings can send a pharms stock tumbling. And, when you own a pharma position, if the pharma sector goes down, your position will go down, regardless of its strength. Hence my decision over 5 years ago to stay out of pharma completely. Still dabble a bit in HC if it makes sense, but there is a lot of money to be made in tech and financials over the next couple of years. And if "the wall" actually does begin getting built, some infrastructure plays such as URI will be big winners.
any industry can be promising if you just sit there for long enough
i personally think blockchain is one of the most promising industries for people with a skillset similar to mine (tmt investing), mostly because it's (i) high growth and (ii) most people think it's absolutely retarded. courage is extremely rare and most people that work in finance are pussies when it comes to sticking their neck out. you only get paid if you're right that the industry is high growth and, more importantly, that other people are wrong that it's not high growth. blockchain is one of the few places where i think that's possible and, again, it's mostly because most people just don't understand what's going on there because it's incredibly technical and difficult to understand if you don't have a background in decentralized systems. maybe i'm a fucked up person, but when i think i'm right and other people laugh at me, it gets me hard. this is mostly because i work in public markets and knowing something that other people just don't know is just extremely rare and happens only once every few months.
cannabis is similar. most smart people wouldn't work in that industry and generally the people that work there are absolutely retarded. it's objectively high growth, so if you work there you'll get paid a lot because you're probably a lot smarter than the people you're competing with.
tech is also similar, but generally TMT is extremely competitive. you need to pick stuff that's fairly nuanced to win there over the course of a career.