Athymis Gestion overweight Amazon, underweight Facebook
FAANGs (Facebook, Amazon, Apple, Netflix, Google) are core to the Athymis Millennial fund run by French boutique Athymis Gestion. Its chief executive officer Stéphane Toullieux says the firm holds four of these stocks since fund inception two years ago, the portfolio being overweight on Amazon and underweight on Facebook.
Toullieux praises Amazon for its participation to the digital revolution and huge potential in the e-commerce and cloud spaces. Apple forms another liked stock for its high-valued services such as Apple Music. On the contrary, the boutique has trimmed positions in Facebook as the social network giant carries an important risk in Athymis Gestion CEO’s view: its boss and co-founder Mark Zuckerberg.
“In Facebook dwells a reputation risk. Scandals such as the Cambridge Analytica one raise an important ethical problem around data protection. Each data breach will lead Zuckerberg to testify before Congress. How many times will he have to excuse himself? That said, Facebook’s growth and incredible cash generation seem to demonstrate markets have not over sanctioned neither Facebook nor other FAANGs. Hence it is hard not to hold Facebook in portfolio,” argues Toullieux.
He adds the boutique does not hold the stock in the Athymis Better Life fund given “Facebook does not make the world any better”.
As for Netflix, Toullieux regrets to have sold the stock a few months ago. Since then, the Paris-based manager has been trying to find entry points to get back in Netflix but without success, the stock’s valuation having increased to exorbitant levels says Athymis Gestion’s CEO.
Another FAANGs’ feature that the firm appreciates is their capacity of launching initiatives that carry future growth sources, a concept Toullieux calls “pluri-optionality”.
Could Facebook, Google and co confiscate tech innovation by concentrating it? Yes and no, replies Toullieux for whom FAANGs’ success enables them to raise colossal funds.
“Therefore their problem is not financial but an issue remains in the recruitment and talent allocation at the service of innovation. The acceleration of the startup ecosystem also turns these companies in fortresses that are permanently besieged.
“As a result, rethinking models for FAANGs’ CEOs is key. Satya Nadella understood it very well by reviving sleeping beauty Microsoft and turning it in a winning racehorse surfing on the cloud. To sum up this digital revolution, “the revolution is like a bicycle. When the wheels don’t turn, it falls.””
Other millennial-related stocks Athymis Gestion invests in include Twitter, Salesforce and Paypal. Asia is not forgotten with Samsung and Alibaba.
In Toullieux’s opinion, the Chinese BATXs band (Baidu, Alibaba, Tencent, Xiaomi) carry a more spectacular growth potential than that of the FAANGs as they grow as multi-activity businesses and nothing seems to impeach them to adapt to other cultures therefore to conquer markets outside China.
As for Europe, Athymis Gestion’s CEO says poor offering lingers as European tech expertise rather deals with research and development.
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