15 July 2020
As part of our Rising Stars series, Amanda Lyons discusses her passion for technology, the importance of diversity and highlights some of the key themes emerging from the Covid-19 crisis.
As an investment manager working alongside Mark Hawtin on GAM’s Disruptive Growth and Technology team, Amanda Lyons’ starting point for researching and developing stock ideas always begins by identifying key disruptive themes. In a year in which our homes have become our offices, classrooms, shopping centres and entertainment venues, Covid-19 has provided Amanda with plenty of research material. Hardly any society or industry has been spared from disruption in 2020 although, crucially, the investment expert, who joined GAM in 2011 and has always had a passion for technology, says Covid-19 has not altered her overall approach.
“I look for areas of the market where traditional companies and methods are being displaced and where technology is an integral part of the business. Within each theme I look for potential winners and losers, and use fundamental research (company visits, expert networks, in depth modelling and scenario-based cash flow analysis) to analyse individual stocks.
“During Covid-19, video calls have replaced company visits, which have been okay, but I genuinely believe there is no replacement for being in the same room and reading the non-verbal signals. Aside from this, my overall approach has not changed during the pandemic. It can be very tempting in a volatile environment to relax your approach and reduce your due diligence, however history has taught us that is a dangerous game to play, and rigorous analysis and scrutiny is more important than ever.”
As many will recognise, the big winners during the Covid-19 crisis have been those that have benefited from people spending more time at home. From a consumer standpoint, online retailers such as Amazon have been able to grow their customer base as well as increase order frequency. Home entertainment companies such as Netflix have seen increased numbers of subscribers in light of traditional entertainment options being closed. In the enterprise sector, companies exposed to the cloud and that facilitate remote working have seen big gains.
Clearly, the losers have been those that were simply unable to operate in a world in lockdown. Digital travel companies took a big hit as non-essential travel was cancelled. Amanda explains: “Ride sharing companies were similarly impacted, especially as people became wary of being in close proximity to others outside of their household. Software companies linked to events have struggled as live events were cancelled and the uncertainty around when they will recommence. Similarly, as digital native retailers blossomed, traditional bricks and mortar retailers struggled with store closures and often a poor digital strategy.”
For Amanda, Covid-19 has accelerated some existing trends and the speed of adoption is likely to increase, even once a vaccine has been developed. One key theme to emerge from the pandemic is the adoption of working from home and as lockdown measures start to relax, working from anywhere. According to her, Covid-19 has been the impetus for the biggest ever beta test of this concept. “It has challenged companies to ensure that their technology can cope with all employees working remotely; it has forced employees to adapt to a new environment and determine exactly what resources they require and, most significantly, it has accelerated a trend that was already taking place: digital transformation.”
Prior to Covid-19, Amanda suggests many companies were ‘dipping their toes into the water’ of digital transformation, but this crisis has jumped it to the top of the priority list and made it a boardroom discussion. “Enterprises that did not see digital as a priority now realise that it must be a vital part of any strategy to survive. At the very centre of this theme is the cloud. Remote working and the ability to scale up systems quickly would not be possible without the cloud. Similarly, adopting software as a service (SaaS) applications enables companies to scale quickly and efficiently without having to invest heavily in capex. This shift is not temporary and if anything will accelerate faster as the remote working momentum continues to build.”
Amanda travelled regularly pre Covid-19 to Silicon Valley, China and Europe to see and hear first-hand how advances in technology present suitable investment opportunities, and believes the increase in working from anywhere and virtual meetings will continue to have a profound impact on the travel industry. “While lockdowns were in place almost all conferences were cancelled or transitioned to a digital format. Each year events generate USD 1 trillion in spending, including airfares, transportation and hotels. A typical offline conference spends 20% of the budget on the venue, 20% on food and drink, 20% on equipment and less than 5% on speakers and programming. Switching to a virtual format can allow huge cost savings while spending more on the actual speakers and programming thereby increasing the quality of the conference.”
Several big companies that were forced to host their flagship conferences virtually have suggested they may consider never go back to physical conferencing. Virtual conferences have seen much higher attendances than physical conferences, with some reporting a much higher conversion to subsequent sales. Amanda believes business travel will commence again post Covid-19, however she thinks it will be at much smaller volumes than before.
Covid-19 has put many businesses under an immense amount of pressure and consequently many are looking to cut costs and increase efficiencies as a means of survival. Amanda thinks technology will play a huge part in this. “Using technology to improve efficiency is not solely related to the current climate, however the current climate is likely to accelerate change. This automation of knowledge work is beginning to take pace and investors may wish to look for stocks that enable companies to either replace human capital with technology or use technology to significantly improve the efficiency of their human capital.”
Tech investor and entrepreneur
Prior to joining GAM , Amanda found herself at a crossroads after the company she was working for collapsed during the financial crisis and she was confronted with a decision to either continue covering the Japanese stock market or take an opportunity that rarely comes along to try something new. She took the plunge and founded her own business. “Although I loved asset management, covering Japan was not my passion – I was more interested in technology and all the disruptive innovation coming out of Silicon Valley.”
In 2009 she set out to launch her own tech start-up. The business focused on user-generated / crowd-sourced entertainment content and news. “Back then, there were far fewer out of the box tools that help today’s founders set up new tech businesses,” she recalls. “I had to spend a lot of my time working with developers, liaising with cloud services providers and getting up to speed with digital advertising, social channels and monetisation. I ran the business for two years, and in this time we achieved good traction and a loyal user base, however, as with most early stage businesses, we did not scale at a pace that made it financially viable.” Amanda gained a huge amount of hands-on experience and knowledge of the burgeoning tech sector, which proved invaluable for her return to asset management where she started out focused on the pipeline of social media initial public offerings (IPOs).
Part of this entrepreneurial spirit may have come from her early influences. As a child of the eighties, Amanda grew up in awe of Margaret Thatcher, although at the time she was too young to really understand politics. “In hindsight Thatcher followed some policies that I disagree with, but she instilled in me that anything was possible. She was the first woman that I saw in a leadership position and seeing her command a cabinet full of men was powerful imagery for me as a young girl.”
At school, Amanda always excelled in mathematics and was interested in pursuing a career in finance. She took a variety of work experience placements in different fields, working in equity derivatives, FX and asset management to help determine what she would like to do post university. During one of these placements, at New Star Asset Management, she had the pleasure of working with Richard Pease and Guy de Blonay, both heavyweights in the asset management industry. “They not only taught me the fundamentals of the role, but also made me believe that I had the skill set to succeed in the industry,” she recalls.
Amanda studied economics and management at Oxford, which she describes as a privilege which can be easily forgotten while you are in the midst of your studies there. “One of the best parts of the Oxford experience is the incredible one to one tuition. I had the opportunity to discuss ideas and learn from some of the greatest academic minds, as well as meeting other students from many different backgrounds but who were all driven to succeed. If I were to do it over again, I would definitely use the opportunity get more involved some of the interesting and unique societies and clubs on offer.”
Amanda believes diversity and inclusion is the acceptance that everyone has something to contribute, no matter their background or circumstances. She explains: “In asset management in particular, the ability to see things from alternate viewpoints means we can better appreciate different investment and market opportunities and not be limited by our own unconscious bias. Finance in general tends to get a bad rep in the press, particularly when it comes to gender diversity.” Consequently she feels lucky that she has not experienced sex discrimination during her professional life.
“At the start of my career I worked in an environment where not only were there more female graduate trainees than male, several of the lead investment managers were women. Having said that, when I started out, I noticed I was one of very few females covering the tech sector. This observation was most pronounced at industry conferences where I found myself to be one of only a small handful of women in a room with several hundred people. Interestingly, the one exception is when I cover fashion retail (given the increasing overlap with tech), where the reverse is often the case. I would hope that more companies within asset management understand that gender does not determine your ability to cover one company better than another.”
Looking ahead, Amanda is excited about a return to more normal times post Covid-19. Since she was a young child, she has always been captivated by the theatre and enjoys everything from opera, the ballet and serious plays to light-hearted musicals and even the odd pantomime. “Living and working within touching distance of the West End means I am lucky enough to do this as often as I like; the escapism this provides is something I have really missed during the pandemic. It would be a great loss to the UK if these cultural institutions were unable to operate again soon as a result of this crisis. This is one of the few areas where digital / virtual options are no substitute for the real thing.” More broadly, Amanda is looking forward to continuing to meet interesting and diverse people and companies, virtually as well as in person.
The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is no indicator for the current or future development. Reference to a security is not a recommendation to buy or sell that security.