Investing in Robotics: More Profit in a Snap

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How to make money?
How can an investor earn income if it is an investment truth held to be likely apparent that robots will eventually play a long-term role in the economy?

Simon Edelsten’s answer is with great difficulty. He runs the Artemis Global Select fund, which has doubled investors’ capital over the past five years. He said, ‘We have not found anything to own on a sensible valuation as we have looked at automation in some detail, though in the short run there does seem to be an acceptable pickup in robot orders from China.’

Wesley Lebeau, who runs the CPR Invest Global Disruptive Opportunities fund, has induced by the valuation question to minimise his exposure to the sector desperately. The investor remarked that having positioned around 8 per cent of the capital in his investment into robotics, he grew worried about the level of valuation applied to robotics as a sector and had been taking profits, decreasing his exposure to around 5 per cent of the capital in the investment. Moreover, he commented ‘The sector has outperformed, and the valuations became very high, so we thought that it was important to be more selective, so we began to take profits. All of the stocks that we owned outperformed.’

He focused the investment case for the Japanese-listed Harmonic Drive Systems as the clutch of stocks Lebeau continues to get in the sector. The fund manager said, ‘This company makes products that are small robots, and they can be used in factories for humans and robots to collaborate. Right now, the robots that work in factories are too big to work safely with humans, but Harmonic Drive Systems are working on this. They have 90 to 95 per cent market share in the segment, and it is a segment that keeps growing.’

The French-listed giant Schneider Electric is the second stock he proposed. He said that the specialism of this line of work is ‘the automation of building integration and software platforms’, and he believes that the entity has a standardised market position in this sector.

Alex Blake, the client manager for Japanese assets at Baillie Gifford, is rather more eager on the investment case for automation and robotics over the long run.

Alex Blake, the client manager for Japanese assets at Baillie Gifford, is rather more eager on the investment case for automation and robotics over the long run.

Thus, he added, ‘Structural changes, driven by technological shifts, provide us, as growth investors, with a favourable backdrop for investing in companies with good long-term prospects. We believe that factory automation and robotics will be one of the major growth areas in the future.’

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