PODCAST: Research in Action
In this episode of Research in Action, Portfolio Manager Denny Fish makes the case for why investors shouldn’t let tech’s recent pullback overshadow the long-term growth potential of powerful mega themes, including the cloud, Internet of Things, artificial intelligence (AI) and edge computing.
- Rising interest rates, supply chain shortages and uncertainty about economic growth have created volatility for technology stocks.
- But in our view, recent performance does not correlate with a decline in fundamentals for the sector. On the contrary, spending on the cloud, AI, edge computing, and the semiconductor chips that power these and other advanced technologies is expected to grow rapidly over the coming years.
- Inflationary pressures could also provide a tailwind as companies seek ways to lower costs, including via automation and productivity-enhancing software.
Carolyn Bigda: From Janus Henderson Investors, this is Research in Action. A podcast series that gives investors a behind-the-scenes look at the research and analysis used to shape our understanding of markets and inform investment decisions.
On this episode, we’re joined by Portfolio Manager Denny Fish to talk about the tech sector. Tech stocks were the darlings of the pandemic, but rising rates and supply chain disruptions are putting pressure on the sector. And these issues don’t look to be going away any time soon, which you might assume doesn’t bode well for tech. Or does it?
Denny Fish: Valuations can go pretty extreme in both directions whenever you have emerging-growth patterns like we have. And by the way, that’s getting better and better as we’ve had the volatility that we’ve had.
Bigda: Denny leads the U.S.-based Tech Sector Team, and has been investing in tech for nearly two decades. He’s seen the industry go through many cycles and believes big themes, like cloud computing and artificial intelligence, remain in the early stages of their growth potential. And that recent volatility may only be making their investment case more appealing.
I’m Carolyn Bigda.
Matt Peron: And I’m Matt Peron, Director of Research.
Denny, welcome to the program.
Fish: Yes, thanks for having me.
Bigda: So, to begin, let’s talk about the volatility we’ve seen in tech stocks lately and why the sector pulled back this year. What changed?
Fish: Yes, well, I think things actually started to change before we got to this year. If we just rewind the clock a little bit, the market really started to discount the idea of a higher interest-rate backdrop due to inflation and the prospect for the Fed [Federal Reserve] to start raising rates, kind of as back as far as, call it, October/November. What’s been interesting is that if you focus on what happened in the latter part of last year, the real growthy parts of the technology ecosystem really started to feel it on the chin. And what I refer to there, kind of the higher-multiple, earlier-in-the-lifecycle technology stocks, like software companies, e-commerce or the digital ad ecosystem. Those were the first to kind of really start to feel it, and that really persisted into this year.
The thing that’s a little different over the last couple of months is, you know, the sectors that had actually held up better were both a bit more value-oriented legacy stocks with low multiples, just the nature of the factor rotation in the market. But secondarily, cyclical growth companies like semiconductors and semiconductor capital equipment actually continued to hold up fairly well through the balance of ’21, given shortages in the entire supply chain, which have inventories at the lowest levels ever and order books that are going out into 2023. And you know, we can argue the merits of double ordering and potential and things like that, but nonetheless, like it’s you know, the tightest supply demand environment we’ve had in the supply chain for semiconductors in many years.
But then what’s kind of happened is the whole prospect of rising rates slowing the economy, and then you pile on – you know, if you told me, like, we were going to have an environment where we’re going to go through a pandemic, so we’re going to have to figure that out; and then we’re going to come out of a pandemic and we’re going to have to figure out what that meant; and then we’re going to have the highest levels of inflation that we’ve had since the early ’80s and the Fed was behind the curve and they were going to have to raise rates – that’s created a bit of a tricky backdrop. And so, as a result, even some of the sectors of tech that had been holding up started to feel it, just given the prospect for, you know, lower economic growth, and there’s generally a correlation there. And then even like the large ballast companies have come in a bit more than the broader market when we think about the Microsofts and the Apples of the world. So, I know that was a mouthful, but there’s been a lot going on, to the point of your question.
Bigda: So, a lot of curveballs and some of them have been hitting the tech sector pretty hard. But Matt, I think, at the same time, there are some underlying secular trends that are going on in tech that we should also be talking about, right?
Peron: Yes, I think Denny lays out what’s been happening in the short term, to your question. But I think what his team does very well is identifying these secular themes, these megatrends and the killer applications that come out of them and how they change our lives. And I think, Denny, I don’t want to speak for you, but I think we’re in the middle innings of many of them. So, Denny if you wouldn’t mind laying out what you and your team have identified as these key themes that you’re riding.
Fish: Yes, absolutely. And I think that is probably the most important context as we think about the world going forward, and that is exactly what you both just laid out in terms of the mega themes, which, in our view, over a multiyear period, kind of overwhelm many of, you know, the factor dynamics or what might be going on over the short term. And it’s kind of like the old adage: We always, you know, overestimate what can happen in a year; we completely underestimate what can happen in a decade as we think about technology trends. And the big trends, I mean it’s, I know it’s a broadly used term and it’s been around for a while now, but cloud [computing], you know, it’s interesting. It’s rare that you’re 15 or 17 years into a mega theme and you’re only like 10% or 15% penetrated into a multitrillion-dollar market. But that’s the reality of where we’re at. So, we continue to be really enthusiastic there.
Secondly, we think one of the most powerful trends for the next couple of decades, maybe two/three decades, is the proliferation of artificial intelligence (AI) to both technology businesses, as well as the broader economy. And we think we’re like really early on and [it] has the potential for the most profound implications for both, you know, improving productivity and improving the quality of life globally across many, many different sectors. And that kind of ties into cloud because the reason that we’re getting to where we’re getting today is because these companies are scaling on the backend in a way that allows companies to leverage compute cycles and GPUs [graphics processing units] and algorithms in a way that they just weren’t able to historically. Because for all practical purposes, companies have an infinite supply of compute now. And so, that’s really good for certain types of companies and then as well as semiconductor companies that are on the leading edge, providing technology to the cloud providers.
We’re really bullish on this idea of the development of sovereign interests in the semiconductor supply chain. It’s no secret that the world has become way too reliant on Taiwan and Korea, to a lesser extent, for semiconductor content, and every major nation globally wants to have some degree of control over that. And so, that’s going to be a big theme over the next decade is, countries that went through a 30-year cycle of outsourcing semiconductor design and development to now wanting to manufacture products on their own soil. And so that’s pretty darn good for the semiconductor supply chain.
And then it kind of dovetails into another mega theme, and that’s this whole proliferation of semiconductor content making devices smarter and more relevant and, kind of, the broad-strokes theme of Internet of Things. But we continue to be really big believers in that. And we have connectivity that just continues to densify as 5G gets broadly deployed across the world, and that’s going to open up the use-case for many, many new and useful applications. So, you kind of combine cloud, AI, more content at the edge – densification of connectivity – and now you have the backbone for really cool stuff like a ton of truly autonomous vehicles, the evolution of the metaverse and just uniquely connected applications that are going to transcend just about every industry on the planet. So, that’s kind of how we’re thinking about it in broad strokes. And we’re still in the early innings of many and middle innings for some of these megatrends as we think about the next 10 years.
Bigda: So, that sounds like a lot that’s going on in the tech space.
Fish: Yes, it is.
Bigda: All while – this volatility seems like a sideshow, at this point, just given, you know, the real stuff that’s happening underneath in terms of development.
Peron: And that’s exactly right. That’s the key point here. I think everything that Denny laid out has years to go in its evolution and some of them are just getting started. And so, we do get lost in the volatility sometimes, but really, these themes have lots of legroom to go and I think Denny’s right to focus on those long-term themes as your guiding light, if you will, towards long-term value creation.
Bigda: Yes, so maybe we could just step back a little bit and go through some of these themes a little more in depth, maybe starting with the cloud. One report that I read said that spending on the whole cloud, which includes things like services, hardware and software components and so on, that’s going to surpass $1.3 trillion USD by 2025, which is up from just over $700 billion in 2021. So maybe, Denny, you could talk a little bit about kind of what’s driving this growth and the types of companies that might be best positioned to sort of take advantage of that growth.
Fish: Yes, there are many different facets to it, but I think the core underlying principle to what’s driving the growth is, you know, we had an infrastructure that built up around computing technology over about a 40-year period, from the ’60s kind of through the early 2000s. And it had various iterations from, you know, mainframes to client server. And then ultimately, this handoff to cloud, and importantly, what the handoff to cloud did was it massively expanded the market, and it massively expanded the market because, ironically, you got a lot more efficiency out of your spend. So, you could deploy more dollars against it because you are getting better return. The access to simplified, unlimited, infinite scalable resources that do not require the same level of expertise for every organization to have within their organization.
The other thing that sometimes doesn’t get talked about as much: the cloud massively lowered barriers to entry for digital for businesses on the Internet, as well as in software and in AI, as we were talking about. And this is a really important one because, you know, I’m going to date myself here, but I worked for Oracle back in the mid- to late ’90s, and there was a period where every startup that got funded by a venture capital firm, the first thing they told them to do was go out and buy a bunch of Sun servers, a bunch of Oracle databases, some Veritas and VEA [Veritas Enterprise Administrator]. And there was like this laundry list of companies that you had to go invest in, and it was millions of dollars of the capital outlay to actually get the business up and running before like a single penny came out the door. And you compare that today, to be able to go and grab a you know, an Azure or an AWS instance [Amazon Web Services instance, which is a virtual server in the AWS Cloud]; start developing code; distribute it in a low-touch model using, call it, you know, maybe search algorithms through Google; and suddenly, you have a scalable business with de minimis amounts of capital that actually had to be put against that. And so, it’s opened up this huge innovation cycle around both more traditional companies being able to leverage technology more effectively, but also creating the glide path for the digital economy. And you know, that’s super important.
And you know Satya Nadella [CEO of Microsoft], I respect him so much, and he’s got this very simple framework. And it’s like, look, if we kind of look at you know, the global economy today and it’s, you know, $80/$90 trillion, or whatever it is, and roughly 5% of that – call it $4 to $5 trillion – gets spent on technology in one form or another and we just assume that mix shifts to 10% over the next, 10 years or so – it’s interesting to do the math, and it totally makes sense why that would happen and that the broader technology industry grows two, three, four times that of the economy itself. The cloud enables that spend and that efficiency curve to continue to happen. And that’s, you know, in our view, why there’s still a long way to go and kind of why it’s had the growth profile it’s had at scale relative to anything that we’ve seen before.
Bigda: So, in that setup, what looks most interesting to you at this point? Is it the companies that are actually providing the cloud services that allow companies to scale and get these efficiencies, or is it the start-ups and the other companies that can leverage this new ecosystem? Or, is it both?
Fish: Yes, it’s both, to be clear. No, it’s like with everything, you know, everything has a price, and so, you know, the one thing that we haven’t touched upon is valuations. And valuations can go pretty extreme in both directions whenever you have, you know, emerging growth patterns like we have. So, yes to both of those, assuming that we can put together a fundamental investment case for an attractive return in the business. And by the way, that’s getting better and better as we’ve had the volatility that we’ve had, and we’re probably a little more excited about the valuations that we’re looking at than we have for quite some time.
But I’ll tell you another area that like just doesn’t get as much attention, and that’s the underlying building blocks, the silicon. We talk about this content growth in the economy and devices; that’s good for steady growth analog semiconductors that kind of grow a little bit faster than the broader economy. But then there’s also like this insatiable amount of demand for compute resources and AI, and, you know, the cloud providers are providing that. There are a limited number of companies that actually provide the silicon content at the leading edge. And there are a limited number of companies that actually provide the design services for that, and a limited number of companies that actually provide the equipment to actually manufacture that. And then the rest of semi cap equipment, they’re like these really nice cyclical growth businesses that carry low valuations that effectively compete as narrow monopolies in their swim lanes.
And so it’s interesting, because all of these themes when you look at them, particularly this cloud one, there are a lot of like really interesting underlying currents that support both the idea of true, robust secular growth, which we tend to be attracted to, but also attractive opportunities in places in the value chain where the growth is more moderate – a bit more cyclical, of course – but very reasonable valuations relative to the competitive positions of these companies in the duration of growth over a multiyear cycle. So that’s how I would characterize it.
Peron: I would say, just to emphasize Denny’s point around the high-performance semiconductor ecosystem, that includes the semi cap equipment and the high-performance chips that his team has rightly been focused on. Like Denny, I was an engineer as well, and the innovation there is just astounding, and what it’s enabling us to do. One application that will hopefully be a killer application is autonomous vehicles. And these chips enable that. It’s like you’re going to have a supercomputer on wheels now in your car. You know, again, we talked about these long-term themes that Denny’s team’s working on. I think you’re seeing more and more of that in everyday use.
Fish: Yes, that’s actually a really good point. Just to kind of layer on to that and, importantly, the way the cloud extends to support something like autonomous vehicles. If you think about an autonomous vehicle, it’s kind of the killer app, right, for all of these technologies converging. You need super dense connectivity, you need it heavily localized, you need edge compute. These cloud providers now, like the next big opportunity, in addition to the core business, is building out all of these edge compute opportunities so that we can enable these use cases, like autonomous vehicles and augmented reality (AR) or virtual reality (VR).
Bigda: For those of us who aren’t as tech savvy, could you just describe what edge compute is?
Fish: Yes, it’s effectively, so, the beauty of cloud so far has been, you’ve been able to centralize a lot of compute, storage, and access to applications and so forth in these large data centers, and then you create big data centers all over the world. So, you have these points of presence. But as your applications require lower and lower levels of latency – meaning, you know, if you’re an autonomous vehicle, you’ve got to get the information back and forth pretty darn fast, right – you need the data processing to get closer and closer to the actual device that’s accessing it. And that’s the idea of creating many, many more opportunities for what are called these edge data centers. And there are a lot of things we could talk about in terms of how that could evolve and it’s still very early on, but ultimately, that’s another opportunity, and it’s necessary and needed to actually be able to fulfill the promise of some of these long-tail opportunities that are going to be really meaningful to society.
Bigda: So, it’s sort of similar to 5G, which also needs, I guess, closer connectivity or lower latency, correct?
Fish: Yes, totally. Because, like, 4G was all about expanding access of cellular coverage. It was like, can we get geographies covered with cellular access? And then 5G is all about densifying the coverage and leveraging things like small cells and, you know, other things to make our speeds faster and those access points closer to the devices that are accessing them. So yes, it’s a good question.
Peron: So, the mega-theme here is, and Denny correct me here, but is not only do you have increasing content in everyday use – content per vehicle, content per household, etc. – but you also have the increasing complexity of that content in all forms, and it’s this dual nature of the innovation and the content story that is accelerating the adoption here.
Fish: Yes, that’s exactly right.
Bigda: And semis are basically the building blocks of this new ecosystem that we’re talking about. Can we talk a little bit, then, about how semiconductor stocks have performed recently? Because it sounds like, if there’s so much demand for them, that these companies should just be in super high demand among investors. But if I recall correctly, semiconductor stocks have traditionally been a little bit cyclical, a little bit volatile. And so, I didn’t know what sort of your take is on this area of tech right now, as an investment opportunity.
Fish: There are a couple things, and one other thing that we also hadn’t mentioned about semiconductors is there’s been a significant amount of consolidation across the space over the last 15 years, and that just creates a much better industry structure, too. So, kind of like what we talked about earlier, you have these narrow monopolies, you have these kind of great end markets, really good management teams. I mean the operating margins in many of these businesses are so much higher than they were 15 years ago. But there’s just always one thing that hangs out there with semis, and they’re cyclical businesses. For those of us that have invested in them over many years, every single cycle, I always want to believe this is different because these businesses are so great and like there’s a reason China’s had multiple five-year plans now about, like, how do we get self-sufficient semiconductor content because we need it to be able to grow our economy without uncertainty. Because you just can’t. You know, you can’t move forward without semis.
But, nonetheless, there’s always a cycle. And we’re not that far removed from 2018, when semis went through a nasty inventory correction. It was when the Trump administration was pushing on China, too, and you just had like a storm that came together. And it was a very, very difficult situation for semiconductor companies. And so, I think, like, that’s always in investors’ minds, and why they’ve [semiconductor stocks] performed despite having still what, I would argue, are attractive valuations relative to the broader market, which is always interesting to me.
There’s this prospect that semis are going to have some degree of impact from economic growth, whether it’s more positive or more negative. And if we assume that we’re in just the very first stage of a tightening environment with the Federal Reserve and inflation, and you know, that puts general pressure on economic profits that broad-based semis might you know, struggle a bit more in that environment than this incredibly robust environment that we’ve had for the last 12 to 15 months, where anyone who could get – just I mean, auto manufacturers, cloud providers, industrial companies, you name it – everyone’s just been salivating for semiconductors because they just haven’t been able to get their hands on them. But that could normalize. And then, you know, that sometimes can be a more difficult backdrop for the sector. But nonetheless, we really like the industry and it’s just cyclical growth versus secular growth.
Bigda: What about just looking ahead to the frontier in the digital economy? You talked earlier about the metaverse, which is this sort of immersive Internet that’s using augmented reality and virtual reality. There’s also a lot of talk about online gaming and so forth. I mean, these areas can only exist with the help of advanced chips. But has that kind of computational power arrived, and sort of what does that mean, you know, for investing in these various areas of the sector?
Fish: Yes, so in one respect, yes, and in one respect, no. And what I mean by that is the content that’s being developed for the metaverse is starting to spin up and we have examples of, you know, entire companies that are “metaverse-type companies:” a Roblox or, you know, Epic Fortnight, for example, are kind of like early iterations of what the metaverse can look like. They’re digital economies, they’re immersive, there’s transactions within them, digital currencies. The only thing that they don’t have right now is, you know, they’re not played via virtual reality or augmented reality. So, we’re really early in the process, and having followed this space for many years, I always feel like, ah yeah, we’re still a couple years away. And then, you know, two years come, and we’re like, ah, we’re a couple years away. This one does feel like we’re probably closer to actually being, you know, a couple years away, like for real in terms of seeing some inflection. But it’s hard, you know, it’s really hard. I mean, getting the form factors right and the technology that goes into developing a really elegant set of glasses or an experience like the meta headsets. And it’s going to take some time, and we need both people to feel comfortable using the end device and we need a sufficient amount of content to come together. And in that context, that’s where you get what I refer to as kind of the two sides of the network going and the flywheel.
And importantly, I think an area of the metaverse that doesn’t get talked as much about is the enterprise opportunity, and we’re actually like really enthusiastic about that because there are so many use cases. You know, you combine AI with virtual reality and you think about things that you can do in construction or medicine or commercial real estate. Online education and learning; there’s just so much you can do that you can’t do in the physical economy in a more efficient way. And you know, we kind of feel like there’s just going to be this bifurcation of kind of enterprise metaverses, consumer metaverses. Some of them will tie together, some of them won’t, and that’s going to create all these really unique opportunities. And I mean it’s a whole different discussion, but digital currency NFTs, which are non-fungible tokens, and kind of the way that business gets transacted in the metaverse. It might look in many ways similar to the physical world, but then in many ways different, as well. So, I know that’s a little bit of a tangent. We don’t need to go there, but that’s kind of where we’re at. You can kind of see between the clouds at what’s coming.
Bigda: Well, I appreciate that tangent because for me, the metaverse – and I don’t know about you, Matt – but it’s still sort of very conceptual in my mind. And so, if trying to figure out what is the actual gain that you get from it? Because from the cloud, when you talked about it earlier, it was, you know, lowering barriers of entry for businesses, it was providing scale, finding efficiencies. So, with the metaverse, what is sort of the end goal with that, and could that be as big of a market opportunity as the cloud, or could it be even bigger, in your view?
Fish: Well, the cloud has to enable it, so realistically speaking, the cloud’s probably bigger than the metaverse. But depending on how the metaverse evolves, it could be like the next big computing paradigm. If we think about what the PC revolution ushered in, it ushered in productivity like we hadn’t seen because you put a PC in many houses and every business and it just allowed us to do things we weren’t able to do before.
And then the next big wave of compute was the smartphone, with the iPhone that came to market in 2007, I think it was. And it ushered in, like not just putting a computer in your pocket that had the same processing power that a PC had like 10 years ago, but it introduced this whole other opportunity because it was connected back to the cloud, as well, around an application economy. And that’s what we’ve seen. We’ve effectively seen the explosion of the mobile Internet-based application economy over the last 15 years. It’s been 15 years. And that’s maturing, and so what you can envision is the next leg of growth or the next big computing platform being AR/VR in multiple different form factors, and that’s going to create an entirely different type of economy than what we’ve seen historically.
And I love this example because for those of you that haven’t heard of Roblox, or have heard of it but don’t completely understand exactly what goes on in it, it’s just this immersive game. It’s this combination of, you know, developers that develop games within the game, and then consumers that consume those games. And there’s a digital currency called Robux. And, you know, it’s really cool, and played mostly by younger people. So, I talk to my kids about it. That’s how I learn about all this stuff, is just, you know, watch what they do.
Bigda: Naturally, yes.
Fish: And you know, understanding that we’re not going to catch all this stuff, but they are. But the most fascinating thing that I’ve seen in Roblox over the last year is they did a collaboration with Gucci, and it’s, they created something called the Gucci Garden. And what it was, was you could go into the Gucci Garden and hang out and buy Gucci goods. And they were effectively virtual representations of Gucci handbags or scarves or whatever else it was. And the most fascinating part of it is, for skeptics on what the digital economy might bring and so forth, digital Gucci handbags were trading for a higher price than the physical handbags were trading for in the physical world. These are real dollars at work.
Bigda: Oh my goodness.
Fish: But it was because, yes, it was because their scarcity value, there’s this just whole identification factor in the digital world. It’s not dissimilar than that of the physical world. And in some ways, you don’t have any barriers to it because, you know, the sky’s the limit. And so, that was just one of those proof points where like if I wasn’t spending enough time thinking about it, I needed to be spending a lot more time thinking about the potential implications of where we’re going.
Bigda: Matt, are you going to rush out to the Gucci Garden and start making some purchases?
Peron: I’m already on my iPhone doing that right now.
Bigda: Well, maybe we should come back to the real physical world a little bit and talk about inflation and the impact that that might have on technology. And Matt, I don’t know if you want to sort of take that question and think about the economic implications?
Peron: Well, I think certainly, as Denny mentioned earlier, we’re actually getting started on the rate-hiking path and that certainly does have an impact, by the math of things, on multiples. But you typically find that once the market gets comfortable with the path of those hikes, etc., the market tends to settle down and then resumes; maybe not as fast and furious as earlier in the cycle, but more mid-cycle/late-cycle type of activity.
But certainly, the inflation dynamic poses a risk. It makes it tough on policy makers, and it will introduce volatility into the market if there is the sense of a policy error. And then on top of that, given geopolitical issues that could create shortages. Denny, how manageable do you think this will be for semiconductor makers, and, in general, any supply chain comments or thoughts that you have, being on the front lines?
Fish: Yes, you know, I do wish I had a crystal ball on this one because there are a couple of different crosscurrents. I’m going to talk a little Econ 101 and Finance 101. You know, if supply’s constrained and demand is still strong, we kind of know what that means from pricing. And so, for example, you know over the last year, semiconductors have been able to take price at levels that they haven’t taken in 20 years. And so, that could potentially continue to put a lot of pressure on the supply chain and actually be good for margins and pricing and the general inventory demand backdrop. But the thing I think a little bit more about is kind of just demand destruction of the general economy. And then maybe, more importantly, is the rate of progress of the rate hikes. And I totally agree with what Matt said. There’s generally a lot of angst as we come into these environments, and then once we can actually see the light at the end of the tunnel and how far these rates are going to go, it’s kind of like getting back to business on where, you know, the best economic growth is and the strongest companies and, ultimately, those start to get rewarded again.
Bigda: And at the same time, it seems that rising costs might actually drive some companies to invest more in tools and technology that help them find efficiencies, etc. So that might actually benefit some of these cloud providers or software application providers, correct?
Fish: Yes, I kind of think about it two ways. One is, if you’ve got physical costs that are going up and you have wage pressures, a natural place to invest is in automation and technology to make your business more efficient. And if there’s one thing that the pandemic taught us is that there were so many companies worldwide that were completely flatfooted, with like a limited ability to actually respond the way that they needed to respond. But over, you know, a 12-month period or so, they were able to do things to make their companies much more productive and enable virtual work environments, which was pretty cool.
But kind of thinking about an inflationary environment in the same respect, you kind of have two things. Like okay, we should see more investment into productivity-enhancing technologies, and the other thing – Matt kind of hit on it, this is where I’ll pull Finance 101 out – all things equal, if you’ve got to increase your discount rate because interest rates are going up, the value of cash flows goes down. I think one thing that’s really important about that – and this is where growth comes into the equation, make sure you’re focused on secular growth – is that it might cause a year of pain because the discount of cash flow analysis brings the value of the company down like, 20% or 25%, maybe more. But if you grow 25% or 30%, all things equal, you kind of digest for a year and then suddenly, you’re back to fair value and kind of, you know, where you’re going from here.
It’s a very simplified way to look at it, but I kind of look at it like the best companies that are trading at reasonable valuations that are getting hit right now because of rising rates. You know, oftentimes, it’s kind of like biding your time, and then if you have a combination of getting to the other side on interest rates and this pressure to automate and improve productivity, that actually could be a pretty good scenario for many of these companies as we start looking into 2023, ’24 and so forth.
Bigda: Well, Denny, thank you so much for joining us today. It’s been a real pleasure having you on, and we really hope to have you back and get an update on what Gucci bags you’ve collected or you and your children have collected.
Fish: Great, thank you.
Bigda: And thanks to our listeners. We hope you’ll tune in next month. We’ll speak with one of our analysts who covers European industrials to talk about volatility in the commodities market. In the meantime, I’m Carolyn Bigda.
Peron: I’m Matt Peron.
Bigda: Stay well, and thanks for listening.
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