Managing the pace of change will be key for companies in the future as they adjust to life post-pandemic, according to Loomis Sayles.
When looking to identify this ability to manage change, investors could look for their sustainable competitive advantage, resilience, return on equity and intrinsic value growth.
In an update, Loomis Sayles co-portfolio manager of the Global Equity fund, Lee Rosenbaum, said: “We believe the pace of change across industries has accelerated the last few years. Our team continues to witness disruption across a range of global businesses including retail, media, healthcare and consumer products. This change has made it challenging for some companies to keep pace in terms of both execution and strategy.
“Many of our companies have leveraged this period of disruption to reduce costs. Some have increased use of augmented and virtual reality technologies to perform virtual sales and service visits.”
One company Rosenbaum highlighted as having successfully adapted to change was Dropbox which had taken advantage of more people working from home and pivoted its office environment. Shares in Dropbox had risen 35% over the past year.
“The company participated in a study which found that over 25% of working hours in knowledge work are lost due to distractions from interruptions from colleagues. In conjunction with the study, Dropbox announced remote work will become the primary experience for all Dropbox employees,” Rosenbaum said.
“They will have access to smaller Dropbox studios that are going to be hubs to spark creativity and maintain that company culture. We view Dropbox’s approach as an interesting alternative to either a fully remote approach or an ad-hoc approach.”
Another suggestion was Japanese IT services provider Nomura Research Institute, where shares had risen 37% over one year, which Rosenbaum described as having “very sticky” characteristics.
“The company’s resilience stems from its asset-lite business model and entrenched position with long-term clients.
“The company also has a high degree of recurring revenue, stemming from its cloud computing capability where offerings, such as back-office solutions for retail brokerage firms, are very sticky in our view.”
The Loomis Sayles Global Equity fund had returned 8.1% over one year to 28 February, 2021, according to FE Analytics, versus returns of 10.1% by the global equity sector within the Australian Core Strategies universe.
