In this video Walter Scott investment manager Lindsay Scott explains how understanding digitisation can help long-term investors in an age of constant change.
At the rate technology is changing, Walter Scott believe 75% of the companies in the S&P 500 will be replaced by 2025. Although exciting growth opportunities may be arising, as bottom-up long-term investors they are wary of lofty valuation multiples associated with tech companies and therefore tread lightly. They believe in focusing on business models that bring strong recurring revenue and sustainable margins at reasonable valuations. While the market is typically drawn to things shiny and new, businesses that are likely perceived as pedestrian ‘legacy’ tech have actually reinvented themselves and are innovating in many areas.