This article discusses the top 10 top technology sector picks of Ian Simm’s Impax Management at the end of June and elaborates on the fund’s history and recent performance.
Impax Management is a global investment management behemoth headquartered in London. In 1998, Ian Simm founded Impax Asset Management with a mandate from the International Finance Corporation (IFC). Four years ago, in 2018, Impax Asset Management Group plc acquired Pax World Management LLC, which was subsequently renamed as Impax Asset Management LLC.
Impax Management is a publicly traded firm that trades on the London Stock Exchange under the ticker symbol “IPX” and currently has a market capitalization of around $1.17 billion. Mr. Simm sits on the board of major ecological conservation foundations and think tanks, including the Natural Environment Research Council (NERC). Impax Management offers multiple financial products and services to institutional investors, including private equity funds in several countries around the world.
Impax Management’s Portfolio
Impax Management recently filed its 13F filing with the SEC for the quarter ending June 30. According to the filing, Impax Management reduced its holding in 3 stocks and made additional purchases in 1 stock during the second quarter. At the end of that period, the aggregate value of its 13F holdings was $24.19 billion, and the firm’s top 10 stock picks accounted for 26.75% of that value. Some of the top stocks that Impax Management held in its portfolio at the end of second quarter included names like Agilent Technologies, Inc. (NYSE:A), Microsoft Corporation (NASDAQ:MSFT), and PTC Inc. (NASDAQ:PTC).
Our Methodology
We at Insider Monkey actively track the portfolios of over 900 hedge funds. For this article, we went through Impax Management’s latest 13F filing for the quarter ending June 30 and selected the top 10 technology stocks that were part of the fund’s portfolio. Under each stock we will cover in this article, you will be able to see the number of funds in our database that were holding it at the end of the first quarter of this year.
10 Best Technology Stocks to Buy According to Ian Simm’s Impax Management
10. Texas Instruments Incorporated (NASDAQ:TXN)
Impax Management’s Stake Value: $271,232,000
Percentage of Impax Management’s 13F Portfolio: 1.12%
Number of Hedge Fund Holders (Q1): 46
Semiconductor giant Texas Instruments Incorporated (NASDAQ:TXN) was Impax Management’s tenth most favourite tech stock and 29th top stock pick at the end of June. Although shares of several large semiconductor stocks have tanked over the last year, the stock of Texas Instruments Incorporated (NASDAQ:TXN) has shown much resilience during this time. Currently trading near the $185 level, the stock is down less than 5% year-to-date.
Texas Instruments Incorporated (NASDAQ:TXN) reported better than expected earnings per share and revenue numbers for its second quarter and provided optimistic guidance for the rest of the year. However, on July 27, analysts at UBS Group reduced their price target on the stock to $165 from $175 while maintaining their ‘Neutral’ rating.
9. Analog Devices, Inc. (NASDAQ:ADI)
Impax Management’s Stake Value: $278,903,000
Percentage of Impax Management’s 13F Portfolio: 1.15%
Number of Hedge Fund Holders (Q1): 67
Analog Devices, Inc. (NASDAQ:ADI) was another semiconductor company that Impax Management continued to hold during the second quarter. Amongst the hedge funds we track, Analog Devices, Inc. (NASDAQ:ADI) was held by 67 funds at the end of the first quarter, down from 72 at the end of last year.
Out of the 20 analysts on Wall Street who track Analog Devices, Inc. (NASDAQ:ADI), currently, 16 have a ‘Buy’ rating and 4 have a ‘Hold’ rating on the stock with a consensus price target of $195.8, which represents a potential upside of 11% from its current price.
8. Autodesk, Inc. (NASDAQ:ADSK)
Impax Management’s Stake Value: $287,747,000
Percentage of Impax Management’s 13F Portfolio: 1.18%
Number of Hedge Fund Holders (Q1): 50
One of the leading design and engineering software provider, Autodesk, Inc. (NASDAQ:ADSK) has seen its stock correct by over one-third since the beginning of 2022. However, Autodesk, Inc.’s (NASDAQ:ADSK) stock has historically been one of the best performers in the long term. In the last 30 years, the stock has multiplied 40 times, and despite its recent beating, it is still up by over 500% over the previous 10 years.
Analysts bullish on Autodesk, Inc. (NASDAQ:ADSK) think that the stock’s recent decline makes it a good buy as the company continues to see growth in its AutoCAD and Architecture, Engineering and Construction (AEC) segment. Autodesk, Inc. (NASDAQ:ADSK) recently released its Construction Cloud solution in the Asia Pacific region, which analysts cite as another reason its revenue growth will continue in the foreseeable future.
7. TE Connectivity Ltd. (NYSE:TEL)
Impax Management’s Stake Value: $371,300,000
Percentage of Impax Management’s 13F Portfolio: 1.53%
Number of Hedge Fund Holders (Q1): 38
Along with its subsidiaries, TE Connectivity Ltd. (NYSE:TEL) manufactures and sells connectivity and sensor solutions worldwide. The Switzerland-based company employs 89,000 people currently and is the leading supplier of connector systems and components, sensors, relays, antennas, heat shrink tubing, and application tooling products to various industries.
Analysts at UBS recently picked TE Connectivity Ltd. (NYSE:TEL) as one of their highest conviction pick for the rest of 2022. In their note, they mentioned:
“The post-Covid economy has accelerated towards TEL behind a heightened focus on building resiliency and investments in connectivity. As these trends continue to take share of capex wallets, we see a sustainable uplift in market outgrowth vs historical levels – positive for both EPS &valuation.”
6. Applied Materials, Inc. (NASDAQ:AMAT)
Impax Management’s Stake Value: $391,693,000
Percentage of Impax Management’s 13F Portfolio: 1.61%
Number of Hedge Fund Holders (Q1): 74
Impax Management first reported a stake in Applied Materials, Inc. (NASDAQ:AMAT) during the first quarter of 2019. Since then, Applied Materials, Inc.’s (NASDAQ:AMAT) stock has appreciated over 75%.
In the last 10 years, Applied Materials, Inc.’s (NASDAQ:AMAT) yearly revenue increased to $7.31 billion in FY2021 from $2.7 billion in FY2012. However, during the same time, its net income only doubled to $1.39 billion from $651.2 million. On July 25, analysts at Morgan Stanley reduced their price target on the stock to $115 from $133 but maintained their ‘Equal Weight’ rating on it.
5. PTC Inc. (NASDAQ:PTC)
Impax Management’s Stake Value: $447,211,000
Percentage of Impax Management’s 13F Portfolio: 1.84%
Number of Hedge Fund Holders (Q1): 41
PTC Inc. (NASDAQ:PTC) operates in two segments – professional services and software products. The company was founded in 1985 and was formerly known as Parametric Technology Corporation, but changed its name to PTC Inc. (NASDAQ:PTC) in 2013.
For its second quarter, PTC Inc. (NASDAQ:PTC) reported earnings per share of $0.97 on revenue of $462 million, missing analysts’ estimates by $0.09 and $11.1 million, respectively. However, post the earnings release on July 28, analysts at Mizuho reiterated their ‘Buy’ rating and upped the price target on the stock to $130 from $120.
4. Equinix, Inc. (NASDAQ:EQIX)
Impax Management’s Stake Value: $490,925,000
Percentage of Impax Management’s 13F Portfolio: 2.35%
Number of Hedge Fund Holders (Q1): 40
Equinix, Inc. (NASDAQ:EQIX) is one of the largest data center operators in the world. Although classified as a specialized REIT, the stock of Equinix, Inc. (NASDAQ:EQIX) usually follows the trajectory of the broader tech industry.
On July 28, Oppenheimer analyst, Timothy Horan, upgraded Equinix, Inc.’s (NASDAQ:EQIX) stock to ‘Outperform’ from ‘Market Perform’ but maintained his price target on it of $750. In his note to clients, Mr. Horan wrote:
“EQIX is the primary on-ramp for the cloud, with critical infrastructure and major barriers to entry giving it strong pricing power, which it is now using, and it is recession resistant, and relatively attractive, if the ten-year yield has peaked, which it likely has.”
3. Agilent Technologies, Inc. (NYSE:A)
Impax Management’s Stake Value: $569,693,000
Percentage of Impax Management’s 13F Portfolio: 2.31%
Number of Hedge Fund Holders (Q1): 43
Impax Management was the largest shareholder of Agilent Technologies, Inc. (NYSE:A) at the end of the first quarter among the 912 hedge funds we cover, followed by William Von Mueffling’s Cantillon Capital Management, which held 3.47 million shares.
On August 2, Agilent Technologies, Inc. (NYSE:A) announced that it had acquired Polymer Standards Service (PSS) for an undisclosed sum. PSS focuses on hardware and software solutions used for defining the makeup and creation of molecular structures. According to Agilent Technologies, Inc. (NYSE:A), this acquisition will help the company to grow its product portfolio and customer offerings, particularly in the chemical and biopharmaceutical industries.
2. Trimble Inc. (NASDAQ:TRMB)
Impax Management’s Stake Value: $680,719,000
Percentage of Impax Management’s 13F Portfolio: 2.81%
Number of Hedge Fund Holders (Q1): 28
Funds covered by Insider Monkey that held a stake in business solutions provider Trimble Inc. (NASDAQ:TRMB) declined to 28 at the end of March from 33 at the end of 2021. Trimble Inc. (NASDAQ:TRMB) breaks down its business into three segments – Buildings and Infrastructure, Resources and Utilities, and Transportation. Shares of the company have appreciated almost 50 times in the last 30 years.
In May, Bernstein analyst Chad Dillard released a research note arguing that Trimble Inc. (NASDAQ:TRMB) could unlock $3 billion in incremental value if it divests its agriculture business. In his note, Mr. Dillard wrote that if the company sells its agriculture business, the company will have “enough dry powder to curate its construction tech product offering as it sees fit through M&A and can compete against better capitalized peers such as Autodesk.”
1. Microsoft Corporation (NASDAQ:MSFT)
Impax Management’s Stake Value: $766,003,000
Percentage of Impax Management’s 13F Portfolio: 3.16%
Number of Hedge Fund Holders (Q1): 259
Impax Management didn’t make any changes to its holding in tech giant Microsoft Corporation (NASDAQ:MSFT) during the second quarter and the company remained the fund’s top technology stock pick at the end of that period.
Microsoft Corporation (NASDAQ:MSFT) reported earnings per share and revenue numbers below the consensus analysts’ estimate on July 26, following which several analysts on the Street lowered their price target on the stock. This included analysts at Wedbush, who reduced it to $320 from $340, and analysts at Wolfe Research, who reduced it to $275 from $320.
You can also look at Simon Sadler’s Segantii Capital is Bullish on These 10 Stocks and Morris Mark’s Mark Asset Management Latest Portfolio: Top 10 Stock Picks.
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