Barclays’ Is Overweight Tech: Knapp

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Feb. 21 (Bloomberg) –- Barclays Head of Equity Strategy Barry Knapp discusses tech valuations with Matt Miller and Julie Hyman on Bloomberg Televisions’ “Street Smart.” (Source: Bloomberg)

Company, $19 billion does not seem like that much.

Here is the market value per user various companies have done.

Barry, what you think about tech valuations?

Tech valuations are really difficult because they look cheap in aggregate, but the reason they are cheap is it is big old-line tech.

Industrial companies trade at low-volume rations.

We are overweight tech, but when we talk about being overweight tech, the reason is we think there will be a strong capital spending cycle.

We are talking enterprise tech, software, services.

Microsoft is 75% of the business sector.

These companies -- i have no idea what to do with these companies.

It reminds me of the 1990's where people started talking about all new valuation metrics.

I could not in all good conscience tell people what to do with these stocks.

Do not worry, half of those users pay $.99 a year.

In your job as a strategist if you have to pick tech as an overweight, do you then have the ability to tell a client, stay away from these guys?

Several absolutely.

That is the hardest question i get.

Ok, tell me what to buy in tech, because there is all this is ripped of technology going on.

Two years ago it was pc's. -- because there is all of this disruptive technology going on.

Our idea is to disrupt capital spending.

Software, services.

But you get a cheaper valuation, as you pointed out, but you can also get trapped.

Yeah, it is cheap, so it never goes up.

You never get rewarded for your investment.

Our position that we will have a strong capital spending cycle, it is much easier to play in industrial companies than in tech.

Tech does have all this disruption and all of the stocks trading under valuation metrics that, again, i have no idea what to do with.

I would struggle to buy them in my own account.

To be fair, if you reinvest dividends, microsoft is not so bad.

Over the last five years, it has more than doubled.

Correct.

And our analyst -- correct.

This text has been automatically generated. It may not be 100% accurate.

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