The Nasdaq 100 index is still down more than 10% for the year as investors continue to be nervous about technology amidst record inflation. Still, KAR’s Julie Biel says a subsector within this space is ripe for investment.
Biel’s remarks on CNBC’s ‘Squawk Box Asia’
According to Biel, tech companies that provide niche-specific software are well-positioned to survive inflation and regulatory scrutiny. On CNBC’s “Squawk Box Asia”, the portfolio manager said:
I like the mid and small-cap tech names that are in vertical software. These businesses are well-positioned to avoid regulatory scrutiny, there’s high barrier to entry, there’s earnings; you can actually do a PE on them, and they’re in a position to do well even if we tip all the way into recession.
One such name is Tyler Technologies Inc (NYSE: TYL), down over 10% from its high in mid-November. Another is nCino Inc (NASDAQ: NCNO) – a Wilmington-headquartered fintech firm that has lost 35% in five months.
Inflation climbed to 7.5% in January
A day earlier, the U.S. Bureau of Labour Statistics said inflation climbed again to 7.5% in January, which, as per Biel, calls for a more aggressive response from the central bank. She noted:
Inflation will be persistent as long as the supply chain depends on goods from Asia. And Asia is a region that generally has zero COVID policies. So, inflation will be an issue as long as there’s COVID. So, I think it’ll take time, and a more aggressive approach makes sense.
The economic data on Thursday had Fed’s James Bullard urge a 100 basis points increase in the interest rate by July 1st. There’s talks of up to seven rate hikes in total this year.
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