The capital markets were a very different place back in 1978, when OppenheimerFunds Portfolio Manager (PM) Frank Jennings launched his career.
Those were the days of high interest rates, a persistently weak U.S. economy, and far too many publicly traded companies that simply weren’t managed all that well. Back then, the technologies we take for granted today were still just a figment of the imagination.
But times have changed, and today, Frank is working to help investors benefit long term from innovations that are transforming nearly every aspect of our lives. Virtual reality, electric cars and improvements in healthcare are among the investment themes that have his attention.
In his role as PM of Oppenheimer Global Opportunities Fund, Frank is uniquely positioned to provide insights on where the markets could be headed and an informed opinion on opportunities that investors should consider.
In this episode of the OppenheimerFunds World Financial Podcast, Frank explains why he believes virtual reality has the potential to spark a dramatic cultural transformation. He also provides insights into why advancements in healthcare and pharmaceuticals may be a profitable long-term trend. The electric car has piqued Frank’s interest as well, and he breaks down why its rise to dominance might be imminent.
Frank is all about helping investors find what he calls “MULD” – massive upside, limited downside opportunities.
Here are some highlights from our conversation.
Virtual Reality and Gaming
“The virtual reality and video game industry is something I’m thinking about recently. I’ve often thought the next killer product would be a kind of pad – where you can play a video game. Videogames require huge horsepower for graphics … but it’s coming to the pad, and it’s coming to 3D vision. It’s becoming hugely captivating.
One of my predictions is that virtual reality is going to become more gorgeous than reality. There are changes afoot in vision, hearing and in the technologies of projection that have to do with the management of contrast and color … You’re going to have a dramatic cultural transformation around this."
Improvements in Healthcare
“One thing that’s very positive is the relationship between data and diagnostics … You’ve got Big Data. You’ve unlocked your genome. 100 million other people’s genomes have been unlocked. Today, we know that everyone with breast cancer had certain genes. We also know that drugs only work for people with a particular gene … In the future, this means fewer drugs will be prescribed inappropriately and there will be big savings. But will that hurt the pharmaceutical industry? I don’t think so, because the cost of developing drugs will also fall thanks to the development of biomarkers and drugs in the same trial.
This enables us to know who the drug works on. Subsequently, drug trials can be conducted solely on those people. We can have “home run” results and get it approved by the FDA. Whereas if we tried it on everybody and it worked on only 10% of the people, it wouldn’t get approved. Theoretically this will raise the approval rate. And even though drug companies make less money per drug, they might be able to get them approved for less money.
So the profitability would remain, or perhaps even improve."
The Automotive Sector
“The car is the second biggest expenditure in most people’s lives – not including university costs. You’ve got a house and a car. Now, there are all sorts of people saying the car will become “communitized” and we’ll all ride around in Ubers. Or Uber won’t even have a driver – all these Flash Gordon kind of theories which I don’t think are imminent. But the electric car is imminent, and the implications are massive.
There’s a geopolitical implication … The demand for oil could meaningfully decrease. Now that’s not happening yet because you have so much demand for oil from the likes of China, India and Africa …
Ultimately, the latest technological trends will lead to an electric car which is superior because it will have fewer moving parts. Today, we basically drive around in these gear boxes, whereas an electric car doesn’t need any gears. You just need a couple of motors and a computer to keep the motors in sync. So this theme – the electric car – will then lead to all sorts of other themes, such as semiconductor equipment, which is a massive bull market right now."
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