Lots of folks know Kevin O’Leary as the host of the long-running ABC reality show, “Shark Tank.” Go-getting entrepreneurs pitch their business ideas to O’Leary and a panel of industry “sharks” – successful heavy hitters who’ll invest in ideas they like.
If you think that’s cool, wait till I tell you about O’Leary’s “day job.”
He’s a world-class tech investor with a special emphasis on web-related firms.
I’m not telling you this to impress you, impressive as it is. What you need to know is O’Leary runs an investment vehicle that anyone can use to invest in the companies he likes.
His track record speaks for itself: He’s doubled the market for years on end.
Now you can, too…
This Is a Shark You’ll Want to Swim With
O’Leary’s interest in computing goes all the way back to 1986.
By the early 1990s, SoftKey had become one of the biggest players in educational software. It acquired competitors such as WordStar, and in 1995 bought The Learning Company for $606 million.
That became its name until toy giant Mattel Inc. (NASDAQ: MAT) acquired it for $4.2 billion.
Shortly after, O’Leary cashed out. Nowadays, of course, CD-ROMs are practically museum pieces. Software is now downloaded from the Web, and often runs on the Cloud instead of only on the user’s computer.
Which brings us to O’Leary’s most recent venture…
Since cashing out of The Learning Company, O’Leary has gotten into finance. He has an investment company, a mutual fund business, and is involved in venture equity.
But one of his larger ventures is a family of exchange-traded funds that follow his own emphasis on companies that are profitable, post good earnings, and have strong balance sheets.
The newest ETF in this so-called “O’Shares” family is the O’Shares Global Internet Giants ETF (NYSEArca: OGIG). It includes the highest-quality companies from around the world that make their money from the Internet and e-commerce.
Following his own investment approach, OGIG includes only profitable, well-run Web-related firms. That’s absolutely critical; you don’t want part of your investment dragged down by lost causes.
O’Leary’s timing in launching OGIG was impeccable. Debuting in 2018, OGIG has followed the rise of the Internet as an economic powerhouse, and through 2020 and beyond, it should follow the growth of 5G communications.
And when the coronavirus hit earlier this year, that became even clearer. It’s no exaggeration to say it was the Web that saved America. Without it, we wouldn’t have had millions of people able to pivot to working and doing business from home. There wouldn’t have been 300 million video chat users a day as lockdowns stopped social gatherings and travel.
The economic damage from COVID-19 was and continues to be severe, but it’s humbling to think how much worse it might have been without the technology that kept much of our economy running throughout this crisis.
OGIG Owns Both Established Performers and Rising Stars
As you’d expect, OGIG’s 77 holdings include the obvious big names like Amazon.com Inc. (NASDAQ: AMZN), Microsoft Corp. (NASDAQ: MSFT), and Zoom Video Communications Inc. (NASDAQ: ZM).
But – this is the really exciting part – this ETF is also a low-risk way to hold smaller firms. Take a look:
Shopify Inc. (NYSE: SHOP) supplies retailers with sophisticated software that allows them to manage orders, collect revenue, send out e-mails to buyers, and get the kind of business analytics that are key to succeeding online. Shopify even helps companies build their own online sites as well as integrate with Amazon’s, all through the Cloud.
Twilio Inc. (NYSE: TWLO) uses the cloud to enable apps to make and receive phone calls, e-mails, text messages, and other kinds of communication easily, all through the Cloud. Apps like Uber, PayPal, Airbnb, Box, and others use Twilio’s Cloud communication service to securely contact customers, as well as power customer service and marketing.
Adobe Inc. (NASDAQ: ADBE) is the global leader in software for visual creative design. Its Illustrator software for editing photos is a mainstay among professional photographers. Meanwhile, Adobe’s Photoshop image editing software is so well known it’s become its own verb. Adobe was one of the first to move to the blockbuster Software-as-a-Service (SaaS) model, where customers pay monthly fees for ongoing access to software.
Salesforce.com Inc. (NYSE: CRM) has created what’s probably the best-known customer relationship management software. It’s used by companies like Amazon Web Services’ Cloud division, State Farm, Adidas AG (OTC: ADDYY), and many others. The firm also sells software that integrates with its main product and helps companies with sales, marketing, e-commerce, customer service, and so on.
OGIG is quite inexpensive, too – it sports an expense ratio of just 0.48%. That makes this ETF an efficient, cost-effective way to track the success of the best Web-related firms in the world.
Given that the ETF makes sure only high-quality companies are included and that it looks all over the world for its investments, that small expense ratio is well worth paying.
The care taken to invest only in the best really shows in OGIG’s performance. The ETF is up nearly 40% for the year, even accounting for the March 2020 “Coronavirus Crash.” By contrast, the Dow Jones is down 9.2%, and the S&P 500 is down 3.8%. OGIG is doing around four times better than the best-performing index, the tech-centric Nasdaq Composite, which is up 10.2%.
Another plus is OGIG’s price. The ETF trades at just over $32 a share, which is a small fraction of some of its notable portfolio holdings. For comparison, one share of AMZN will set you back over $2,400 right now; SHOP shares go for $883 apiece.
The bottom line: With its low cost, uncanny stock-picking abilities, and sharp management, OGIG will likely continue outperforming the market for years to come. Take a position and buy on (infrequent) dips; it should have a place in every investor’s tech portfolio.
— Michael A. Robinson
Source: Money Morning