Expert Insights

‘Economic moats’ allow companies to maintain their competitive advantage, so are essential for long-term profitability, but also for responding to a structural threat. Warryn Robertson, Portfolio Manager at Lazard Global Equity Franchise lists a cluster of stocks in this short video, whose moats enabled them to turn such a threat into an opportunity. 

Discussing some of the largest global tech names, as well as an ASX growth stock, Warryn summarised this in saying: “What we did was to essentially make a call that it was a far easier move to transition those existing customers to a new offering than for someone to come in and to offer them a completely new service.” Watch the short video for the full story. 

 

Key points: 

  • Question the sustainability of the economic moat for a business: Can the business produce robust cash flows over the very long-term?
  • Look for businesses that can adapt their models. For example, players such as SAP, Oracle, Microsoft, Intel, and Computershare, who turned the threat of the cloud into opportunities.
  • Their incumbent positions provided a long-term economic moat that enabled the transition to occur. For example, consumers pay Microsoft monthly rather than intermittently, leading to better revenue streams and margins for the business.

 

Want to hear more?

You can read further insights and analysis from Warryn and the team at Lazard here



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