Major techs set to prosper: Investec

By Brian Gorman

LONDON (Reuters) - Major technology companies will benefit from stronger-than-expected demand for computers and giants such as Microsoft (MSFT.O), which have been sold off heavily, provide a real opportunity, a fund manager said.

"Microsoft is incredibly, astonishingly cheap," James Hand, manager of the Investec Global Equity Fund, told Reuters, adding that demand for computers did not look as weak as people had expected.

Microsoft and Hewlett Packard (HPQ.N) are among the top 10 holdings of the fund. Hewlett and IBM (IBM.N) were trading at nine times earnings, making them attractive, Hand said.

More than 61 percent of the 253.6 million pound fund is invested in North America. The United States is overweighted by 8.1 percentage points. However, the fund, launched in 2000, does not target specific geographies.

"We're bottom-up stockpickers," Hand said.

The fund uses Investec's 4Factor screening process, which scores characteristics such as valuation and technicals.

"We spend the rest of the week doing what we really enjoy, digging into companies, finding out whether the scores on the screens are a fair representation of reality," said Hand.

"The most consistent error we see is anchoring. People are really reluctant to change their mind, even in the face of strong evidence, such as earnings revisions," he said. "We aim to exploit that."

Hand's liking for tech-related stocks extended beyond the giants, including stakes in Norway's Tandberg (TAA.OL) and France's Gemalto (GTO.PA).

UNDERWEIGHT ON JAPAN

The fund's biggest underweighting is in Japan, just 2.6 percent of the fund's portfolio.

"Japan is a real conundrum. It looks cheap in terms of discount of price to book, but we always look at that with reference to return on equity -- if a company generates a ROE below its cost of equity, then it's fair that it trades at a discount on price to book."

"We've struggled to find high quality businesses in Japan. There's some evidence that that's changing, businesses are being run in a shareholder-friendly, rather than a stakeholder-friendly manner," he said.

"But we need to see progress. We're ready to be very excited but need to see a push-up in the level of returns."

Banks are the biggest sector underweighting.