Insights from the Bernstein Strategic Decisions Conference

The Solutions team attended the Bernstein Strategic Decisions conference earlier this June. It gave us the opportunity to meet with several portfolio companies, get unique insight from CEO's and top-level management of various companies, and to gain a better understanding of how the companies are thinking and planning for the next 5 years.

By  Philip Ripman, Portfolio manager

All in all, a total of 128 companies made presentations at the event. Some of the key takeaways were:


A positive tone remains…

The overall tone from most companies was positive, citing robust demand – but balanced against caution related to China, to new or existing restrictive covid measures and caution related to an overheated labor market.

But downside protection is an issue…

  • The conference kicked off with an analyst day, where investors were presented with best investment ideas across various sectors. A common denominator from the presentations were "recession-proof" cases where solid profit margins, recurring revenue and excellent positioning relative to peers in segments with prospects of stable future growth.
  • The main conference provided access to top level management in some of the largest companies in the world. Shareholder value and positioning for a potential recession were frequently mentioned. Measures to counter inflation, increasing interest rates, value chain disruptions due to covid-related lockdowns, raw material shortages and increased transport costs due to the Russia-Ukraine war led to a sentiment with expected long term economic drawdowns
  • Jamie Dimon, the CEO of JPMorgan Chase, warned of an "economic hurricane" coming, a narrative that immediately swept its way onto Bloomberg and other news outlets, even before the session was concluded. Dimon was perhaps the participant who most clearly signaled significant headwinds ahead when taking into consideration rising inflation, rising interest rates and supply chain issues.

Energy matters more than ever…

The story, being accelerated by the conflict in Ukraine, is energy diversification, energy independence and energy decarbonization. These themes will likely continue, requiring a tremendous amount of investment.

Technology is central to many potential solutions…

The use and application of technology was another major theme, ranging from automation and reducing labor costs, to geo-spatial technology and using resources more effectively.

Stay open….

We also heard from David Epstein, the author of a book called "Range: Why Generalists Triumph in a Specialized World", where he argues that range is more important than specialization, in today's society: a "wicked environment" where a new order is being constructed, under unclear terms. A thought provoking and well-argued book – which I highly recommend!






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