Welcome to Optimus Capital

Optimus Capital specialises in asset management, delivering highly sophisticated investment solutions to both private and institutional clients. Our diversified portfolios, constructed using a disciplined qualitative and quantitative investment management process, are designed to meet the unique objectives, risk tolerances and performance aspirations of our clients.

In addition, Optimus Capital uses its extensive network of institutions, family offices and high net worth individuals to engage in private placements.

 

Weekly market commentary, Review & Outlook

Is John Deere a space stock?

16 April 2021, 2 mins.

You may laugh but this question is posited with sincerity. John Deere – the maker of tractors and lawn mowers, and member of the Russell 1000 Value Index – is a 2% weighting in the freshly minted ARK Space Exploration ETF.

So, is John Deere a space stock?

The answer, according to ARK at least, is yes. The natural question to ask is “why?” ARK’s logic is the company stands to benefit from satellite mapping for its robot lawn mowers and tractors.

ARK’s definition of a ‘space stock’ is quite broad. In fact, one could argue it is any business that stands to benefit from GPS, the internet, artificial intelligence and, of course, actual space travel.

However, the point to focus on is: in this brave new world, old school companies are now trying to push the digital revolution throughout their operations.

We have seen this story play out before. In the early 1900s, mass production and assembly lines were a fantastic new innovation. Over time, this ‘technology’ seeped into the business practices of every company, from washing machines to pencil manufacturers.

The adoption of technology into the business models of companies considered ‘value’ stocks, could be a catalyst for the value risk premia to extend its recent outperformance.

So, yes – John Deere is both a value stock and a space stock. Just as Volkswagen could be considered both a value stock and a tech stock. When thinking about investments for the next 5 years, and not just focusing on last year’s outperformers, an allocation to ‘value’ stocks should be considered.


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