Facebook and Twitter face a decade of reckoning on their role in America’s political upheaval, reducing their attractiveness as an investment, according to one of the UK’s most successful tech investors.
“We are in an uncomfortable world where the strength of companies is so acute that they cannot escape being involved in [social and political] affairs,” said James Anderson, who helps manage £ 17.5bn Scottish Mortgage Investment Trust.
Owned by asset manager Baillie Gifford, Scottish Mortgage in the last decade has become an unlikely star in the world of technology investing with large interests in high-growth companies like Facebook, Twitter. , Apple, Netflix and Tesla. Such bets have helped make it the best performing investment trust in the UK over the past 12 months, with a total return of more than 100 percent.
In a call to investors and analysts this week, Anderson warned that “great technology has made a sea change recently” as the preferences of Twitter and Facebook have been left to “deal with the consequences” of accumulated force by their platforms and it will be in a decade.
Large social media platforms need to create a better balance of work with disruptive changes in their social effects, Anderson added.
The warning came after a January 6 storm at the U.S. Capitol by extremist supporters of Donald Trump heightened scrutiny on the nation’s largest social platforms. Businesses face a collapse in criticism of failure that has hampered the spread of pro-Trump conspiracy theories, hate speech and internal extremism online.
Last week, Twitter suspended Trump’s account, while Facebook CEO Mark Zuckerberg said the president’s social media group accounts would be suspended for the remainder of his term.
Scottish Mortgage, which first invested in Facebook in 2012 and at one point had a nearly 5 percent stake, was revealed in November that it had sold the company’s final assets. Trusted Twitter owners share between 2013 and 2016.
After taking advantage of the big tech boom over the past decade, Scottish Mortgage is also beginning to cut holdings of some of the other groups that came to dominate the US stock market.
Confidence said in November that it cut its Amazon holdings for the first time since it bought shares more than 10 years ago. Anderson told investors this week that while the company does not plan to exit Amazon entirely, the opportunity the group has now shown “does not increase as the share price has.”
The veteran investor admitted that the trust was launched in 2017 by Apple, with shares rising 75 percent this year. “Sometimes we are too early,” he said. “We will not always be right.”
The Scottish Trust is said to be known for its stake in Tesla. Despite selling a £ 1.2bn stake in the electric car maker in September, the US company still owns nearly 10% of its total trust assets.
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