Rather than leap straight in, expert investors often use a ‘nibble’ strategy before taking further action.
It is fascinating to me how professional investors are handling these volatile times on the sharemarket. Clouded by rising inflation and interest rates, the political tensions around Ukraine and the fundamental shift away from growth to valuing investing, equity investing is incredibly uncertain. And that is producing incredibly volatile markets.
What I’m learning from the experts I interview every day on my share program The Call (midday AEDT on the www.ausbiz.com.au investment streaming platform) is that they each have their individual ‘watchlist‘ of stocks which suit their strategy and risk profile. If the share price of that stock pulls back to a fair value, they will then “nibble” by buying in.
Why use a nibble strategy
They aren’t afraid if the share price keeps falling because they haven’t invested their full allocation into the stock. They may start by investing 10 per cent of what they intend to eventually invest. They’ll sit for a time to assess any further news.
If they still have conviction in the stock and management, they’ll “nibble” some more, even if the share price has fallen since the first purchase.
A nibble strategy is basically a way to reduce investment risk, without missing the market.
3 tech stocks to nibble on
The “nibble” strategy was a key theme when I chatted to two of my favourite experts on The Call this week: Gaurav Sodhi from Intelligent Investor and Mathan Somasundarum from Deep Data Analytics. Nibbling, it seems, has become a serious strategy in this market. Here are three tech companies that are part of Gaurav and Mathan’s nibble strategy.
Gaurav has been a big fan of digital audio networking group Audinate (ASX: AD8), a Sydney-based tech company which supplies its Dante protocol to wirelessly connect audio and video. It dominates the category globally, but its share price has been hit by supply chain problems and the lack of live concerts because of COVID.
Garuav thinks its share price could drop below $7 (it’s just above that now), but would be “nibbling” now.
Mathan agreed that Audinate was a good nibble. He also has a similar strategy for Altium which, along with Audinate, are his two tech stocks to be following at the moment. Altium was founded in Australian in 1985 and moved its headquarters to the US in 1991. That same year it launched its Windows-based PCB (printed circuit boards) design system Protel for Windows. Altium listed on the ASX in 1999 (ASX: ALU) and has innovated its way to be the world leader in PCB software.
Later in the show, Mathan also put a “nibble” on audio recording group Dubber for the same reason as he likes Altium and Audinate. Dubber was founded in Melbourne in 2011 three mates over a few glasses of red wine. It listed on the ASX in 2015 (ASX: DUB). It is now the global leading unified call and conversation recording platform (UCR) and voice intelligence cloud. If that completely went over your head, you’re not alone. Just know that its call monitoring, recording and analysis technology is in demand since COVID made working from home the norm.