Fund manager unravels the excitement around Apple — and why he thinks it will do well next year

Published Thu, Dec 23 20216:29 PM EST

Fund manager Tom Wildgoose tells CNBC why, despite all the hype, he thinks Apple shares will do well in 2022. Wildgoose, who manages the Nomura Global High Conviction Fund, said that companies such as Apple and — with their high pricing power — will do well in an environment of persistent inflation. U.S. inflation rose at the fastest pace since 1982 in November, climbing 6.8% from a year ago, while inflation hit a 25-year high in the euro zone in the same month. Inflationary pressures are also starting to build in some of Asia's largest economies, particularly in China and Japan . Wildgoose said that companies which are able to maintain or raise their pricing will continue to do well even as inflation stays high for longer. "Apple obviously fits into that category," he said during an interview with CNBC Europe. He said one of the reasons for Apple's recent strong performance is the "excitement around things like the Apple Car and the Apple Glasses." Positive product pipeline news also saw the tech giant act as a safe haven amid increased volatility, Nomura noted in its November fund commentary. "But ultimately, it's a very strong brand producing great products and is able to put up prices quite easily," Wildgoose said. After rallying nearly 30% this year, Apple is now closer to the elusive $3 trillion market cap that would make it by far the largest component stock of the S & P 500. LVMH Another stock that Wildgoose likes is renowned French luxury fashion group LVMH — a new addition to the Nomura Global High Conviction Fund. He said that LVMH has a "great stable of brands" and a "strong heritage" that acts as a barrier to entry for potential competitors. "This brings us back to the point of pricing power. People want those brands, they want those products and so it can raise prices — essentially at will — which is the thing we really liked about the stock," Wildgoose added. Shares of LVMH are up nearly 40% this year. The company completed the acquisition of luxury jeweler Tiffany for $15.8 billion in January after a bitter legal dispute, and is currently in the process of integrating the brand into its portfolio. The Nomura Global High Conviction Fund was up 9.96% year-to-date to the end of November. It has underperformed MSCI's flagship global equity index, which rose 13.98% over the sale period. Competition in the payments sector Wildgoose also weighed in on the impact of the increasingly popular "buy now, pay later" model and other innovations in the payments sector. While recognizing the fund's longtime success with payments companies, he also acknowledged rising concerns about innovations that are disrupting traditional electronic payment businesses. PayPal was one of the fund's worst performers in November, declining 21% following weak third-quarter results and concerns about pricing power in the broader payments sector following Amazon's ban on Visa. Wildgoose, however, believes that the overall disruption is likely to be more limited than people expect. "Over time, we will see probably that the disruption isn't as serious as we think and the likes of MasterCard, which has a huge technology base connectivity and provides end-to-end services, will be an extremely valuable tool for any new party in payments," he added. Meanwhile, blockchain technology "seems much more useful in specific areas of transactions rather than going into the local supermarket and buying your monthly shopping," Wildgoose said. "This is obviously [an area that] the likes of MasterCard and Visa are particularly good at."

People wait outside an Apple store as the iPhone 12 series launches in Shanghai, Oct. 23, 2020.

STR | AFP | Getty Images

Fund manager Tom Wildgoose tells CNBC why, despite all the hype, he thinks Apple shares will do well in 2022.