Former Macquarie Bank executive Alex Pollak first invested in artificial intelligence company Nvidia in 2016 through his fund management company Loftus Peak.
After a sustained bull run in the stock, Loftus Peak sold out of the company this year, believing better value could be found elsewhere in businesses disrupted by AI. But Pollak, whose funds under management this year have topped $1bn after 10 years of operation, will be tipping another disruptive industry stock when he speaks for the first time at the Sohn Hearts & Minds conference in Adelaide on November 15, which fits in with his themes about investing in companies riding waves of disruption.
“We are an investor in disruptive technology,” he says, explaining his fund’s approach to investing.
“It’s the disruption of existing business models. A lot of the time it is technology focused, but they are the tools – the chips are the tools.”
During the Sohn Australia conference, modelled on a US forum started in 1995, Australian and global fund managers tip a favourite stock at a one-day, $3500 a head event that raises money for medical research.
Loftus Peak sold out of its holdings in Nvidia and Apple before the end of the financial year but still had holdings in companies such as Qualcomm, Taiwan Semiconductor Manufacturing, Amazon, Alphabet, Microsoft, Meta Platforms and Advanced Micro Devices.
A financial journalist before joining Macquarie Bank, Pollak has a runaway enthusiasm for the potential of AI to disrupt the world that forms the basis of his investment philosophy. “We’re riding a wave which started in the ’50s and ’60s with the invention of the first silicon chips,” he says.
“We all know about Moore’s law (which says the number of transistors on a microchip will double every year). Intel is running out of room with Moore’s law but Nvidia isn’t.
“The rate of change at which businesses are being affected is increasing exponentially after 60 years. Never mind what Moore’s law is doing, Nvidia’s taking it to new heights.”
Pollak illustrates the sweeping changes being driven by AI by pointing to a product being beta-tested by Google that can turn an article into a two-person podcast.
While acknowledging there are risks with AI-driven products, including AI’s capacity to hallucinate, Pollak sees machine learning as a structural game changer that has only just begun.
“There’s a popular theory floating around that machine learning or artificial intelligence is all going to come crashing down,” he says. “But it isn’t.
“I’m not saying that there is not going to be a period when the stock prices of some of these machine learning companies come down, but machine learning and AI are here now, and they are going to roll through every facet of business you can imagine.
“It’s not a flash in the pan. There are still bugs to be ironed out, but it is not a flash in the pan. It’s going to percolate through every area of business globally in the next five or 10 years.”
Pollak says AI will affect every aspect of business, noting agricultural equipment company John Deere uses the technology.
Loftus Peak’s investment approach takes in several thematics, which Pollak says “all bleed into one another”, including data and machine learning, networks, electrification, as well as the biotech and healthcare sectors.
He was asked by conference organisers to present at this year’s event because of the investment performance of his funds, whose success has been due to his early recognition of the importance of disruptive tech stocks, which have boomed in the US in recent years.
“We haven’t chosen a stock (to tip at the Sohn conference) but it will be one from amongst those thematics,” he says.
The themes of the conference this year will include space, artificial intelligence, geopolitics, biosciences and investing.
Now in its ninth year, the Sohn Australia conference is set to raise $70m for medical research since its launch in 2016, when it was founded by former UBS bankers Matthew Grounds and Guy Fowler, and businessman Gary Weiss. Funds go to medical research organisations such as the Victor Chang Cardiac Research Institute, the Brain and Mind Centre at the University of Sydney and the Walter and Eliza Hall Institute of Medical Research in Melbourne.
This year’s speakers will include Oaktree Capital co-chairman and co-founder Howard Marks; US-based Scalar Gauge Fund managing partner Sumit Gautam; IFM Investors portfolio manager Rikki Bannan; and Terra Capital founder and chief investment officer Jeremy Bond.
The Australian is a media partner of the conference.
The Sohn Hearts & Minds conference will be held in Adelaide on November 15.
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