Zehrid Osmani, manager of Martin Currie Global Portfolio Trust (MNP), explains why he invests in American healthcare company Masimo (US:MASI).
“Masimo is the largest holding in our portfolio, accounting for 5.3 per cent of assets, and is typical of the type of company that we like to invest in. It is a global leader in non-invasive patient monitoring hospital devices and technologies.
The company operates in a supportive industry structure, with high barriers to entry and limited competitive pressures. It has a 45 per cent share of what is a two-player market, which is an industry dynamic that we like.
These characteristics give it superior pricing power. As a rule, we seek companies with pricing power, which is important in a world where there are strong underlying deflationary trends.
Masimo also has close to a 75 per cent share of any new orders, so is increasing its market share. It has a highly defensive sales stream with a high proportion of recurring revenues because many hospitals’ operating budgets are resilient and shielded from pricing pressure.
We believe that the company faces low disruption risk, due to its productive and targeted research and development efforts, enabling it to sustain its leadership position.
Masimo also has attractive growth prospects, which are driven by supportive long-term structural trends. These include an ageing population, improved healthcare infrastructure, and increased use of technology and intelligent patient monitoring.
The company has a high-quality management team and – importantly – a sustainable business model. We see Masimo as a great opportunity to gain exposure to three important long-term themes that we have identified as part of our thematics framework: bespoke healthcare, robotics and automation, and ageing populations.”
