%20(1).png?width=600&height=338&name=menu_thumbnail%20(4)%20(1).png)
%201.svg){kind=small}
The cybersecurity sector may offer significant long-term investment opportunities
Key Takeaways
- Robert Picard anticipates strong tailwinds in the cybersecurity sector. As ransomware incidents increase - at roughly 1,000% per year by some estimates - the need for creative cybersecurity solutions is growing.
- Cybersecurity spending remains important in economic downturns, as it is now a key fiduciary responsibility at the board level, putting a floor under capital expenditure for the sector.
Transcript
My name is Robert Picard. I head up private market solutions at Hightower Advisors. Hightower is a community of 135 separate advisor businesses and wealth management firms spread across the United States in approximately 34 different states.
One of the areas that we've been spending a lot of time looking at, of course, is the growth areas, specifically technology. We know public markets, to a degree, are very overweight in technology. We have focused on certain specific segments or themes within technology that we believe to be relatively robust, have meaningful tailwinds, and will continue to generate returns and grow consistently over time.
One example would be cybersecurity. Just to give you an idea of some of the elements—and not to scare anyone—but it's fascinating to understand that ransomware is increasing almost 1,000% per year. Every day, we're waking up to news of someone who's been locked out or hit by ransomware.
Another area that's quite frightening is the fact that the average breach—when I used to negotiate contracts about how soon we had to be alerted if there was a breach with one of our counterparties, we would negotiate five days, seven days, and go back and forth with the lawyers—it turns out the average breach takes almost one year to be discovered. This just highlights how much risk is still in the system and how important cybersecurity is.
Lastly, in certain market downturns or if there's a recession, people may be concerned that CapEx spending in technology could be reduced. Cybersecurity, however, really can't be reduced. It's now a fiduciary responsibility at the board level in corporate America to ensure cybersecurity is properly maintained. We believe this creates a floor that enables this sector or segment within technology to continue outperforming as we evolve as a society.
We need to evolve on the cybersecurity side, and we believe there will continue to be meaningful investment. Some of the best investments and opportunities are not at the public company level. The purest investments are often at the venture capital and private equity level in private companies that are still being managed or run by their founders.
Important disclosures
Opto Investment Management, LLC (the “Firm”) is a wholly-owned subsidiary of Opto Investments, Inc. and is an SEC-registered investment advisor. Registration with the SEC does not imply a certain level of skill or training. SEC registration does not mean the SEC has approved of the services of the investment adviser. This website is operated and maintained by Opto Investments, Inc. Certain products described herein and institutional relationships may involve investment advisory services provided by the Firm. This website is presented for financial institutions and investment professionals only and is not intended for individual consumers or retail investors, unless specifically noted. Unless otherwise indicated, commentary on this site reflects the personal opinions, viewpoints and analyses of the author and should not be regarded as a description of services provided by the Firm or its affiliates. The opinions expressed here are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual on any security or advisory service. It is only intended to provide education about the financial industry. The views reflected in the commentary are subject to change at any time without notice. While all information presented, including from external, linked or independent sources, is believed to be reliable, we make no representation or warranty as to accuracy or completeness. We reserve the right to change any part of these materials without notice and assume no obligation to provide updates. Nothing on this site constitutes investment advice, performance data or a recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. We disclaim any responsibility for information, services or products found on linked websites. Images and photographs are included for the sole purpose of visually enhancing the website. None of them show current or former clients and should not be construed as an endorsement or testimonial. All investing is subject to risk, including loss of principal. Historical performance is not a guarantee of future performance and clients may experience different results. This information contains certain “forward-looking statements,” which may be identified by the use of such words as “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of the depicted investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting operations that could cause actual results to differ materially from projected results. See related disclosures at https://www.optoinvest.com/disclaimers.
