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This Tech Pick Popped for RS

Ryan Leggio

Ryan Leggio: In the energy or the technology areas, any names that pop out in particular, that you and your team are really excited about?

Allison Thacker: An example of a name would be Akamai, which we have historically over the last few years owned in our mid-cap fund. We really like the company because they had a dominant position in the content delivery network. Basically as you are using media and software over the Internet, a lot of the time to keep the packet flow consistent, you need to use a content delivery accelerator, and that is what Akamai does.

They have the dominant market share in this business. They have over 40% EBITDA margins, validating the fact that it has very strong competitive advantage. And over the last 10 years we saw it move from a small cap into a mid-cap market cap.

Then during the sell-off, it sold off dramatically in 2008, back down to an under $2 billion market cap. At that point in time, it was about 10 times free cash flow yield. So very inexpensive valuation for a dominant franchise player.

We are big believers in the fact that people will be using more personal media content online, as well as businesses are forcing applications to go more and more over the Internet.

So we really are big believers in bandwidth consumption increasing, and that is kind of the fundamental driver for Akamai. So that's an example of a name we owned in the mid-cap, it became a small cap, we added it many more of our products. So we increased our overall ownership of the name.

It has done really well off the bottom, I think, as investors have realized that bandwidth is continuing to grow and that Akamai's margins are still very strong.