A Golden Age for Data-Advantaged Healthcare Companies

**Jenny** (0:00)
And to help us do so, we'd like to welcome in Amy Zhang, Executive and Vice President and Portfolio Manager at Algor. So Amy, thank you so much for joining us today. Let's start really with what you're seeing as far as these growth opportunities and what characteristics can lead to a stock's outperformance day regardless of the macro environment.

**Amy Zhang** (0:20)
Yeah, thank you Jenny for having me on the show.
Yes, I think, you know, market's pretty volatile now, but I think volatility always creates opportunity. And as you said, you know, there are certain parts of the market, like I think healthcare is relatively insulated from the geopolitical risk. And also particularly, you know, in terms of innovation, AI healthcare is very, it's very early in at this point.

**Alex** (0:52)
Amy, our viewers are primarily, I would say, at least partially self-directed investors, many of which are maybe new to their investing journey. As someone who does this professionally, as a portfolio manager, and thinking about, you know, kind of markets in many different ways, you know, I can think back throughout my entire career, seems like every year we hear, hey, it's going to be a stock picker's market. It's going to be a stock picker's market. For the first time, it really feels like that is what this year has been. The under-the-surface volatility is so dramatic to the overall index volatility. Now that we have a portfolio manager, how does that change your approach or does it?

**Amy Zhang** (1:35)
That's a great point, Alex, and I agree with you. I think finally now we are in the stock picker's market. As a portfolio manager, I think it's really important at this point to tone out the macro noise. Of course, we want to be cognizant, but really focus on fundamentals. At Alger, we are stock pickers, so we really focus on company-specific growth drivers.
I always say we like to invest in motorboats instead of sailboats. Motorboats are the ones that have an engine, and here I would say the engine is innovation. I believe innovation is a key driver to long-term value creation.
And the motorboat will propel the company to sort of, regardless of the waves of the sea, so to speak, where a sailboat, of course, it could be easily tipped over by the economic wind. So we really focus on those companies that are driven by innovation, have something truly differentiated in a larger growing market, and a lot of times open-ended, ideally science-based company that can gain a lot of market share, that can sustain is a long-term growth.

**Jenny** (2:53)
Okay, so where are you seeing some of these major opportunities emerge? Of course, AI becomes more integrated, and also right now, fully integrating itself into the healthcare industry, which I think is almost, not as discussed to say, like the big hyperscalers, but it's a fascinating space in which AI is hugely beneficial to broader healthcare.

**Amy Zhang** (3:13)
Yeah, exactly.
And also it's very early, right? I mean, I think we're entering a golden age of digital biology where intersection of life science and computational technology, AI and data science. So we really focus on those companies that play a pivotal role in that, for example, you know, Twist, Bioscience, the tickers, TWST. That's really a picks and shovel play in AI healthcare, right? Because, you know, AI can help researchers design potential new drugs much faster, but those ideas still need to be physically made and tested by biology, validated in biology. So that's where, you know, Twist comes in and use, it's secret sauce is a silicon chip, a sort of a lab on a chip to make cells in the piece of synthetic DNA at once. So make the process much faster and cheaper. And then traditional methods. They also are industry. They also have industry leading quality and they can really scale.
So as you know, AI will lead to more potential drugs being designed, and will definitely create more demand for twist technology and services. So we think this is almost open-ended opportunity.

**Alex** (4:39)
Amy, I love the motorboat versus sailboat analogy. I love analogies. We try to use them as much as we can to kind of make things digestible. But you're looking within the mid-cap space. We know as you kind of move down the cap spectrum, sort of the profitability can really swing.
And you know, those who are just broadly invested in, you know, kind of funds that track, you know, mid-cap index or small cap index, they can sometimes get some stocks in there that maybe they wouldn't have chose. Healthcare, another thing that requires a ton of research as well. You got a couple more names that stood out to you. You want to walk us through those?