An anomaly not often discussed is that professional investors have a different remit to so-called retail investors.
While many retail investors are investing with a long horizon, fund managers are incentivised to make rapid changes to their portfolios because they have to report their performance every month, quarter, and year.
Mum-and-dad investors, therefore, actually have the advantage that they can persist with their investments for the long term.
If the stock has a bad quarter or even a bad year, the average punter doesn't have to anxiously cut it from their portfolio.
So it can be considered a bit of a gem if a professional investor picks a particular stock as a long-run prospect.
Here is one example from this week:
Invest in an 'unregulated monopoly'
Speaking on a Market Matters Q&A, Shaw and Partners portfolio manager James Gerrish revealed a field trip his team went on.
"We visited this software developer in December hearing from their international technology teams who were out visiting their offices in Surry Hills," he said.
"We believe this is a good company, with good people running it, a great product that has dominance in one area — audio."
The business he's talking about is Audinate Group Ltd (ASX: AD8).
Audinate is the creator of a networking protocol called Dante, which is used to digitally transmit audio data. It is useful for situations like concerts and conferences.
The protocol is fast becoming a standard, with many musical instruments and audio equipment from other manufacturers now selling with it built-in.
Audinate's dominance of that market is such that Medallion Financial Group managing director Michael Wayne once called it a potential "unregulated monopoly".
"You can liken it to Bluetooth, if you like. Except Bluetooth isn't as good a technology and it's owned by a cooperative."
Gerrish's team is also a believer.
"We maintain our bullish stance towards Audinate and see this as a medium to longer-term opportunity within our Emerging Companies Portfolio."
Audinate shares closed Thursday at $7.25, which is more than 28% down from its August peak.
"We believe the stock's good value under $8," said Gerrish.
"Last week's decline was a result of issues from the chip makers, with some chips now in oversupply but some remain hard to get. This has been an ongoing issue for companies like Audinate over recent years."
