Kevin Landis has been running the tech-focused Firsthand Funds since 1994, so he's got some perspective on ups and downs in Silicon Valley, including recent volatility fueled by US-China trade tensions.
Landis spoke with CNN Business about the tech sector's recent dive and said he understands why investors are nervous.
Recent headlines about China banning many of Apple's (AAPL) iPhones and Canada holding the chief financial officer of telecom networking company Huawei for extradition to the United States have only made matters worse.
"This is the economic equivalent of a fly-by shooting," he said. "It feels like investors are already hiding underneath their desks."
But Landis said he's cautiously optimistic that those tensions will soon end. He said the current trade war amounts to saber rattling.
Despite tech's rocky 2018, the sector may ultimately be a good long-term investment. Tech companies remain among the most powerful and wealthiest in the world. One year of volatility won't change that.
Landis' optimism extends to the market, too. He said that the sizable sell-off for the Nasdaq (NDAQ), which is now down nearly 15% from the record high it set earlier this year, has created some notable opportunities for those brave enough to dive in to tech.
In fact, his firm's Firsthand Technology Value (SVVC) closed-end fund (a mutual fund that trades like a stock) has thrived, even in the midst of this tech turmoil. The fund is up nearly 40% this year.
Nvidia: a fallen angel that finally looks like a bargain
The fund recently took a stake in chip giant Nvidia (NVDA), the graphics processor that has plunged more than 45% from its all-time high. Landis said Nvidia has been on his radar for awhile but the stock always seemed too expensive.
Nvidia has gotten hit by the crash in the price of bitcoin and other cryptocurrencies. Its chips are used for so-called crypto mining — the graphics-heavy process needed to discover and obtain bitcoins.
Landis thinks there is more to Nvidia than bitcoin. And since the crypto bubble appears to have burst, the stock finally looks attractive. Nvidia is arguably the most well-known tech that he's bought recently, though.
Landis said investors need to resist the herd mentality and look beyond the five techs that get the lion's share of attention — the so-called FAANG stocks of Facebook (FB), Amazon (AMZN), Apple , Netflix (NFLX) and Google owner Alphabet (GOOGL).
He said the most recent sell-off is a "lesson on what happens when everyone owns the same stocks." Landis said his funds underweight Apple, Amazon and Google because the big spending sprees by some of those companies make him nervous.
He does not own Microsoft (MSFT), either, despite its cloud resurgence under CEO Satya Nadella.
"Old companies with big market caps scare me," he said. "When companies have to buy their growth, there is usually something missing."
Look beyond FAANG for values in tech
Landis does like streaming device maker Roku (ROKU), which he says is "on the right side of the cable cord cutting trend," along with education tech company Chegg (CHGG), networking equipment maker Arista (ANET) and data protection service Nutanix (NTNX).
He's not afraid to look overseas for holdings either. Among his top holdings are semiconductor equipment companies Pivotal Systems and Revasum, which both recently went public on the Australia Securities Exchange.
Landis said that to find long-term tech winners, it makes more sense to look for smaller innovative companies.
But Landis isn't completely ignoring the FAANG stocks. He said he's still a big fan of Facebook — warts and all — because of its strong growth potential.
Netflix still looks unstoppable
And Landis has been a long-term bull on Netflix. He said he's owned the stock since 2004 and that he continues to believe that it will fend off competition, even as media giants like Disney (DIS) look to get bigger in streaming content.
Landis quipped that there have always been Netflix doubters, going back to the days when it was just a DVD mail service that investors thought would be killed by the likes of Blockbuster, Redbox and even retail giant Walmart (WMT).
"Netflix is beyond critical mass," Landis said, referring to its more than 137 million subscribers and billions of dollars spent annually on programming. "There's an entire short seller's graveyard for investors who have bet against it."
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