TrueShares Technology, AI & Deep Learning ETF (LRNZ) is a concentrated portfolio that seeks to provide thematic exposure to technology companies significantly involved in advanced levels of artificial intelligence. LRNZ is led by portfolio manager Sam Kim, who has a deep understanding of the technology sector and conducts extensive qualitative fundamental research. We spoke with him to gain a better understanding of the risks and rewards involved in AI and deep learning.
What criteria do you use for selecting companies to include in LRNZ?
We are not limited by cap size or valuations or any other criteria. Our stock selection process is somewhat different than others. It is entirely based on our ability to conduct our own deep fundamental research.
Even though we only invest in public companies, our due diligence process starts long before their IPOs. We have been in the tech industry and located in the Silicon Valley for a long time, allowing us to harness extensive information flow from our industry sources.
Because of that, we tend to identify these promising companies very early — ideally at least 18 to 24 months before their IPOs. By the time these companies become public companies, we know exactly what to do in terms of making investment decisions. This philosophy helps us identify category killers and manage risk within the portfolio.
What are the risks of AI and deep learning?
As with any new technology adoption, there will always be some incidences of abuse, disruption and mistakes. In the early stages, some of these AI algorithms will occasionally malfunction, spit out wrong data and hallucinate at some key moment and the public will point out the flaws. We will also have some bad actors using AI with harmful consequences. But that’s all part of the process in adopting the new technology growth cycle.
What’s different about AI compared to other emerging technologies like the internet is that AI already has a long history. It may be hard to believe, but AI is actually more than 80 years old. Because of this long history, the benefits and risks of using AI have been very well understood. Eventually, this will all work out and I strongly believe AI will improve every aspect of our lives for the better moving forward.
What are some of the benefits of AI?
I think some of the most interesting use cases of AI can be found in health care, more specifically AI-based new drug development platforms. Without the help of AI, it used to take eight to 10 years for biotech companies to develop one new drug candidate, and it took another 10-plus years to move it through the FDA trial process for final approval. It used to be an extremely inefficient and wasteful cycle.
But now, with an AI-based drug development platform, this process has been dramatically improved. Instead of taking eight to 10 years, it now takes less than one to two years to develop a new drug candidate with dramatically improved accuracy and predictability.
What are some of the companies in LRNZ that are trying to improve our lives with AI?
One of the prime examples is AbCellera and what they achieved a few years ago. AbCellera, using its AI-based biologics drug development platform, successfully developed an antibody-based Covid-19 vaccine for its partner, Ely Lilly. It took less than one and a half years to develop the vaccine and generated close to $1 billion in revenue from Ely Lilly under the contract. With this new AI-based drug development, it should result in billions of dollars saved in R&D in the short term, and billions of lives saved in the long term — that is the incredible difference an application of AI can make.
For complete list of fund holdings, please visit: https://www.true-shares.com/lrnz/
Sam Kim is a Portfolio Manager for Black Hill Capital Partners, LLC. Mr. Kim has been in the investment management industry for over 25 years, specializing in investment, research and analysis of secular growth companies, largely in technology related sectors. Prior to founding BH Capital Partners, Mr. Kim was a Senior Analyst at Amerindo Investment Advisors, a top-tier Wall Street investment management company that focused on investing in long-term secular growth companies in the science and technology sectors. During his tenure at Amerindo, in addition to covering newly public companies, Mr. Kim was also active in analyzing and investing in late-stage private companies. Prior to his financial career, Mr. Kim acquired first-hand knowledge in designing large-scale, real-time software and communication systems as a Systems Analyst/Consultant at Teledyne Browne Engineering and a Software Systems Engineer at Raytheon Corporation. Mr. Kim received a B.S. in Bio-Medical Engineering; an M.S. in Computer Engineering from Boston University; and an M.S. in Management from the Sloan School of Management at MIT.
