SINGAPORE (Sept 23): As many as 20 funds available for sale in Singapore hold software company Adobe Systems Inc. Shares of Adobe jumped 7.1% in trading to close at a record high of US$107.78 (S$146) per share on Sept 21. This came after the company reported third quarter earnings that beat market expectations.

Adobe is largely known for its flash player software that is used to view web content. The company also develops and sells the widely-used Photoshop publishing software. In 3Q, Adobe’s profits grew by an impressive 55.2% y-o-y to US$270.8 million. This was driven by a 20% rise in revenue, which grew to a record US$1.5 billion. Investors are pricing in earnings growth down the line for Adobe, which currently trades at a P/E ratio of 56 times, according to Bloomberg.

Among the funds with the largest exposure to Adobe is the growth-focused S$1.5 billion AB FCP I American Growth Portfolio fund, which has a 1.5% allocation to the stock (at July 31). In Personal Wealth (Sept 12), the AB FCP I American fund was flagged as one of three well-positioned US equity funds to ride the switch out of defensive stocks to growth names. Since end-June, the fund has advanced 7% in Singapore dollar terms (at Sept 21), outpacing the 4.3% rise of the Standard & Poor’s 500 Index.

Meanwhile, the largest fund holding Adobe is Grant Bowers’ S$4.9 billion Franklin US Opportunities fund, which has a 1.6% allocation (at June 30). Bowers’ fund is down 5% this year but, like the AB FCP I American fund, has outperformed the S&P 500 since end-June. The Franklin fund’s largest bets are on growth sectors like technology and healthcare, which make up just over half the fund’s assets.

In an earlier reply to The Edge Singapore, Bowers said, “As a sector, information technology has low levels of debt, high margins and reasonable valuations – particularly when you consider a growth rate that is higher than the overall market.” Within technology, Bowers is focused on cyber security, Software as a Service (SaaS), cloud computing, digital payments and smart devices.

Moving forward, Adobe’s management sounds a bullish note for 4Q. “We are expecting another record quarter in 4Q, and the leverage in our operating model is reflected in our increase to earnings targets for the year,” said Mark Garrett, executive vice president and chief financial officer of Adobe.