CIO Insights - 25 October

Hi everyone
 
There’s not a lot of sport to comment on right now, but it was pretty cool to see Masters Champion Hideki Matsuyama claim the ZOZO Championship in his hometown of Japan yesterday. Fans will remember the ZOZO for the 2019 edition, which saw Tiger Woods claim his record-tying 82nd PGA Tour win, the same year he won the Masters for the 5th time in that all-time Sunday showdown at Augusta. Well done to the Aussie men’s T20 cricket team, who got their World Cup campaign off to a good start with a victory over South Africa, albeit a bit closer than it perhaps should’ve been!
 
Thank you to all of those who bought tickets to our virtual conference last week, I’m sure you’ll think it was money well spent once you’ve seen the show. Remember that HM1 shareholders can access a 20% discount on their $500 ticket using the code HM1-CONF at the checkout here. This week we’ll be announcing more speakers, both stock presenters and another keynote speaker. Obviously, it’s going to be tough to top last week’s announcement of Charlie Munger, but I have absolutely no doubt you will be intrigued to hear what this person has to say about some very current happenings in our world. We expect these announcements to come out on Wednesday of this week, so keep your ears and eyes open!
 
In today's Australian Financial Review, there is an excellent article by Chanticleer on Beeneet Kothari, who I’m sure you all know is a Hearts and Minds veteran now, having pitched Yeahka in 2020 (this investment returned 112% in 3 months); GDS Holdings in 2019 (this investment returned 69%); and PagSeguro Digital Limited in 2018 (a 72% gain). Beeneet is a specialist technology sector investor, who runs a A$3.3B fund, Tekne Capital Management, and I think epitomises what the conference brings to Australian investors – ideas that may not hit the radar for stocks that you would consider buying. You can read the AFR article on our website here, and while you’re there, take a general look around and you’ll see many other articles and reports, including my previous CIO Insights.
 
I’ve often mentioned the individual performances of stocks in the conference portfolio, especially when we lock in super-normal gains, like we did with Yeahka (+112%) and more recently Bill.com (+179%). So you can understand how the entire conference portfolio(s) have performed since the journey as a Listed Investment Company began three years ago, here are the pre-tax investment returns:

  • 2018: +34% return over 12 months
  • 2019: +64% return over 12 months
  • 2020: +28% return, over 11 months

 
In addition to this, a small Special Purpose Vehicle that was created in 2017 to house the recommendations made that year delivered a c44% return. Our overall investment returns can be found in our latest monthly update here.
 
I’m sure you’ll agree that as a portfolio, these are excellent annual returns, which embody the passion our speakers have for delivering to our shareholders AND beneficiaries, and indeed the depth of investment knowledge our managers have and are willing to share. Remember also that it is probably more difficult to make a 12-month recommendation than it is to make a 3-5 year recommendation, by virtue of the shorter time frame for a particular thesis to play out. Our managers spend a lot of time looking for catalysts or upcoming ‘tipping points’ that the broader market may not have picked up on in the stocks they pitch at the conference. Sometimes they don’t always play out as quickly as expected, and indeed some have appreciated after the 12-month period, as investment markets can sometimes move more slowly than we all think (and hope).
 
And we’re ok with this – we have two-thirds of our portfolio invested in stocks that can be held for as long as we, and our managers like, and the remaining one-third in the 12-month time horizon recommendations.
 
I think it provides a good blended portfolio of short and longer term investments for our shareholders.

Stay safe

Rory Lucas
Chief Investment Officer
Hearts and Minds Investments Limited

Reminder: these are simply my general views and should not be taken as investment advice

 

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DISCLAIMER: This communication has been prepared by Hearts and Minds Investments Limited (ABN 61 628 753 220). In preparing this document the investment objectives, financial situation or particular needs of an individual have not been considered. You should not rely on the opinions, advice, recommendations and other information contained in this publication alone. This publication has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Past performance is not a reliable indicator of future performance. This document may not be reproduced or copies circulated without prior authority from Hearts and Minds Investments Limited.