HM1 Weekly Investor Update: 14 December

Hi everyone
 
Well here we are, the week before Christmas, people are hopefully signing off work for a few weeks, and an end to what has been a tumultuous year to say the least.
 
I hope you took the time to listen to Hamish Corlett's podcast chat with the Equity Mates guys and myself last week - so many insights from this great investor. Never stop learning I say! If you planned on listening to it later, and forgot about it, here is the link for you; and you can see all of the other interviews Bryce and Alec have conducted, including a cracker with Malcolm Turnbull. 
 
You may be wondering what we're going to do with Hamish Corlett’s pitch from the conference last month, Slack Technologies, which has been bid for by the behemoth, Salesforce. Well, as Hamish said in the podcast, he was actually disappointed to see the takeover announced, as he firmly believed this was just the beginning of a 10 year growth runway which would increase the value of Slack by many multiples, rather than the c60% we have gained in 3 weeks. Whether Salesforce management are able to do what Hamish firmly believes Slack management were on track to do remains to be seen. As a consequence, we have exited the position and kept the proceeds in cash until we decide on how best to re-deploy the proceeds. 
 
Another of our conference presenters, Qiao Ma, from Cooper Investors, also spoke with Equity Mates last week. You can listen here. Wow! The depth she went to in explaining how she looks at stocks, her experience at Lehman Brothers during the GFC, and her explanation of her 2020 pitch, Shenzhou International (the textiles business that provides the fabric for Nike, Adidas, Uniqlo and Puma, amongst others) was fascinating. It's a 'must-listen' episode in my books!
 
With all the news going on around the world, we've had some winners and some losers in the portfolio lately - CSL decided against progressing with their vaccine candidate, and so has been weaker in the last few days, as has Ping An Healthcare in China, while BILL.com, which automates back office operations in the SME space, and our online fresh food stock, Hello Fresh, have both been extremely strong in the past few weeks. Pleasingly the core portfolio is also contributing nicely, while the stronger Aussie dollar remains a headwind.
 
I'll finish this update with a mention of one of our keynote speakers from this year’s conference, Professor Scott Galloway. If he isn't one of the smartest people I have ever listened to, I don't know who is! He is a Professor of Digital Marketing at NYU Stern School of Business, and seems to know a helluva lot about e-commerce. He writes a weekly blog that you can read for free, he does a weekly podcast that is mindblowing, and has just released his latest book, Post Corona, where he gives his views on what life will be like post corona, which companies will likely thrive, and who may not, and what he thinks we need to do about it. 
 
Here are some fun facts I took out of it:

  • The coronavirus is one four-hundredth the width of a human hair.
  • Scott believes the pandemic's most enduring impact will be as an accelerant of dynamics already present in society.
  • He believes that in crises, there lies opportunities, and the more disruptive the crisis, the greater the opportunities
  • "Nothing can happen for decades, and then decades can happen in weeks" 
  • E-commerce really began in about 2000, and has grown its share of retail by 1% a year, to 16% at the start of this year. 8 weeks later, that number leapt to 27%, and shows no signs of reverting. A decade of e-commerce growth in 8 weeks.
  • It took Apple 42 years to reach $1 trillion in value, and 20 weeks to accelerate to $2 trillion.
  • In the US, with COVID cases taking up many more hospital beds than ever before, and warnings to stay away from doctors surgeries if you have symptoms, the forced embrace of telemedicine suggests a sea-change in how the rest of us will use doctors surgeries and hospitals for our ailments going forward.

Interesting hey!!
 
As I said, he does a podcast (warning, he speaks very very quickly!!); a blog, and has written a couple of books - all worth checking out over the Christmas break!

 

Stay safe,

Rory Lucas
Chief Investment Officer
Hearts and Minds Investments Limited

 

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