Need To Know Bumper Edition: SOHN Hearts & Minds Investor Conference

Candice: [00:00:00] Talk money to me. Hello and welcome to talk money to me, I'm Candice Bourke [

Felicity: [00:00:06] and I'm Felicity Thomas. And here it took money to me. We're all about talking about money, stocks, investable ideas and ways to better manage your wealth and the tools to help educate you on your financial landscape. So last week we had our water pad episode where we pitched CrowdStrike and PayPal as long term buy stocks. You know, we think every growth investor should have in their portfolio, and they have come off quite a bit even since we pitched them, which I guess for us seems like a good buying opportunity or, in our case, an opportunity to top up. Now, if you thought our last episode was exciting, well, do we have a special treat for you today as advisors? There is one particular event held each year which we both really look forward to, and that's the Sown Hearts and Minds Investor Conference, which was actually held on Friday, the 3rd of December.

Candice: [00:00:55] That's right. So it's that one event in the calendar that we really, really look forward to. We clear the diary with everything else and we just focus on the conference. So investors gathered alongside everyone else online because it was virtual because of Covid. Again, the sown hearts of my Australian conference and investors there, I guess they really saw a clear, dominant theme. I would suggest Felicity, which emerged from the post-pandemic world that we're kind of leaving now. And I thought that was disruption occurring almost everywhere, you know, disruption in tech, disruption in how consumers, you know, have their perception or certain platforms and, you know, goods and sales. And that ranged from restaurant apps to cryptocurrency to food delivery apps to beauty treatments and the fund managers who were pitching their next big stock ideas. They were really, in my opinion, looking towards a marketplace where it was more about convenience, and the big thing was speed was king. I thought that was a big message that everyone kept talking about. So in a world post, lockdowns hopefully crossed the fingers. That's in 2022. It's really accelerated the use of everything going digital, you know, platforms going digital, consumer behaviour like I mentioned, the trend to just go digital everywhere I thought was the key investment for Matic for the day. 

Felicity: [00:02:10] You know what? I agree with that speed is king. I mean, I can give you a good example, right? If you get your coffee in Sydney CBD, you're literally waiting. I don't know, 30 seconds, one minute. But when I get my coffee, you in my local, I'm waiting five to ten minutes and it's less busy. So I except for one, which is fantastic. One coffee shop. But it just makes sense. 

Candice: [00:02:33] Yeah, no, right? So when your you feel like your time, when you're waiting that five minutes, which is really not that long, right? For your whole day, I just don't like. Yeah, so this is a question for you. What are you doing that? Are you on your phone using different platforms? 

Felicity: [00:02:46] You know, usually I'm on my phone. I could be listening to a podcast, listening to hours. Actually, most of the time, I'm just cuddling my little puppy because he's all right. 

Candice: [00:02:57] Yeah, because I think I think that's what we do now as humans. We have this tendency. We think we're running out of time and you end up going on your phone and you're scrolling on platforms. So you might be flicking like, Okay, what am I going to change my order for HelloFresh next week? Right? That was actually a stock pick from last year in 2020. So not as 

Felicity: [00:03:16] well as it your go through, which is pretty 

Candice: [00:03:18] good. Yeah. So everything now is available in our hands and we demand it now. 

Felicity: [00:03:23] That's it. The click of your finger. Yeah. So I guess if you missed the event, don't worry, we've got you covered. The star of the show is Charlie Monga, and he kicked off today and he touched on his experience investing in capital markets in the lessons learnt, investing alongside his business partner Warren Buffett. Now, don't worry, a little later on, we will cover off this wisdom. And after Charlie, we heard from 13 presenters with one fund being brave enough actually to pick a post-COVID a loser pitching a short bet in the longest bull market on record.

Candice: [00:03:54] Yeah, that was controversial. I remember the last couple of it's own heart, so is at least two shorts, but this time interesting only one. But you've got to be very brave to be a short seller in any market, right? So 100 percent. And so as always, guys, our chat today, it's not considered personal advice, even though we're registered financial advisers at showroom partners. So please note, this podcast and content discussed does not constitute financial advice, nor is it a financial product. As always, if one of these stock ideas, you know it sounds interesting and you want to add to your portfolio, it's general in nature and you should seek professional, appropriate advice before making your decisions. We are going to go through the companies that were pitched at the Southern Hearts 2021 conference so we can talk about some of the balance sheets and et cetera. But all the companies that we're discussing on our show today are offered in good faith based on the facts known at the time and don't contain all relevant information in respect to the financial products to which they relate. 

Felicity: [00:04:50] Okay, now that that fun disclaimer is done before we get into the companies, let's give you a quick rundown of what sign. Hearts and minds Investor Day is all about. You might have. Heard about it, you might not. But essentially, this event takes inspiration from the US event, and it's hosted by Hearts and Minds Group, which provides a concentrated portfolio of the highest conviction ideas from leading fund managers while providing funds to Australian medical research. Now it's actually a listed investment company or a leak. Hearts and minds investments, and it's actually one on the ASX now. It's donated over three million to these charities that they support, which is amazing. 

Candice: [00:05:28] It is incredible what they do. They actually donate one and a half per cent of all their NCTA of the link to the charities I support, which I think is fantastic. And on top of that, all the funds in their top ideas are donating their free time to to pass on this amazing leak. So since it listed in 2018 of November 2018, in fact, it's actually outperformed the index. So it's benchmarked against MSCI World Index, which that index has performed sixteen point seven. And as of their October 2021 report, the Hearts and Minds Lessees actually performed twenty four point four per cent. So that's a great alpha that it's generating. 

Felicity: [00:06:07] Yeah, definitely is. 

Candice: [00:06:09] If you haven't heard of it, we encourage you to look it up on your investing apps. 

Felicity: [00:06:13] Exactly. I guess investing in the LIC means you don't have to pick one of these individual ideas, correct? You get the overall. And what we wanted to actually go through is give you a little bit of a recap of the picks from 2020, which was held a little earlier on November the 13th 2020. You know, kind of discuss how they're, you know what price they were pitched at, what they are today and kind of what their high is because we want to help, you know, get you to understand the market is quite volatile, right? When you're invested for only a year, there's a lot of peaks and troughs. So the first one was CSL. The ASX darling, which we've all heard about, really needs no description. So that was pitched at $309 and 46 cents. Today, it's actually down. It's $296 in 29 cents with a 52 week high of three hundred nineteen point seventy eight cents. 

Candice: [00:07:04] Yeah, that's interesting, right? And you think like a healthcare stock will just kill it in the pandemic markets, but it's obviously been volatile and it's that, you know, CSL and CBA here in Australia always compete for the number one position in terms of market cap. So it's not a small company we're talking about. 

Felicity: [00:07:22] And I think as we go through the list, we're actually going to find that healthcare hasn't done as well as we thought it was going to do. 

Candice: [00:07:30] Yeah. And the theme for 2021 was more the disruptors online platforms, not necessarily these companies yet making earnings, but the story's all about the growth. And I think the stock that one in 2020 is another pandemic platform business that just has accelerated because we're all working from home. So the next stock, which was pitched in the 2020 round, was T mobile team US on the Nasdaq, the code for that one. And essentially, T-Mobile is the U.S. version of Telstra. It's a massive telecom over there, and it's been the only carrier in the U.S. to deliver 5G across the US economy, and that was pitched at $128 and 23 cents, and today it's around $115. So you could argue it hasn't really moved. But the 52 week high was one hundred and fifty dollars and twenty cents. 

Felicity: [00:08:20] Yeah, that's really interesting. And I guess here's another healthcare which is on the Hong Kong Stock Exchange, which we all know has been hit, you know, heavily over the last couple of months, which is really unfortunate. It's ping and health care and technology. Now this is one of the most sophisticated players in AI and digital health, and its share price, you know, they believed, could have gone five to ten times more in the next five years, which it still could now is pictured 103 Hong Kong Kong dollars. It's actually now 27 Hong Kong dollars. Yeah, with a 52 week high of one hundred and forty eight Hong Kong dollars. So you see that huge decline after everything that's been going on in the Chinese economy. 

Candice: [00:09:06] Yeah, but like you said, this was I remember when he pitched it, it was a two to five year play and it was really talking about that. They don't have a concentrated and organised marketplace for health care in the Asian markets, and this business is addressing that. So I still believe in ping and but it's super volatile. 

Felicity: [00:09:25] I agree. I actually think that this is not based on the business and the company. It's just based on macro factors rather than the company actually being a bad investment. Yeah. 

Candice: [00:09:36] And I guess whenever it's still there, the caveat you have to consider as an investor, when you go into emerging markets, you still have a lot of regulatory risk. You still have a lot of political risk when you invest there. So you've got a you've got to know the company, you've got to do it and you've just got to, I guess, have the conviction if you think it's a good company to stick it out when it's volatile, the next company that they mentioned. In the 2020 rounds of Sony Arts was another Asian stock. So there was a lot of Asian stocks last year, we noticed, and that was the next one was Nintendo. Probably everyone's really familiar with that doesn't need an introduction. And that was pitched at fifty four thousand four hundred eighty yen. And today it again hasn't really moved. And it's now sitting around 50000 640 yen. But it did have a bit of a bull run halfway through the year, and the 52 week high was sixty nine thousand eight hundred thirty yen. So I think Nintendo is another one that's kind of a no brainer, in my opinion. I put Nintendo alongside, you know, stocks like Disney, and I think these types of that's a big call. It is a big call. Even Disney's come off lately, too. 

Felicity: [00:10:45] Everything has, but 

Candice: [00:10:47] these platform gaming, you know, very much the next generation. I think of gaming. I think these companies will stick around and they will perform well. I would hold Nintendo, in my opinion, for at least five, 10 years. 

Felicity: [00:11:00] Yeah. And then we have Fisher and Pickle again. So the Coyotes mph on the ASX pitched at 31 92. Today it's 31 to 52 week high, is 34 29. This didn't really do much, either in this kind of falls again in the health care space. 

Candice: [00:11:18] Yeah, a lot of people know Fisher Paykel as the kitchen appliance business, but the stock was pitched because it was talking about they were making the ventilators to help with the COVID pandemic in the hospitals and also the portable ones that you can take home to help with, like sleeping problems and breathing problems. So I thought this was a good company when they pitched at the time. And that's the thing. When you sit down at the Sony Arts Minds conference, you think every business is a winner. Everyone's a winner because they're so good at convincing you. But then you've got to take a step back and look at the balance sheet, right? Or or the earnings of whatever it is. And the next company was another Asian company, Shen Xue International, and that was pitched at one hundred and thirty five Hong Kong dollars, and it's now 151 and 30 cents Hong Kong dollars. So as of right now, it's actually up. Around the 52 week high was 207 Hong Kong dollars, 

Felicity: [00:12:11] and so this one was more in the manufacturing. 

Candice: [00:12:14] Yes, it was. It was apparel. 

Felicity: [00:12:16] Yeah, which is quite interesting.

Candice: [00:12:18] So a comp to Nike, I guess?

Felicity: [00:12:20] Yeah, which that seemed to do well. They may have got year so pronounced yee ca. That's hilarious. You go yee or yee ha. Well, we were saying yee ha at one point in the year 

Candice: [00:12:34] because it was going so well. Now we're going, you know? 

Felicity: [00:12:37] Yeah. So the code is nine nine two three on the Hong Kong Stock Exchange. Now again, technology platform that sits smack in the middle of China's flourishing mobile payment system, where a string of competing payment services such as We Pay and Alipay, compete at the merchant terminal to service online shoppers. Now this is pitched at thirty seven Hong Kong dollars today. It is a sad 25 Hong Kong Dollars. But the 52 week high was 122 Hong Kong dollars. So that's when we were cheering. Yeah. Again, I think a really interesting business, one that we still have in the portfolio and we're actually looking to double down. 

Candice: [00:13:16] And that's because it is essentially the A.I. business in the QR code business behind everything there. So particularly in Asia, you have an open wallet concept in how you purchase goods in the Asian market. 

Felicity: [00:13:29] So it's all on their phone, right? Everything's all in 

Candice: [00:13:32] exactly. You open up and you can pay with QR codes, bitcoin, traditional credit card cash, whatever it is. So, yeah, I still think it's one to watch, in my opinion, 

Felicity: [00:13:41] and just hit because of, you know, the Chinese technology crackdown, which I think is only temporary. 

Candice: [00:13:47] Now, the next one was probably another familiar one for Aussie listeners Temple and Webster TPY. And the ASX was is the code for that one that was pitched at nine point ninety eight on the ASX and today's around ten point twenty, but the 52 week high was around $15. So this one also is kind of a little bit of a no brainer. Now in hindsight, 2020, so to speak, because everyone was in lockdown and were continuing to to shop online to improve their home because that's all we could do. We could just be at home. 

Felicity: [00:14:17] We're seeing a little bit of a, I guess, a theme here that consumer discretionary seems to be doing well versus health care. All right. Right, right. Then we've got Treasury wine. So again, consumer discretionary, yep. Or compulsory in our in our opinion, so pitched at nine point eighteen. I mean that churches had quite a hard year. Today, it's $10 three, but it actually hit a 52 week high of 13:34. So it really surprised me, Treasury over this last year. 

Candice: [00:14:49] Yeah. And then if you look, if you remember, like three or four months ago, might have even been longer. I mean, where is this year gone? Remember when the Chinese economy came out, Felicity, and we're increasing their tariffs on. A lot of the soft commodities Treasury got smashed in that time along with like A2 milk. But a company that never really got smashed, which was the winner of 2020 CNN's stock picks was Buildcon. So Bilel on the Nasdaq on the New York Stock Exchange is the code that was pitched it as small $95 and 24 cents at the time. And today it's trading around $232. So that's the winner, winner, winner, chicken dinner, that is. And the 52 week high for the year was just shy of $350. It reached $348 and 49 cents. So that's definitely the winner and that was pitched by. I'm going to say his name. Wrong? Sorry. Buy back if you're listening back. But you are back back this year for 2021, and he's from Cota Capital, and I really was looking forward to his stock pick that he had this year around. 

Felicity: [00:15:51] Yeah, that was fantastic. And we've got a couple of happy clients in that one. Then another one that's actually done very well that you would have thought was maybe boring, maybe not boring, but you didn't expect it again. 

Candice: [00:16:05] It was like a shock when there was a 

Felicity: [00:16:06] shock when we were like, what? And a consumer discretionary again. So it's actually target, say TGT on the New York Stock Exchange. It was pitched $162. Today it's $242 and the 52 week high $268. So target. Interesting. Yeah. 

Candice: [00:16:26] Bull's eye. Bull's eye. And and I remember the fund manager was saying he was very bullish on target because they were very clever in the U.S. at targeting the click,

Felicity: [00:16:36] click and collect. Was that yeah, 

Candice: [00:16:37] click and collect. Yet they were the first kind of movers in the US to do that in the Covid world. And just like we're talking about all the consumer discretionary stocks, what can we do? Last year and this year we sat at home, we bought stuff online and it got delivered to our homes through Amazon, or we drove out for a little adventure every day to click and collect. So another one that I actually use and I mentioned earlier and it's done really well, in my opinion, is HelloFresh, which is HFC, and that was pitched at $43 and 56 cents. Or sorry, I should say euro. And today it's 82 and 34 euro, and the week 52 week high for the year was ninety seven and a half. So that one's done really well again. Similar pandemic lockdown kind of consumer discretionary theme. 

Felicity: [00:17:27] And then we had slack or work on the New York Stock Exchange, which is actually no longer there. So it was pitched at 25 75 today. It's, you know, it was taken over by Salesforce at a share price of 26 79, and you also received point zero seven seven six shares of CRM or Salesforce. Now, if you equated that to the share price, it'd be about a profit 45 86 per share. So a great profit there on that takeover. And again, very happy clients in this one. 

Candice: [00:18:02] And that was like, very controversial. I remember when Salesforce made the offer at the time, Slack skyrocketed in the share price, and Salesforce went down because everyone thought the market, in their opinion, they'd pay too much. But now 27 billion? Yes, twenty seven billion us. So look, no brainer for Salesforce. They're just eating up, you know, the CRM market. Share that one there. So the next one was another health care kind of telehealth stock pitch by Cathie Wood. And this one was controversial because Cathie, the previous year in 2019 pitched Tesla and from memory, Tesla was, I think, around, you know, less than $100 us per share, and now it's over 1000 bucks again. So she came out strong going, look, I pitched controversial last year. I'm going to pitch another controversial and so Teladoc is what she pitched. And that was TD AOC on the New York Stock Exchange. And she was pitching it around $183 us per share, and it's dropped quite a bit. It's been volatile and now it's trading around $94 us per share. But at some point in the year, she was killing it and she was getting it so right because the 52 week high was three hundred and eight dollars us per share. So I guess to summarise before we jump into 2021 and how the event was in our opinion and the highlights in the companies we want to chat about, we wanted to demonstrate that you shouldn't really, I think, be concerned in a very volatile market. It's important to not look particularly every day, you know, look less in our opinion. And when you find a really compelling argument or really compelling business that you think is, you know, kicking it on on all the metrics in your opinion and it suits your portfolio, really look for over more than one year, you know, more like three to five, ideally five to seven is what we say when you want to invest in equities, 

Felicity: [00:19:56] yeah, exactly that. You really need to take that longer term view. And not be so short sighted. I believe, I guess, if people were short sighted on Tesla, yeah, a couple of years ago, they'd be kicking themselves now. Right? Correct. But before we hear this year's conference picks, we are going to hear from our sponsors. Okay, now let's get our thoughts on this year's conference and pick so Candace, what were your thoughts on Charlie's interview?

Candice: [00:20:28] So I really enjoyed this part of the conference this year because obviously, Charlie, you know, he's he's the legend when it comes to investing. And the first kind of question that was pitched him was how is he fighting the current market conditions? And, you know, I thought he was going to say, Oh, look, there's lots of investing opportunity. Still, you know, he's an investor, right? So he's always thinking, bull. But he actually said something like it's even crazier than the dot.com era, in his opinion. And I think he was referring to valuations at that point. And I think from his perspective, he's been around for, you know, decades and he's seen all these different peaks and troughs. 

Felicity: [00:21:06] Ninety seven years, 

Candice: [00:21:08] yeah, 97. And he's still got it. Like, he was still pretty sharp. I thought, Yeah. And and so he's seen all these different crashes and all these different cycles. But I still think he has that old school mentality a bit. He's still of that value investor, which, you know, I actually I'm a bit like that old school, as you know, Felicity. So then I thought, You know what? It's not shocking me now. I think about it that he doesn't have interest in these wildly, overly valued stocks and companies, in his opinion. And he was saying he thinks they're ignoring fundamentals. It's all about the growth story. It's not about the earnings. And I thought that was really interesting to his point, and there was a couple of quotes that I'm just going to bring up that I wrote down. And I think this really sums up Charlie's opinions in the market at the moment. So firstly, he said, I think all successful investing is value investing in the sense that you're trying to get better prospects than you're paying for. And then the other quote that really stood out to me was, he goes, There's no great company that can't be turned into a bad investment just by raising the price. So what's he's saying here is he's saying Tesla, let's use Tesla Ren. He thinks Elon Musk's he made a comment about that dream of what he was saying. Yeah, he was saying like, Look, he's he's a bit crazy, but he's a brilliant man. He did say, and he's very future forward thinking at the time. But Tesla up until recently wasn't making a profit. So the price valuation of a Tesla was just ridiculous on a p multiple. So you can turn any good company into a bad investment if the price doesn't justify the underlying earnings. 

Felicity: [00:22:47] And look, I think what was also really important to mention on the on that point is that Charlie believes that the great companies of the world have already been discovered and that they're expensive to buy. You know, perhaps the next 1000 bagger hasn't actually been listed yet, or perhaps it actually is a micro cap that no one's really heard of. I mean, we'd love to hear your thoughts, and we're actually going to post a questionnaire about this on Instagram on Friday because I don't necessarily think that's the case. I think there are some potential thousand baggers out there. And I think we know a couple of them. [00:23:22][34.8]

Candice: [00:23:22] Yeah. And he and to that point as well, he was saying the younger generation, the millennials and those Typekit doesn't understand them. No, he doesn't understand that. And he was saying, you know, the millennial investor these days are very optimistic. They do think they're going to find the next 100, 200, 300000 bagger. And then with so much wisdom and I guess, longevity in the market, he's gone. Not they're already out there. It's funny how he's a bit more pessimistic than we are. [00:23:48][26.0]

Felicity: [00:23:49] But then the thing is right, do you look historically right or should you be looking at the next gen and what they're using, what they're thinking? And I think this probably leads us to your next point. [00:24:01][12.0]

Candice: [00:24:01] Yeah. Well, the next gen, right, you could argue, is the cryptocurrency market. And when he was asked his thoughts on that economy, he referred to the industry as self-serving entrepreneurs that only think about themselves. He really didn't want any cryptocurrency person in his family. He was saying, [00:24:17][16.0]

Felicity: [00:24:18] I think that's what most people think about millennials, right? [00:24:20][2.6]

Candice: [00:24:22] Yeah. And he and he was so negative on it which again shocked me and he goes, I wish they never had been invented. He just. And it also was pretty clear that he sticks to his knitting. He doesn't understand cryptocurrencies, and he's he's cool with that and he goes, I just don't get it and I'm not interested. [00:24:36][14.2]

Felicity: [00:24:36] Yeah. And look, I think there probably is another good point that we can take it a bit differently. We can say, All right, understand you don't understand crypto. You're sticking to what, you know, perhaps as an investor, you should stick to what you know. [00:24:48][12.1]

Candice: [00:24:49] Yeah, right. Definitely. And that's what him and Warren, as lessons learnt, they kept saying, You know, we are so successful what we do because we know how to value a company in the way that we do it. And we have a tried and tested model and we just stick to inning. That's what he kept saying, and he was very humble about that. [00:25:06][16.7]

Felicity: [00:25:06] Let's just hope that's not the case for our crypto loving listeners. Yeah, exactly. [00:25:12][5.7]

Candice: [00:25:13] And the conversation then moved. So he went from the negative kind of territory in crypto, and then he went back into the positive territory and he was super positive. On Costco and their ability to reduce prices because of their strong purchasing power. They just dominate the market over there in the US. And in fact, globally, right? And he sees its future as really an internet force. So I guess similar to the 2020 pitch of Target, you know, he was Charlie was arguing. Costco is going down that route and it's a competitor from hell, in his opinion against all the retailers. And he kind of likened it to Amazon. And he was a big admirer of Jeff Bezos and his achievements. [00:25:51][38.5]

Felicity: [00:25:52] And he actually said that Amazon should be scared of Costco, really, which was an interesting point. But I guess what is also interesting is Berkshire Hathaway actually sold their full position of Costco in June 2020, pocketing a nice 1.3 billion. Now we all know that Charlie still a Costco director, so it was a very interesting move there. I guess what is also very interesting is that Apple is actually just under 43 per cent of Berkshire Hathaway's holdings, with a value of 125 billion. So again, loved Costco not actually invested in it in their main fund now. But I think he does still hold it personally. But that was quite interesting, [00:26:34][42.2]

Candice: [00:26:35] and I'm so happy that they have that much apple because I'm an Apple shareholder from way back when, and that's just super happy news to know we love [00:26:42][7.0]

Felicity: [00:26:42] Apple. [00:26:42][0.0]

Candice: [00:26:44] And then the conversation kind of shift to a bit more of the Australian listeners because obviously it was a sonar Australian conference, and he was asked on his thoughts on this trillion and China relationship. And what was interesting was Charlie is a major supporter of renewable energy. I didn't think that was controversial when he said that statement, particularly wind and solar, and he thinks Australia is in a really good position to hone on our renewable energy sources. [00:27:09][25.3]

Felicity: [00:27:10] Yeah. And I think that makes a lot of sense for Australia. I mean, we're surrounded by states, you've got the wind, we've got so much land, so much sun. We should really be leading the way. I believe in wind and solar energy. [00:27:21][10.7]

Candice: [00:27:21] Yeah, and it's a shame we're not. But that's okay. That's another topic for another time. And we did kind of cover that last time, right? Yeah. But so he was a massive advocate in the replacement of coal, in his opinion, and petrol and diesel and, you know, suggested Australia should sell its minerals and continue to strengthen the relationship with China. And so one quote there, which I took away was very interesting was, he said, I think Australia was very lucky to have China get so prosperous when they did. And it's actually been a blessing for Australia. I agree with that comment. And I think Australia, with its deep involvement in China, can be in a constructive position. And he I remember he was saying it was actually doing a better job managing their relationship with China than the US and China. So look, I took that comment as he's still very bullish on China, which was a major theme for the 2020 round of sewn hearts. And then it kind of led to him mentioning a stock that I'd never heard of. In my opinion, I had to actually look it up, and it's bid company in the code on the Hong Kong Stock Exchange was 12 11 and it's 105 billion US market cap. When I started doing some research, I discovered that these company researches, develops and manufacturers rechargeable batteries that are lithium ion based. So it kind of leads into his ESG conversation that [00:28:42][81.0]

Felicity: [00:28:42] space that we're very interested in. So this could be one for us. [00:28:46][3.3]

Candice: [00:28:47] So that was a good little tip. Thanks, Charlie. And and so BYD Co. what they do is they basically sell these rechargeable lithium ion batteries for cars and mobile handheld devices. So I think that's an interesting business to look at. And the price target on a consensus 12 month looking forward is it's going to reach three hundred and eighty points and in the Hong Kong market. So that's about 34 per cent upside. So I'm going to do more research on that one, and I'll never know. It might come on the order pad one day [00:29:16][29.7]

Felicity: [00:29:17] and it could, you know, you need to look for large moat companies with a great competitive advantage, which makes it really hard for any competitors to come in. You know, we discussed this with CrowdStrike and PayPal, you know, avoid overconfidence, earnings and company outlooks, but sometimes you also need to look through the noise. Now let's actually dive into the stocks pitched at the event, taking a little bit long to get here. [00:29:39][22.2]

Candice: [00:29:41] But we made [00:29:42][0.4]

Felicity: [00:29:42] it. We made it. So we know it is there. A few key sectors and themes mentioned by the fund managers, those being discretionary ledger technology, disruptors, cryptocurrency finance and finally, industrials and logistics. [00:29:56][13.9]

Candice: [00:29:57] Yeah, that's right for city. So in the first sector category of like leisure, as Americans say, or leisure or discretionary spending and of the present up was from techni capital management. So Felicity, what was this stock that was pitched? [00:30:09][12.5]

Felicity: [00:30:10] So this was actually Berlin based restaurant app delivery hero was his top pick. Quoting the stock's wide valuation discount to its peers, you know, in which? One of his peers was Gorilla now, in his opinion, delivery hero is enjoying the boom in last mile logistics of takeaway food. You know, in Italian clothes, in a business where scale is critical, you know, volumes have risen significantly. I'm probably one of those consumers. Well, profitability is improving. Losses have been huge, but it didn't actually seem to faze him. Now he has a really strong track record of picking winners. You know, he absolutely loves the management team, and he loves the fact that its founder led. The shares have actually dropped 15 per cent in this past year. But this could actually be a buying opportunity and perhaps, you know, sees it as even tripling. I mean, I had some notes down that he was thinking he had the potential with 300 500 percent return. So I thought this was a really interesting pick in last mile delivery. You know, it's expected last mile delivery is actually expected to reach us sixty two point seven billion with a cargo of eighteen point nine per cent by 2027. So he believes it's best placed for this theme. [00:31:23][73.5]

Candice: [00:31:24] Yeah, and I think it had grown 65 per cent this year. It's in 50 countries. I think from the quotes that I was writing down, it was one point seven billion customers. It was the best app in 90 per cent of the markets it operates in, which is four times larger than the app that's in second place. And what really shocked me was they are processing 260 million monthly orders every single month. That's insane on the platform. [00:31:50][26.2]

Felicity: [00:31:51] That's it. And the price now is actually ninety nine point eight euros. [00:31:56][5.3]

Candice: [00:31:57] What's rounded up to 100 year? [00:31:58][1.0]

Felicity: [00:31:58] OK, let's just say it was 100, so the price now is 100. And he thinks the price target is going to be [00:32:04][5.7]

Candice: [00:32:06] seven hundred, wasn't it right? Yeah, I know that's a bit that's so bullish, so bullish. [00:32:10][4.6]

Felicity: [00:32:12] But overpays offering, if we actually look at the 12 month consensus price target of other analysts, it's 166 euros. So sixty six point five percent upside, but more realistically. Yeah, but you never know. You never know. [00:32:25][13.2]

Candice: [00:32:26] You never know so that you would have had if you if you're interested. And then the next one was one of my all time favourite presenters, Hamish Colette from Te Deum Growth Partners. This guy pitched slack last year, and this year he was actually doubling down on his 2019 stock pick, which was Spotify, which is one of my favourite companies that I personally own. And he reckons the firm is even more attractive now than when he was talking about in 2019, because basically it's in pole position in the audio and in particular podcast market. And he really does stick by his guns, and he thinks it's going to be the next FAANG stock to join. So he's talking about Facebook, Apple, Amazon, Netflix and Google there. So I guess he called it fangs with the S at the end. [00:33:10][44.3]

Felicity: [00:33:10] Yeah, and I agree. I mean, audio books, I think, was one of the main things that they were going to get into. This was one of my favourite picks again and we thought, you know, we've got a lot of clients invested in this one, too. [00:33:20][10.3]

Candice: [00:33:21] And he was he was more arguing the fact that it's got 400 million users on the platform and expects it to be reaching over a billion users in the next five years. So he's not thinking 12 months, he's thinking five years. Plus, there's also obviously risks involved, which he went through. But overall, I think this was a really standout stock for the year, and the stock code is spotty. No brainer. The market cap is 43 billion, U.S. last traded price sitting around $232, and the 12 months price target is around $305 USD. So that's kind of 31 and a half percent upside. [00:33:54][33.5]

Felicity: [00:33:56] Yeah, so a bit of a no brainer. I mean, everyone uses Spotify. All right. [00:33:59][3.5]

Candice: [00:33:59] Yeah. And and and that that particular firm is always in the no brainer large cap tech stocks, in my opinion. Yeah. So what was the next one for the city? [00:34:08][8.4]

Felicity: [00:34:09] So the next one was Joyce Meng of Fact Capital. So she actually pitched a Nasdaq listed beauty health company called Beauty Health Co., whose core Hydra facial product is gaining traction from social media. Now, she actually sees the company's strong organic growth continuing, even after the share price more than doubled this year and trades at a whopping 38 times normalised profits. Now, Beauty Health knows people want to look great on Zoom, calls it Instagram posts, and the core asset is a skin treatment, which is popular at Beauty Spa and costs around $200. Now the code is skin NARS, which is quite. I love it. I love that. Easy to remember, market cap is 3.4 billion, so quite small. Moss traded twenty two dollars and 12 month consensus price targets $32, so roughly 40 per cent upside. Now what about you, Candace? What's the next one? I think this is a bit more of the controversial from Phil King of Regal. [00:35:11][62.1]

Candice: [00:35:11] Yeah, this was the only short to be pitched on the day. So Phil King from Regal, who is the CEO there he was negative on. Light sent a group, and he was really kind of saying ahead of the economy's reopening, he thought it was way too far ahead of the reality of the Covid kind of world that we live in. And he believes the Australian firm still faces major financial challenges, and it was the only short. So as I mentioned, that was pitch on the day, and he was arguing the price recovery is based on the economy reopening. But the company has rapidly reduced its store numbers to manage costs. I mean, yeah, that makes sense, and it will never return to its past glory days. Airlines will pay fewer kickbacks and a major source of the past revenues, and it's going to face far more competition from digital rivals. I think also another point that I don't remember him saying, but I think I mean, I would agree and I've been reading a lot of market data on this is that corporates aren't just not paying the amounts that they used to to fly their C suites, for example, to overseas markets or local areas for boardroom conferences that people are just doing. We don't need to anymore. That's right, people doing it on Zoom. I do agree that the recovery is going to be a bumpy road for the travel and tourism sector, and Flight Centre is unfortunately caught up in all of that. So that's interesting one to watch. [00:36:28][76.5]

Felicity: [00:36:28] And I actually think with this one to think about it when you book a flight, I actually just book directly with the airline. [00:36:36][7.3]

Candice: [00:36:36] Yes, I am. I don't use Flight Centre or any of the other aggregates out there. No, I think it's more of an older generation thing and in particular, like, Oh, I'll use the my example of my, my, my nan. She uses a travel agent because she has a long relationship with that travel agent like, you know, worked for her for 20 years. And so the shares interesting for Flight Centre, they actually fell about four and a half a cent when the person on the ASX. And then so coming back to the earlier part, [00:37:06][29.5]

Felicity: [00:37:06] maybe close to short, they [00:37:07][1.0]

Candice: [00:37:08] were coming. It's interesting to watch the stocks during the conference, like how they train and then coming back to to Charlie's earlier comments. You know, he was asked, Would you rather own an airline or an airport? And he said, No brainer airport. You want to own the real estate, not the airline. So now the negative in the travel sector. So if you're looking it up, it's felt on the ASX three and a half billion market cap last traded price was around $18. It's actually up five or so per cent today as of our recording date, which is the 7th of December 2021, and the consensus price target is nineteen point sixty eight, so roughly 14 per cent upside. So I hope that doesn't happen for Phil. I hope it goes the other way. So is short is is legitimised and it's actually short at the moment, 13 per cent in Flight Centre. So one to [00:37:57][48.9]

Felicity: [00:37:57] watch. Interesting. And then we have the next sector tech. So Jay Conn from Flight Deck actually pitched bingo for which was described as Japan's DocuSign and changing Japanese regulations, have created a movement to electronic signatures. So it's cloud fine products said again. Its cloud sign product is in the early stages of adoption, while the company has a legacy business connecting lawyers with clients, Flat Deck Capital founder Jay Khan sees a big opportunity for website services firms. He sees big potential and pitched his belief that the Tokyo listed firm will become Japan's equivalent of DocuSign, especially after the government relaxed regulations on signing methods. You know, the shares have actually fallen thirty six per cent this year. That was really interesting, and obviously this was before DocuSign came off. Actually, sorry. No, it wasn't. This was the same. This actually played or presented the same day DocuSign came off about 42 per cent in the US overnight, which was very interesting. I still don't think that DocuSign and bingo for a purely Covid place. I do think the world globally needs to move to e-signature. So, you know, I think maybe a bit of short term pain here. We've had it with Nitro, we've had it with DocuSign and you know, this company as well bingo for. But I believe we need to move this way for the future. So the stock created six zero two seven on the Japanese Stock Exchange. The market caps 138 billion. Last traded price was six thousand two hundred forty yen and 12 month consensus price target is actually ten thousand seven hundred eighteen, so roughly 72 per cent upside. That's pretty good. [00:39:50][112.3]

Candice: [00:39:50] Yeah, that's that was a big bull when we did our research on it. So next up, we had Eleanor Swanson from Fire Trail and was great to see a female fund up there. I was like, Go women with her. [00:39:59][9.1]

Felicity: [00:40:00] Yeah, that's it. [00:40:00][0.7]

Candice: [00:40:01] And so she pitched a company which is listed here in Australia. It's a tech business called Megaport. AMP One's the code. You may be familiar with it. And basically, it's a tech solving business that connects the problems with a fast and flexible telco network offered at competitive prices, in her opinion. She thinks that it has very little cost. Stammers and they can scale up really easily and supported by like a sales force kind of CRM push, which we know is a rapid growth in the adoption of the future years to come. [00:40:30][29.0]

Felicity: [00:40:31] I mean, what did she say? Didn't she say that this could potentially be the largest telecommunication company globally? [00:40:37][6.4]

Candice: [00:40:38] Yeah, she did. And she was also kind of locking it to the success stories of Afterpay. So she was very bullish on this stock. And P1 shares are actually up 44 percent this year. So you could, you know, it's great to be a bull when the share prices perform that well. But she was the way she kind of pizza stock. She really grabbed me because she was talking about how she was reading a lot of interesting books in lockdown, and it's all about the story you tell and everything like that. And she was very compelling at selling the story of empty one, I thought. But she does think that this share price can double from where it is now, and she's going to hold it, she was saying long until the end of 2022. So it's a market cap of three point three billion. Doesn't sound like a lot here in Australia, but that's that's pretty up there for our tech companies. And the last traded price was $21. The consensus, which shocked me when I did research on this company after the event, is actually nineteen point eighty eight. So roughly, you know, kind of three or four per cent downside from the current prices. So interesting to watch that one. [00:41:39][61.0]

Felicity: [00:41:39] Yeah. So I think this one had a bit of the execution risk, right? So there were kind of executing into new markets. So I think one to watch and perhaps will do a little bit more research on that one, I reckon. [00:41:50][10.1]

Candice: [00:41:50] So what was the next one then? [00:41:51][1.0]

Felicity: [00:41:52] Okay. So the next one was Nick Griffin of Munro Partners. Now this is actually Nasdaq listed and it's called on Semi. Now one of my favourite thematics specialises in the semiconductors that will power many of the major technical shifts to electric vehicles, transition from fossil fuels, renewable energy recycling and waste disposal now and autonomous electric vehicle. We're quite up to us 6500 of semiconductors versus only US 375 in an internal combustion engine. Now, one semi has quality management, and it's priced at only 20 times earnings, more like an industrial rather than a tech company. So that would be tick value from Charlie. Now, Nick argued that businesses like on Semi will become more important as the world races towards decarbonisation. And he said its products will likely power most of the major shifts, from internal combustion engines to electric vehicles through to the transition from fossil fuels to renewables. Now this is one of my favourites, and it's definitely going to be on the buy list now. The code is open on the Nasdaq market cap is twenty six point six billion, last traded at sixty one dollars, and a 12 month price target is only sixty three point only two per cent upside. So I think the market's missing this story, potentially. [00:43:13][81.6]

Candice: [00:43:15] Yeah. And when we were doing research on it was interesting. You and I noted that not a lot of coverage on this stock. So maybe that's another reason why the PTA is kind of whether the market is the moment. But I agree that was a really interesting, compelling story. Semiconductors bit of a no brainer. Supply supplied in. Yeah, and in the ESG space as well. So next up, we had a very interesting company which was pitched by another global US fund manager firm, and that was GitLab. So on the Nasdaq and its software development company, which operates a platform for the DevOps industry of software developers, so it allows developers essentially to go through DevOps processing using a new kind of emergent standard, much like a lesbian. If you think about that business and it's created a core part of this new platform software, so GitLab focuses on the next phases, and the founder of the fund manager, Jen, said the firm is in particular he thinks it's a duopoly with Microsoft's GitHub for the fastest growing DevOps industry within the software development business. So this was a really interesting one. I thought it made me really want to look up the company more. I've only just done a little bit of research on it, but what I did find was that it's a $4.7 billion market cap. GitLab on the Nasdaq is the code last traded price was $89. And this is what really started to trigger my interest was. It is widely covered. There's quite a few brokers on it already, and they think the 12 month forward consensus price target is $135 and 67 cents us per share. So that's 52 and a half percent upside. Yeah. So I likes this company. I want to do more research. [00:45:05][110.3]

Felicity: [00:45:06] Yeah, that was definitely another one because I guess when we go through our top three, right? What I liked about this is it focussed on all three dev ops market rather than Atlassian. He just focuses on one section on market. So it seemed like, you know, a three in one, [00:45:22][16.3]

Candice: [00:45:22] and I think also when I reflect back on the slack pitch and they were really focussing on the one sector market and then Salesforce came up and bought them out. I was thinking when I was listening to Glik lab that perhaps this could be a takeover conversation, another big player like Atlassian. I don't even know maybe Salesforce about who knows. Amazon. Anyone would buy them really interesting. [00:45:45][22.6]

Felicity: [00:45:46] And then we had some crypto, which was Gavin Baker. He actually pitched Coinbase Global, which is a cryptocurrency exchange, tapping into global growth using Coinbase Cloud. Now it's a Web 3.0 application development on blockchain, which will be disruptive technology for the coming decades. Now, I really liked this business, and I understand why he believes it's a good investment because it doesn't really matter if cryptocurrency is going up or down. People are buying and selling on this exchange. So, you know, you take away, I guess a little bit of that, I guess risk the volatility risk, I think here. [00:46:23][37.1]

Candice: [00:46:24] I mean, it's a platform play right there, just clipped that transaction [00:46:26][2.3]

Felicity: [00:46:26] on the ticket. So even though the mood from Charlie was negative re crypto currency, you know, this company has a consensus price target of $426, so it's sixty one point nine per cent from its current price of $263. Market cap is 51 billion and the code is coin on the Nasdaq. [00:46:49][22.3]

Candice: [00:46:49] Love that. Love that ticket. And I think you can't also ignore, like big banks here in Australia, are investing in the crypto space. So whether you are a believer or a non-believer, it's definitely a currency that is trying to become more mainstream society. One to watch the next sector that we kind of unpacked in the presenters was the finance sector. So from Ellen Griffiths, David was up next and he's a small cap portfolio manager right up Felicity's Alley and he was pitching Pinnacle Investment Management. P nigh on ASX is the code for that, and the shares have actually more than doubled this year so far. But he reckons there's more to go that the Australian firm is about to expand offshore into new markets and it's reopening its borders. As we know in 2022, that's going to be a major boost in his opinion. [00:47:33][44.0]

Felicity: [00:47:34] So could it be the next Magellan? Potentially, you know, it could be because Magellan is obviously gone up and come back down. [00:47:39][5.5]

Candice: [00:47:40] That's right. And he didn't see any came in risk concerns there. He thought it's highly scalable business. Lots of existing managers. So say, yeah, 16 underlying and all pretty impressive managers. [00:47:54][13.7]

Felicity: [00:47:54] One very impressive. As well as hearing that we [00:47:57][2.6]

Candice: [00:47:57] Hyperion has killed held it and so is the code if you're interested. Three point eighty seven billion The market cap last traded price was fifteen point forty seven cents and the opinions out there is it's going to reach a peak or price target in 12 months of seventeen point sixty six cents, so it's 15 14 percent upside. [00:48:16][18.8]

Felicity: [00:48:17] Interesting. Yeah, I really like that one. Now, Marcus Bill here of Builders Union actually named a freshly listed London based fintech company called Wise as his top pick. Now, when he started talking through Wise, I was like, I think this sounds like a company that I already know. Yeah. Then I figured out it's actually transfer wise. They've just changed their name because they can be transferring money overseas, you know, with Westpac and other majors. So, you know, essentially this business allows money transfers across the board is superior in pricing speed, convenience. I mean, I agree with that. Interesting business. You know, there are some risks. So so fee compression, you know, in a world where traditional banks take massive margins from retail effects, so interesting one to watch. I'm not 100 per cent sure I'm going to jump on it straight away. Cody's wise on the London Stock Exchange, $7.2 billion last traded seven in £28 and 12 month price target is nine point eighty six, so 35 per cent upside. [00:49:24][67.1]

Candice: [00:49:24] And then the next one that was up was the one that I was looking forward to. The most buyback was back, and he's from kind of capital. And he tipped the Seattle based US software business of Aria, and he said he thought it could grow from a $700 million revenue basis business today to billions and billions of dollars in the next four or five years. I mean, that sounded good. He had me at those those top line figures. And essentially the US tax software business has increased revenues at 40 percent over the last year and is now boasting to have 70000 customers on its books. But the market share is small, so it's only penetrated five per cent so far. Gross margin business is very high 74 per cent, but no earnings yet. So again, this was another Charlie kind of story stock where it's it's got a lot of compelling growth arguments, but it's not yet even up positive. And the company essentially is solving a major. Problem for businesses that still manage tax in the old fashioned pen and paper way. And it's essentially a tax compliance business and what's [00:50:28][63.2]

Felicity: [00:50:28] guaranteed in life, death and taxes. [00:50:31][2.6]

Candice: [00:50:32] That's right. And and that's what he was saying. You know, taxes have been around for thousands of years, so it's no, it's not going away. And I and I wish they did. No, and it's right. And I liked I liked this business. It was probably one of my top three of the picks on the day, and it's operating in 165 countries already, and it's talking about expanding into the emerging markets. So if you're interested in this one, you would look it up on your investing apps you type in. Available on the New York Stock Exchange, you'd find that it's a 12 billion market cap. It last traded around $139 us per share. And the coverage on this stock has a price target of it reaching $212, a roughly 52 percent. Now, remember back, it's he picked Bill. So I think this is one to watch. [00:51:19][46.5]

Felicity: [00:51:19] Yeah, he seems to pick, you know, things that you'd think are relatively boring but really needed [00:51:25][6.0]

Candice: [00:51:26] taxes and accounting. I mean, snore. But they killed it. [00:51:28][2.7]

Felicity: [00:51:29] They did kill it. So he's picking, you know, he's not just picking the story, isn't it? He's picking what you actually need. [00:51:34][5.8]

Candice: [00:51:35] Yeah, that's right. So then the final sector was industrials, and it was actually the first speaker from Cooper investors that spoke. So Felicity, what was her stock pitch? [00:51:45][9.9]

Felicity: [00:51:46] So hers was tech tonic industries, and it's actually known as a power tool industrial company, but it should also be considered more of a technology company, she said. Now, she explained how the company has a deep understanding of its customers needs through product innovation. It grows sales by developing quality products, not cutting prices, and is expanding into Europe and Asia. So as investors, there's more to tech tronic and cordless power tools. She outlined that the Hong Kong listed stock has more in common with Silicon Valley than industrials, citing its migration into lithium ion batteries as early as 2004. Now that that was cool. Yeah, the shares have climbed 52 per cent this year to Hong Kong $167. And she's actually predicting that it's going to be 215 Hong Kong dollars within the next 12 to 18 months. That's pretty impressive scene as we've had, you know, such a demise on the Hong Kong Stock Exchange now. The code is zero six six nine. The market cap is 40 billion. Last traded 165 Hong Kong dollars and analyst 12 month consensus is $191, so 15 percent upside here. [00:52:58][72.8]

Candice: [00:52:59] I thought this was an interesting one because she was recently, she said, returned from their boardroom in Hong Kong. And it looks like it was someone's garage like it was a it was a man cave, right? And I think it's a bit of a no brainer. When she was telling the compelling story that they're moving away from your boring power tools like your mow, your lawn mowers, for example, and they're moving into like snow blowers and all these other areas, [00:53:22][23.3]

Felicity: [00:53:23] things that people need and use. [00:53:24][1.3]

Candice: [00:53:25] And to Charlie's Point, they stick to their knitting. They just sell the one product. They don't get caught up in their mixed messaging. Like, think about how successful Coke's been the one product. [00:53:33][8.6]

Felicity: [00:53:34] I like that ending with the Coca-Cola placement. [00:53:35][1.8]

Candice: [00:53:37] Yeah, and he was like, Oh, of course, I'm drinking Diet Coke. So there were a lot of great ideas and companies that were discussed, we thought in this year's Sewn Hearts and Minds conference. As you can tell, we love the day, we love the event. It gets us talking about the markets and the companies, and it's how we can find businesses that we never heard of, and it sparks our interest to really look them up. So we hope you enjoyed the recap of the event as much as we loved chatting about it. Now, before we sign off, please remember that although flossing our financial advisers at Shaw and partners, please note our discussion today does not constitute financial advice. Yes, we have access to lots of research and broker articles, so we did do some research on these companies, but it's not considered personal advice 

Felicity: [00:54:21] and feel free to reach out to us on our social media channels or send us an email which are displayed in our show notes below. And make sure you follow us on at Talk Money to Me podcast for daily market updates. I'm going to be releasing a questionnaire on Friday until next time. 

Candice: [00:54:37] Thanks, guys. Look forward to the next Sohn hearts & minds conference next year. Bye bye!