INSIGHTS
ViacomCBS - Unparalleled Synergies
Investors in the Elevation Capital Global Shares Fund own shares in ViacomCBS [VIAC.O], a global media and entertainment conglomerate that controls industry-leading assets including Paramount Pictures, CBS, and Comedy Central. Viacom and CBS completed a merger in December 2019 to combine respective libraries to compete with the vertical integration of competitors. As at 2 October 2020, ViacomCBS is one of the Fund’s largest holdings.
In 2020, ViacomCBS’ most important segment for top-line growth is streaming. ViacomCBS has announced plans to launch Paramount+ in 2021, a one-stop-shop streaming service that will offer consumers a combination of live entertainment, including live sports and news, exclusive productions and content from the company’s impressive library. We believe Parmount+ will be a valuable asset in any consumers streaming bundle. The streaming industry is not a zero-sum game, Deloitte estimates that streaming subscribers average twelve media and entertainment services subscriptions. We believe that the offer will appeal to a range of demographics due to the diversification of content. ViacomCBS also owns the world’s largest ad-supported free streaming service in Pluto.
Learn more about why we believe ViacomCBS represents a compelling long-term investment opportunity by reading our summary report here.
Updating Trupanion
Investors in the Elevation Capital Global Shares Fund own a share of Trupanion, a pet insurance provider that offers a monthly subscription eliminating uncertainty around the cost of pet care. The company has grown revenues at +27.14% per annum from 2015-2019 and is well positioned to continue benefiting from the favourable tailwinds in the Petcare Industry.
The growing trend that we have comprehensively covered in the past of “pet-humanisation” and Trupanion’s competitive business model has seen the company experience a rapid multiple expansion since 1 February 2020. From the Elevation Capital Global Shares Fund cost basis, Trupanion has returned +226.26%. We continue to see long-term value in Trupanion, the pet insurance industry in the USA is still considerably under-penetrated. In our opinion, Trupanion offers a best-in-class service to customers which will continue to be reflected via long-term growth in its intrinsic value.
To learn more about Trupanion, read our summary report here.
Richemont - Timeless Luxury
Investors in the Elevation Capital Global Shares Fund own shares in Compagnie Financiere Richemont SA [CFR.SWX], a Switzerland-based luxury goods holding company founded in 1988 by South African businessman Johann Rupert. Richemont’s Maisons encompass several of the most prestigious names in the luxury industry including Cartier, Van Cleef & Arpels, IWC Schaffhausen, Piaget, and Chloe. Richemont specialises in jewellery, watches and writing instruments that represent a long-lasting tradition of style, quality and craftsman ship that must be preserved.
Richemont’s management team have long been committed to sustainable growth, always maintaining conservative debt levels and taking a long-term approach to ensure the company has longevity. We believe that Richemont can leverage its robust financials to weather the current economic downturn, affording the company an advantageous position in comparison to other luxury brands. In our opinion, this longevity, and the immense value of its underlying brands makes Richemont a valuable long-term holding for the Elevation Capital Global Shares Fund.
Learn more about why we believe Richemont represents a compelling long-term investment opportunity by reading our summary report here.
Rakon - a Significantly Undervalued NZX Listed Technology Company
Rakon Limited [RAK.NZ] is a New Zealand based technology company that designs and manufactures high quality frequency control solutions. The Elevation Capital Global Shares Fund has owned shares in Rakon since 3 July 2019. The underlying business is performing well, Rakon has posted positive free cash flow in four of the last five years and with 5G demand ramping up globally the company is well positioned to continue to experience growth.
There are two ways companies return value to shareholders: (1) cash distributions and, (2) share price appreciation. Rakon has not delivered on either of these metrics in recent times. Elevation Capital has called on the Independent Directors to improve shareholder communications and market engagement given the positive outlook for Rakon.
After attending the ASM on 7 August 2020 and delivering this message in person, we are now convinced that the company is listening and the underlying investment thesis and positive outlook is firmly intact. We expect Rakon to add meaningful value to the Elevation Capital Global Shares Fund in the years ahead.
To read our full report, click here.
Fund Update: Zooplus
Investors in the Elevation Capital Global Shares Fund own a share of Zooplus AG [ZO1G.DE], the largest e-commerce pet retailer in Europe. Zooplus has increased its revenue since 2015 at an annual rate of +21.23%. Partially due to the shutdown restrictions driving consumers online, but also caused by the continued trend of “pet-humanisation”, Zooplus as at 20 July 2020 has returned +78.83% for the Fund. In our view, the strong economic tailwinds prevalent in the pet care sector will continue as consumers are more willing to pamper their pets, and with a >50% share in the European online pet care space, Zooplus is best positioned to capture this growth.
We first published a summary on Zooplus in November 2019, where we outlined the companies strengths and potential upside. For a more detailed analysis of Zooplus, read our updated report here.
Fund Update: Spotify
Investors in the Elevation Capital Global Shares Fund have owned a share of Spotify since November 2018. Due to a combination of recent acquisitions, namely exclusive rights to Joe Rogan’s podcasts, and a global pandemic that has further accelerated consumers trend toward streaming, Spotify to date has returned +118.29% from the Fund’s cost basis.
We published our initial research report on Spotify on 9 April 2020 that pointed to podcast acquisitions as a key path to long-term profitability for Spotify. For a more detailed analysis of Spotify, read our updated report here.
VISA - it’s everywhere you want to be
Investors in the Elevation Capital Global Shares Fund own a share of Visa Inc. [V], a multinational payment facilitator who has issued over 3.2 billion cards to date. The Fund added Visa to our portfolio during the recent market sell-off. Visa one of the world’s largest companies by market capitalisation and has been playing a vital role in assisting governments and businesses navigate through this volatile period. The use of cash is declining while e-commerce and digital wallets are on the rise aided by the proliferation of smart-devices and improved offerings by companies like Amazon and Shopify. Visa is well positioned to capture the increase in payment flows through its financial ecosystem as a result of changing consumer and business behaviour.
Learn more about why we believe Visa represents a compelling long-term investment opportunity by reading our summary report here.
Highlighting Farfetch
Investors in the Elevation Capital Global Shares Fund own a share of FarFetch, a global technology platform for luxury fashion that combines global tastemakers talent & audience with FarFetch’s platform capabilities & data to create culturally relevant original content (“Brands of the Future”).
Launching New Zealand Rural Land Co.
Elevation Capital is pleased to announce the launch of New Zealand Rural Land Company (NZRLC). NZRLC is a newly formed entity seeking to take advantage of the current depressed market conditions for rural land caused in part by credit restrictions to the sector and limitations on foreign investment. NZRLC will seek to acquire carefully selected rural land and lease the land back to high-performing operators, improving capital efficiency within the sector and allowing farmers to do what they do best.
You can learn more about NZRLC here.
Highlighting Fevertree Plc.
The Elevation Capital Global Shares Fund acquired a share of Fever-Tree Drinks PLC in the recent market sell-off. A company with a strong balance sheet that is well-positioned to weather the current economic environment and continue to flourish.
Already returning +49.67% for the Fund since 27 March 2020 when we acquired our interest at a near 3-year low. Below we highlight the key company features that led to our decision to acquire an interest in the company.
Forbes 30 Under 30
Former Elevation Capital Intern - Andy Chan - has been included in the Forbes 30 Under 30 for co-founding Qupital, a Hong-Kong based start up that offers short-term lending and liquidity to companies and matches them with investors interested in covering the loan.
The team at Elevation Capital would like to congratulate Andy on his success, and wish him well on his journey forward. Elevation Capital has had a longstanding dedication to furthering the careers of students since 2011, offering placements to carefully selected applicants. You can find a detailed list of our historical interns here.
Elevation Capital's #NZXNOW campaign revisted
NZX Limited announced on 31 March 2020 a proposal to structurally separate the regulatory function from the company’s commercial and operational activities. The proposed entity will be governed by a separate board, with an Independent Chair. Elevation Capital views the separation of responsibilities by NZX as extremely positive.
In October 2018, Elevation Capital released #NZXNOW (www.nzxnow.com) with a list of recommendations the company could undertake to improve profitability. Included in this was separating the regulatory functions of the organisation.
NZX remains a core holding of the Fund accounting for 2.25% of the portfolio as at 30 April 2020. We are pleased to see NZX taking proactive steps to enhance the business which will improve shareholder returns. We look forward to future value enhancing initiatives from the company and continue to engage with them accordingly on behalf of our investors.
Spotify - Reimagining Music
Elevation Capital Global Shares Fund investors own a share of Spotify Technology S.A. [SPOT], a global audio streaming service that has revolutionised the way music is accessed.
Spotify is the largest audio streaming platform in the world and is experiencing year on year growth in users and revenue attributable to their unique service that utilises machine learning to personally curate playlists for each user. The music industry is growing both in terms of revenue and size, as emerging markets like China and Brazil are experiencing increases in demand. Spotify is helping to drive this growth, and are well positioned to benefit from the economic tailwinds in the music and streaming audio industry. The company recently announced a stock buyback, indicating a belief within management that the company is/was trading below its intrinsic value.
Learn more about why we believe Spotify represents a compelling long-term investment opportunity by reading our summary report here.
Chris Swasbrook on Intelligent Investing in Crisis Mode: Opportunities in Quality Businesses
On 2 April 2020 Managing Director of Elevation Capital was invited to share his opinion on investing during the outbreak of COVID-19. During the interview Chris sheds some light on how his investment approach is transforming in light of current events while maintaining his fundamental margin of safety principle.
