Finding quality at the right price has been a challenge for some time but recent market moves have given us the opportunity to move the portfolio up the quality curve in terms of some of the names we own. Amadeus, Compass, Diageo and ASOS are among those where we’ve been able to initiate or add to positions.
Adding to British fashion retailer ASOS earlier this year also allowed us to increase the portfolio’s exposure to technology. The shift to online retail has been accelerated by the pandemic and we took some profits late in August after a sharp rise in the share price. We still like the business but were keen to manage our exposure after such a significant rally. Within technology I have long been an advocate of platforms or facilitators like Just Eat Takeaway – a name we added to after they announced the acquisition of Grubhub in the US. The move came earlier than we expected but the successful integration of the Just Eat and Takeaway businesses bodes well as they look to penetrate the US and disrupt competitors like Postmates and Doordash.
Delivery Hero was another addition – it’s a business we have held elsewhere for some time and a pull back in its shares allowed us to establish a position in the portfolio. It’s a leader in its markets and is a business with some startling numbers – in the first half of 2020 for example, they delivered 519m orders and have seen revenues increase 94% year-on-year.
A rare IPO addition
The IPO market is one we rarely participate in, not least because we see few businesses capable of clearing our quality hurdle. The Hut Group’s recent listing was different as we view this D2C online retailer of beauty and nutrition products as a unique business with real potential – not least thanks to the long-term deals they have in place for their Ingenuity platform to distribute brands from the likes of Nestle, Unilever, P&G and Coca-Cola. The founder’s ongoing involvement and incentivisation gives us further comfort.
Where from here?
We see little merit or value in trying to predict where markets and economies are likely to head from here – a stance that seems particularly sensible against the backdrop of a global pandemic, tensions between the US and China as well as Brexit wrangling. Our focus instead remains on the companies we own as well as those we would like to when the price is right.