A new financial year is upon us, but we still have some unfinished business from the last one: we wanted to wrap up the latest changes to the Spaceship Universe Portfolio.
We added two new companies — which I wrote about here — and we’ve also sold two: Yum China and Mastercard. Here’s some info:
Sold: Yum China
Yum China is China’s largest restaurant company, with more than 10,000 restaurants across 1,500 cities and towns. Its most notable brands are Pizza Hut and KFC.
While these numbers are certainly impressive, we decided to remove Yum China from the portfolio, as we believe it has less global and growth potential than the rest of the companies within the Spaceship Universe Portfolio.
To give you a few more details, Yum China’s growth is limited to China. While China is a large market, Yum China has to adhere to a master license agreement with Yum! Brands, which, among other things, means it has to adhere to certain brand standards.
But even more importantly, Yum China has to pay Yum! Brands 3% of its gross revenue from company and franchise restaurant sales.
Food delivery is an important “Where the World is Going” trend for us. The Spaceship Universe Portfolio holds Domino’s Pizza, and increased exposure to food delivery with the addition of Uber last year. While Yum China benefits from similar trends, the benefit is offset by the increasing preference in China for local brands. Given the two conflicting trends, we made the call to remove Yum China from the portfolio.
Sold: Mastercard
Mastercard. Well, you probably have one in your wallet.
Mastercard is a leader in global payments and technology, best known for its Mastercard-brand debit, credit and prepaid cards.
This is another case where we felt we had strong trend exposure within the portfolio. Yes, Mastercard is a leader, but we also have exposure to cashless payments with Visa, PayPal, Square and Adyen.
When weighing up our options for a new position in Airbnb, which added portfolio exposure to travel and living trends, we made the decision to reduce exposure to cashless payments.
We also preferred to keep our position with Visa over Mastercard. Visa has a strong moat in terms of scale, with more payments volume than Mastercard and many more cards. For example, there are 3.6 billion Visa cards versus 2.4 billion Mastercards. Further, Mastercard has more exposure to credit cards than debit cards; Visa payment transactions are 67% debit, while 58% of Mastercard’s transactions are debit.
We strongly believe that debit cards are where the world is going, so while Visa and Mastercard had similar debit usage growth rates, the debit vs credit exposure was enough to tip the scales towards selling Mastercard.
The Spaceship Origin Portfolio invests in Mastercard, PayPal and Visa at the time of writing.
The Spaceship Universe Portfolio invests in Adyen, Airbnb, PayPal, Square and Visa at the time of writing.
The Spaceship Earth Portfolio invests in Square and Visa at the time of writing.
Important! We’re sharing with you our thoughts on the companies in which Spaceship Voyager invests for your informational purposes only. We think it’s important (and interesting!) to let you know what’s happening with Spaceship Voyager’s investments. However, we are not making recommendations to buy or sell holdings in a specific company. Past performance isn’t a reliable indicator or guarantee of future performance.
