Our investment philosophy at Spaceship is to invest “where the world is going.”
Essentially, we use our Where the World is Going methodology to identify what we think are forward-thinking companies that will benefit from future trends. If they meet the criteria in our methodology — that is, they have competitive advantages and future growth potential — we will then consider those companies for our Spaceship Universe Portfolio and our Spaceship Earth Portfolio. (For the latter, the companies must meet other criteria.)
Perhaps not surprisingly, then, many of the companies in these portfolios are tech companies.
Now for the interesting part.
While stocks have done well in recent weeks thanks to the announcement of President-elect Joe Biden and a spate of potential coronavirus vaccines, there’s a third piece of good news: Barrons recently reported that business creation in the United States has soared. In fact, levels have hit the highest level on record, despite the pandemic and a worrying third wave.
As our senior portfolio manager, Jason Sedawie, noted to us, “our tech companies are doing well because their tools are perfect for new startup businesses.”
Digital tools were once seen as nice-to-haves, but now they are must haves.
This is particularly interesting to us as business habits and workflows have been traditionally more resistant to change. When change does arrive, we believe it’s “sticky.”
Now, almost every new business that launches will need digital tools or services.
A new restaurant, for example, might take payments from Square and might need online delivery services such as Uber Eats.
Retailers with an ecommerce presence might use Shopify or Etsy for digital storefronts, and use payment options from the likes of PayPal and Afterpay.
Corporate businesses that are just starting might use a hybrid work-from-home model, using tools such as DocuSign for document management, Google for productivity and Cloudflare for networks. Combined, these make it easier for employees to collaborate.
We’ve also seen some unexpected trends, such as the digitalisation of orthodontic dental workflows. Align, which makes Invisalign clear retainers, credited the “Zoom effect” as part of its recent success, as people are now more concerned with their smile due to the amount of time they’re spending on video calls.
For Jason and the rest of the investment team, the focus is now on what tools businesses will adopt generally. There has been a tendency to split companies into those that work from home, and those that will benefit from a vaccine and the economy opening up.
But Jason says to be able to best serve customer needs and have the flexibility to reach customers online and offline, digital tools and services are must haves for all businesses. The companies with the digital tools mentioned above (among others) are, in our opinion, a long-term Where the World is Going trend.
The Spaceship Voyager portfolios invest in Afterpay, Align, Alphabet (Google), Cloudflare, DocuSign, Etsy, PayPal, Shopify, Square and Uber. Please refer to the Spaceship app or our website for more information on what each portfolio invests in.
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.
