Latest / Merryn Talks Money / Losing money is the price of making money

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Losing money is the price of making money · Merryn Talks Money

0:00
Speaker 1: Hello, and welcome with me again. Is John Steppic. You know,
0:04
Speaker 1: he's so fun to talk to it I think we
0:05
Speaker 1: might end up talking from more than we had originally
0:07
Speaker 1: expected on this podcast. John. Hello, that's very kind of you.
0:12
Speaker 1: I'd like to hear that, but there's nothing something to
0:14
Speaker 1: do with me a verily. The listeners like you. It's
0:17
Speaker 1: very kind to them. It's all about the downloads. Now listen.
0:21
Speaker 1: John and I are fresh from doing a Twitter spaces
0:24
Speaker 1: on housing house prices in the UK. How bad is
0:27
Speaker 1: it going to be? John made a very exciting forecast
0:31
Speaker 1: that house praises will fall at least thirty percent. You
0:34
Speaker 1: did say at least jump. Nothing that's rash is the
0:37
Speaker 1: what that you're looking for? Rather than exciting. He would
0:40
Speaker 1: not give us the time frame on that because he
0:42
Speaker 1: has been in this game a long long time that
0:45
Speaker 1: he's not going to tell us a year, two years,
0:47
Speaker 1: three years. But it's entirely reasonable to think that house
0:50
Speaker 1: prices could fall by that much over the next couple
0:52
Speaker 1: of years. And with that in mind, I was reading
0:54
Speaker 1: the weekend newspapers bit behind as usual, but I was
0:56
Speaker 1: reading them and there was an article about house prices
0:59
Speaker 1: in Cooler and there was one little bit that jumped
1:01
Speaker 1: out at me which said that there was an attempt
1:04
Speaker 1: to purchase a house in callid pounds and the rate
1:09
Speaker 1: that the buyer was paying on his mortgage is gone
1:12
Speaker 1: up from just two percent just under six percent, and
1:15
Speaker 1: as a result the seller had had to give up
1:18
Speaker 1: eight percent of the price, which is really interesting because
1:21
Speaker 1: it just demonstrates exactly what we always say, John, and
1:24
Speaker 1: it rates up prices down because it fundamentally changes affordability,
1:28
Speaker 1: so prices have to come down by the same amount.
1:31
Speaker 1: Give will take it that your monthly morgige goes up
1:33
Speaker 1: in percentage chance exactly, And I mean that's one reason
1:36
Speaker 1: why I guess for all that yes, it's about right
1:39
Speaker 1: to put an exact number. One thirty percent doesn't sound
1:42
Speaker 1: that unreasonable, especially because Banke of England just released its
1:46
Speaker 1: financial stability review and one of the Bank England members
1:51
Speaker 1: basically said he didn't put the number one. It was spend.
1:54
Speaker 1: Later be pointed though, the house places have gone up
1:58
Speaker 1: in the last two years and he's basically me in
2:00
Speaker 1: the keys that you could go back to that level
2:02
Speaker 1: and financial stability in the UK would be fain So
2:04
Speaker 1: if if even get the Bank England sort of seeing
2:06
Speaker 1: that we'll look at end of is not a big
2:09
Speaker 1: deal then, actually doesn't so ridiculous at all. Yeah, so
2:14
Speaker 1: clearly they wouldn't mind it going down that much. Now listen, um,
2:18
Speaker 1: going back to pre pandemic days and to today, there's
2:22
Speaker 1: one thing in the UK where you really can get value.
2:24
Speaker 1: It wasn't houses then, it still isn't houses now. But
2:27
Speaker 1: we've been talking you and I over the last how
2:29
Speaker 1: many years about how cheap UK equities are, and they
2:32
Speaker 1: just get cheaper and cheaper, and there's headline after headline.
2:36
Speaker 1: The last two weeks have been a class at this.
2:38
Speaker 1: You see endless headlines pointing out that the UK market
2:42
Speaker 1: is cheap. And I was thinking to myself, if you
2:43
Speaker 1: and I had a pound for every time we'd either
2:45
Speaker 1: written or read a headline about UK because he's being cheap,
2:48
Speaker 1: we wouldn't care what was g boar wouldn't anymore because
2:50
Speaker 1: where would be probably my baya or something like that. Anyway,
2:53
Speaker 1: we're not. But the truth is that UK equities are cheap,
2:57
Speaker 1: aren't they. You can really buy into the UK, and
3:00
Speaker 1: not just at the foote one level, but down in
3:02
Speaker 1: the MidCap and small cap level now and genuinely got value. Yeah.
3:07
Speaker 1: I mean lots of places, the smaller, the medcaps actually
3:10
Speaker 1: better because they felt harder this year. We have bounced
3:14
Speaker 1: quite a lot since Med October um. But I think
3:18
Speaker 1: the point is that this is I mean, you know,
3:20
Speaker 1: a column about this sort of you know, an adjacent
3:22
Speaker 1: topic recently about how we're going back to an old normal.
3:26
Speaker 1: So I think that all of the assets that have
3:29
Speaker 1: been doing well in recent months and they can have
3:33
Speaker 1: past year or so, are the ones that will keep
3:35
Speaker 1: doing well for a while. So we're talking things like value,
3:38
Speaker 1: the opposite of kind of growth stocks, that sort of thing.
3:41
Speaker 1: I agree on the house's point of view, but if
3:44
Speaker 1: you look at the house builders, and I know that
3:46
Speaker 1: we have various kind of ethical concerns about the house
3:49
Speaker 1: builders basically because they they buy rubbie she houses and
3:52
Speaker 1: they've been propped up bout the government and they've milked
3:54
Speaker 1: that for years. But in terms of actual kind of
3:57
Speaker 1: you know, the price of the shares, even they don't
3:59
Speaker 1: look too But I can't do it, John, it's my
4:02
Speaker 1: it's my E s G line. Everyone's got into E
4:04
Speaker 1: s G line uses users tobacco, right, some people it's
4:07
Speaker 1: alcohol some people as weapons, but me it's house builders.
4:10
Speaker 1: I couldn't bring myself to buy shares in any company
4:15
Speaker 1: that builds the quality of crappy housing we have in
4:18
Speaker 1: the UK. I can't do it. I can't do it
4:20
Speaker 1: as a moral stuff too far. Yeah, that's quite low.
4:23
Speaker 1: That's basically so this is this is my equivalent in
4:26
Speaker 1: Russia for you. That's what that's why, that's what I
4:29
Speaker 1: like to hear. Um. Yeah, But I mean the other
4:32
Speaker 1: thing I looked at the other day, actual was private
4:34
Speaker 1: equity investment trust and that one really kind of surprised me,
4:38
Speaker 1: actually because I thought, you know, we've had this crash
4:43
Speaker 1: in the you know what, they can I really growthy stuff. Um.
4:47
Speaker 1: As a result, that kind of privately listed stuff is
4:49
Speaker 1: going to come down and value a lot. But whenever
4:51
Speaker 1: you start to look at the historic discounts that these
4:54
Speaker 1: trusts are trading on, you are talking about kind of
4:57
Speaker 1: two thousand and eight levels of expectation, and they underlying
5:01
Speaker 1: value of these assets was not marked up as much
5:04
Speaker 1: as something in perhaps you know, Cathy Wood's portfolio for example.
5:09
Speaker 1: So even there, to me, it's starting to look as
5:11
Speaker 1: if well, actually, yeah, you can probably go in it
5:14
Speaker 1: will put some money in there, and for the long
5:15
Speaker 1: run you'll probably be happy enough. But can you trust
5:18
Speaker 1: the natural asset values? Can you trust the enemies on
5:21
Speaker 1: this stuff? Where do they revalue often enough? I know
5:23
Speaker 1: that discount is is supposed to compensate to us for that,
5:26
Speaker 1: But if these trusts are not revaluing the understood assets
5:30
Speaker 1: more than once every six months, god knows what's in there. No,
5:33
Speaker 1: I mean you can't. You can't trust the navs um
5:38
Speaker 1: kind of like on the face value, which is why
5:41
Speaker 1: the discounts are so large. But you're taught with discounts
5:43
Speaker 1: are twice as large as they have been. And like
5:46
Speaker 1: I said that, you've only ever seen kind of like
5:48
Speaker 1: two thousand and eight two tho elevens in the Euro's
5:51
Speaker 1: own crisis. And also if you're kind of looking at
5:54
Speaker 1: analysts like Numus, etcetera, they tend to do their own
5:57
Speaker 1: kind of calculated nav And even then we are slightly
6:00
Speaker 1: more realistic. Now I said, oh, you're you're still talking
6:03
Speaker 1: about kind of discounts of you know, thirty forty percent
6:06
Speaker 1: or certainly it's deficitely higher than the kind of long
6:09
Speaker 1: term average. And something's a long term average for some
6:11
Speaker 1: of these trust is over twenty years, so they have
6:14
Speaker 1: seen a lot of ups and downs. I mean, yeah,
6:17
Speaker 1: I agree. My inclination is to be skeptical, but even
6:22
Speaker 1: taking that into account, you know, I'm kind of struggling
6:26
Speaker 1: to make the case that they're not decent looking value
6:31
Speaker 1: RASH podcast. I was gonna say, you're making a lot
6:36
Speaker 1: of rash forecasts at the moment, I want to call
6:38
Speaker 1: for this to a halt here before you say something
6:40
Speaker 1: you really don't want to say. Settle houses by private
6:43
Speaker 1: equity trust and what comes next? Who can know? Right?
6:47
Speaker 1: Our guest today has a completely different approach to investing too,
6:51
Speaker 1: I think the one that John has. John, thank you
6:53
Speaker 1: very much. Welcome to Marin Talks Money, the podcast in
7:02
Speaker 1: which people who know the markets explained the markets, and
7:04
Speaker 1: they're in Sunset Web. This week we're having a conversation
7:07
Speaker 1: with Tom Slater, who's the co manager of Bailey Gifford
7:10
Speaker 1: Scottish Mortgage Investment Trust. It is the UK's most popular
7:13
Speaker 1: investment trust. Look at the bond seller lists of any
7:15
Speaker 1: of the platforms and you'll see it right up there
7:18
Speaker 1: at the top. Specializes in finding spectacular, interesting growth companies
7:23
Speaker 1: to hold for the long term, and we're going to
7:26
Speaker 1: talk a bit about how that's worked out over the
7:28
Speaker 1: last decade and over the last year. Tom, thank you
7:34
Speaker 1: very much for joining us today. Thank you very much
7:36
Speaker 1: for having me. I need to start by just talking
7:38
Speaker 1: a little bit about the performance of the Trust. Now.
7:40
Speaker 1: I'm a long term holder of the Trust, as I
7:42
Speaker 1: think will be an awful lot of our listeners, and
7:44
Speaker 1: it's been spectacular for lots of us over the years,
7:46
Speaker 1: and and my holding is still up well over but
7:50
Speaker 1: I've been holding it for quite a long time now,
7:52
Speaker 1: going on ten years, I would say, but if you've
7:54
Speaker 1: been holding it for a shorter time, things are going
7:56
Speaker 1: to feel a little bit rope here, right Even over
7:58
Speaker 1: five years pretty well up nearly two percent, but over
8:01
Speaker 1: the last year down nearly fifty. Year to day so
8:04
Speaker 1: far down nearly forty. But of course this is incredibly
8:07
Speaker 1: voltar stuff. I mean, we're talking you and I at
8:09
Speaker 1: the beginning of December, and in the last five days
8:11
Speaker 1: that the Trust share prices up five six So this
8:14
Speaker 1: is moving all over the place. But nonetheless short short
8:18
Speaker 1: term performance, which I know is not meaningful to you
8:22
Speaker 1: in the environment of what you're trying to do. Long term.
8:24
Speaker 1: But nonetheless, there will be listeners out there who are
8:26
Speaker 1: looking at their portfolios portfolios going my eye, and really
8:29
Speaker 1: expect that although maybe maybe they should have. So can
8:32
Speaker 1: I just start by talking, um, There's quite a lot
8:35
Speaker 1: to dig into it. Start by talking about the the
8:38
Speaker 1: macro market environment. So why it is that as a
8:42
Speaker 1: whole this happened, and how you expect it to resolve
8:47
Speaker 1: yourself again on a market wise rather than stock wise basis. Yeah,
8:51
Speaker 1: of course, UM. I think that the starting point for
8:56
Speaker 1: this discussion has to be what are you trying to
8:59
Speaker 1: do for your shareholders? Um and a lot of funds
9:04
Speaker 1: will try to promise to be all things to all people.
9:07
Speaker 1: We don't do that are clearly defined purpose is to
9:11
Speaker 1: pursue long run capital appreciation by investing in the world's
9:17
Speaker 1: most promising growth companies over long periods of time, and
9:22
Speaker 1: embracing the volatility that goes with that. UM Nothing nothing
9:27
Speaker 1: goes smoothly UM upwards with without without problems or interruptions
9:34
Speaker 1: in this world, and we shouldn't try to pretend that
9:36
Speaker 1: that is the case, um and and so we we
9:41
Speaker 1: we we accept volatility in in in pursuit of that
9:45
Speaker 1: long term aim. Of capital appreciation, we can we can
9:49
Speaker 1: delve into that that more as a philosophy if it's
9:52
Speaker 1: of interest. UM. So, so that's the context. And if
9:58
Speaker 1: you look at what has even the trust performance over
10:02
Speaker 1: long periods of time, it is very little to do
10:06
Speaker 1: with the market and much more about the contribution of
10:11
Speaker 1: a small number of exceptional companies. UM. We think that's
10:15
Speaker 1: what what drives returns in the long run. We also
10:18
Speaker 1: believe that you know, if you're going to pay for
10:20
Speaker 1: active farm management and you want a farm manager to
10:24
Speaker 1: back their convictions to offer you an exposure that's very
10:27
Speaker 1: different to the one that you'll get by just investing
10:29
Speaker 1: in the index UM. And that's that's really how we
10:32
Speaker 1: earn our fees. So so you you talk about the
10:35
Speaker 1: performance and the short run horizon and the long run
10:38
Speaker 1: horizon and so over over long periods of time, the
10:43
Speaker 1: performances is strong, but the outcome in any any one
10:46
Speaker 1: year can be extremely volatile. And that's been to the
10:50
Speaker 1: detriment of shareholders over the past year UM and it
10:54
Speaker 1: was a huge benefit the year before. And you know,
10:57
Speaker 1: I would I would argue that we we aren't idiots
11:01
Speaker 1: for the returns we've generated in in the past year,
11:04
Speaker 1: just as we were not geniuses for the return that
11:07
Speaker 1: we generated previously. It's it's the volatility is inevitable and
11:13
Speaker 1: we must focus absolutely on the fundamentals of the companies.
11:16
Speaker 1: Do you believe that the opportunities are large, that this
11:19
Speaker 1: company has competitive advantages, that it's running away, that it
11:23
Speaker 1: will drive returns for shareholders and ignore those those big
11:28
Speaker 1: fluctuations and prices that are an inevitable part of owning
11:31
Speaker 1: stocks and shares. But I mean, I think a lot
11:35
Speaker 1: of people, including me, might might ask you about the
11:38
Speaker 1: market environment in which you've been operating in that as
11:40
Speaker 1: you say that the brilliant returns that you've made over
11:42
Speaker 1: the last secular say, it doesn't necessarily make you geniuses,
11:45
Speaker 1: but you have obviously been brilliant, interesting, interesting, and very
11:49
Speaker 1: good stockpickers. But also you have benefited hugely from the
11:53
Speaker 1: very low interest rate environment and the craze for growth
11:57
Speaker 1: which she started. Of course it barely give it the
11:59
Speaker 1: grace for growth in the grace of these very very
12:01
Speaker 1: long duration assets. And so the market environment has been
12:05
Speaker 1: extremely positive for your style of investing with doing massive
12:09
Speaker 1: momentum behind it. And it I think is clear that
12:14
Speaker 1: we did reach something close to bubble conditions or possibly
12:17
Speaker 1: beyond bubble conditions towards the end of last year, and
12:20
Speaker 1: the market environment is now not necessarily friendly to your
12:24
Speaker 1: style of investing. So there is I think still a
12:27
Speaker 1: discussion to be had around the fact that the difference
12:30
Speaker 1: between the fundamentals of a company and the business and
12:32
Speaker 1: the price for which which you pay for it. So
12:35
Speaker 1: it may be that a company is brilliant and still
12:38
Speaker 1: doing brilliant things and still has a fabulous future, but
12:41
Speaker 1: is not worth what people were paying for it at
12:44
Speaker 1: the end of last year, and that's going to be
12:46
Speaker 1: a long term headwind for the trust. But I think
12:49
Speaker 1: there's two different um, two different issues there. So I
12:54
Speaker 1: think it's one of the challenges of investing through this
12:59
Speaker 1: let's say that period since the end of as we've
13:03
Speaker 1: had the COVID shock um and and then reopening, is
13:08
Speaker 1: that you you had very loose monatory conditions, You had
13:14
Speaker 1: risk free rates basically go to zero or even even negative,
13:19
Speaker 1: and you had a repricing of assets across the board
13:22
Speaker 1: reflecting that change in the risk free rate um and
13:26
Speaker 1: then that has has now reversed to a large extent um. Now, yes,
13:33
Speaker 1: that that benefited U long duration growth stocks, the type
13:37
Speaker 1: of things that that that we're interested in in. If
13:40
Speaker 1: you go back to it's it's been a headwind over
13:43
Speaker 1: the past year. UM. The The the other part though,
13:48
Speaker 1: that you have to remember is that what what driven
13:51
Speaker 1: performance is not just a repricing of stocks relative to
13:57
Speaker 1: their prospects, but actually the delivery of of on the
14:00
Speaker 1: part of those companies. You know, Tesla today is a
14:07
Speaker 1: vastly bigger company than it was in nine you know,
14:10
Speaker 1: if it's if that's measured by the number of vehicles
14:12
Speaker 1: it's delivering or the size of the profits that it's generating.
14:16
Speaker 1: Um And that's that's true of a number of the
14:19
Speaker 1: companies that we invest in. So yes, there's has been
14:22
Speaker 1: this sort of market phenomena, if you like, of the
14:24
Speaker 1: of of of how how highly do you value that
14:28
Speaker 1: that income stream? But you've you've also had a lot
14:31
Speaker 1: of fundamental progress and and so there's there's those two
14:34
Speaker 1: things going on. And so if you if you then
14:37
Speaker 1: bring that to the second part of your question about
14:39
Speaker 1: what happens next, then is there a headwind to growth companies?
14:43
Speaker 1: Um I my reading of the the you've had a've
14:50
Speaker 1: you've had this valuation component, which is both come and gone.
14:53
Speaker 1: And so the way I think of it looking forward is,
14:56
Speaker 1: you know, are these companies delivering you? Can they grow substantially?
15:01
Speaker 1: And in the short run, I think there's challenges because
15:04
Speaker 1: of the economic environment, um, you know, the rising interest rates,
15:09
Speaker 1: the likelihood of recession in various developed economies. UM, But
15:14
Speaker 1: if you look at what what the companies are actually doing.
15:17
Speaker 1: Are we going to are we going to own a
15:20
Speaker 1: lot more electric vehicles in five years that we do today?
15:23
Speaker 1: Is that is our source of power generation? Moving? Is
15:26
Speaker 1: is the way that we're treated for healthcare ailments changing?
15:30
Speaker 1: All of those trends suggest that actually they're from a
15:34
Speaker 1: from a company fundamental point of view, despite the short
15:37
Speaker 1: term headwinds that actually the long term prospects are pretty bright.
15:40
Speaker 1: So so I don't see it as they're being a
15:42
Speaker 1: particular headwind as we look out over the next five
15:44
Speaker 1: or ten years. But isn't the question really not can
15:49
Speaker 1: they continue to grow? Are they the companies that you
15:51
Speaker 1: hope they were? But can they grow to such an
15:55
Speaker 1: extent that they can validate their still relatively high valuations?
16:00
Speaker 1: And they are different questions, right, and I know that
16:02
Speaker 1: that it barely giving You very often say what valuations
16:05
Speaker 1: are on the point, because anything that we choose is
16:08
Speaker 1: going to outgrow any valuation it has on a given
16:10
Speaker 1: day if it does what we think is going to do.
16:12
Speaker 1: But that view must surely have slightly changed since last year.
16:17
Speaker 1: But it depends likely what you mean by very high valuations.
16:21
Speaker 1: Now if you if you mean, um, if the multiple
16:24
Speaker 1: of today's sales or today's profits are high relative to
16:28
Speaker 1: the rest of the market, UM well, I think that
16:33
Speaker 1: that doesn't necessarily mean you have a high valuation. Um Now,
16:37
Speaker 1: I absolutely would accept the point that m stocks whose
16:42
Speaker 1: profits are far out into the future and therefore have
16:45
Speaker 1: a high short term multiple have been punished much more
16:48
Speaker 1: than other stock market companies over the past year. Um but,
16:52
Speaker 1: and and that premium that they've enjoyed has eroded very
16:56
Speaker 1: significantly relative to its history. UM But but I come
17:00
Speaker 1: back to, you know, what's the philosophy of the fund,
17:02
Speaker 1: and and it is growth, growth at an unreasonable price.
17:06
Speaker 1: And what we mean by that is it doesn't sound attractive,
17:09
Speaker 1: film doesn't sound attractive. You've got to get rid of
17:12
Speaker 1: the unreasonable And it's been there in the annual report
17:14
Speaker 1: for the past ten years for But what we mean
17:18
Speaker 1: is not that these companies are unreasonably expensive, but that
17:22
Speaker 1: for the ones that we're right about, it will have
17:25
Speaker 1: been an unreasonably low price to have paid, and for
17:28
Speaker 1: the ones that were wrong about, it would have been
17:29
Speaker 1: unreasonably high. But what we're fairly sure about is that
17:32
Speaker 1: these these assets are miss priced, and if you look
17:35
Speaker 1: at the delivered returns, it's much more about that small
17:38
Speaker 1: number of companies that have proven to be far, far
17:41
Speaker 1: more successful than the market ever anticipated. Okay, this is
17:45
Speaker 1: a guy just interrupted. This is a brilliant way to
17:47
Speaker 1: look at it. That everything in the portfolio is the
17:50
Speaker 1: wrong price. Absolutely everything but a small percentage to them
17:54
Speaker 1: are massively too cheap, and the rest of grotutually over priced.
17:57
Speaker 1: But the ones that are massively too cheap at the
17:59
Speaker 1: moment and will drive long term that performance there are
18:03
Speaker 1: performance well be so superior to the under performance of
18:06
Speaker 1: the others that the initial moss pricing is irrelevant. That well,
18:09
Speaker 1: that's been the experience if you if you look at
18:11
Speaker 1: the past decade um you know, and and that is
18:15
Speaker 1: the experience if you look at broader stock markets over
18:18
Speaker 1: long periods of time. But it's but it's you know,
18:21
Speaker 1: it's getting at this. One of the questions you're asking
18:24
Speaker 1: is about the price of growth assets in general, and
18:28
Speaker 1: prices are really difficult to predict. Now, there's maybe people
18:32
Speaker 1: who investors who specialization is in forecasting prices of assets
18:38
Speaker 1: um and and maybe some people are good at that,
18:40
Speaker 1: but we don't claim to be. But what we do
18:43
Speaker 1: believe is that in the long run, prices will follow fundamentals,
18:47
Speaker 1: and that you've got a much better chance of analytically
18:51
Speaker 1: of predicting the fundamentals of companies than you have of
18:54
Speaker 1: how those assets will be price and how they will
18:56
Speaker 1: be priced relative to whether whether it's value stocks or
19:00
Speaker 1: or bonds or whatever other asset, and so that that
19:04
Speaker 1: that pricing phenomenon has absolutely dominated the returns over the
19:08
Speaker 1: past couple of years. But if you extend the time
19:11
Speaker 1: horizon to five years, ten years, we don't think it
19:14
Speaker 1: matters that much. Although a lot of strategists wouldn't say
19:17
Speaker 1: that we should be trying to unlearn everything we've learned
19:19
Speaker 1: about markets over the last ten years, possibly in the
19:22
Speaker 1: last thirty years, because the environment going forward is so
19:25
Speaker 1: change that the evaluation environment won't go back to where
19:28
Speaker 1: it was last year for decades. Well, I think you
19:32
Speaker 1: come back to what we weren't investing, and I don't
19:35
Speaker 1: believe our sholders are investing two in the hope of
19:39
Speaker 1: that market environment. What what what we're investing for is
19:43
Speaker 1: in the belief that backing some of these companies that
19:47
Speaker 1: really are building the future of the glotable economy, we'll
19:50
Speaker 1: deliver returns to shareholders. And I think that one of
19:55
Speaker 1: the one of the consequences of the environment you're talking
19:57
Speaker 1: about is that there has has been an abundance of
20:00
Speaker 1: capital to fund companies that are going after big opportunities.
20:04
Speaker 1: And actually that makes it really quite tough to build
20:07
Speaker 1: competitive advantage. You know, if you are I don't know,
20:10
Speaker 1: building a if you if you're building rockets, if you're
20:14
Speaker 1: building a super fast delivery network, and you set out
20:18
Speaker 1: to do it, and ten other companies easily get a
20:21
Speaker 1: billion dollars of funding to go after the same opportunity. Um,
20:24
Speaker 1: then it just is that much harder. But I think
20:26
Speaker 1: in an environment where people are people are more wary
20:30
Speaker 1: about providing capital. Actually those that have got an edge,
20:34
Speaker 1: whether it's their structural position, whether it's the culture of
20:37
Speaker 1: the business, whether it's just getting a head start, UM
20:40
Speaker 1: stand much greater chance of actually building on that edge
20:42
Speaker 1: and building a long term return generating business. That's that's
20:47
Speaker 1: attractive to Shahold and hopefully those are the ones that
20:49
Speaker 1: you have. We we have a relatively concentrated portfolio. This
20:53
Speaker 1: this is not as scattered and approach to investing in
20:56
Speaker 1: these companies. We we didn't invest in the twenty nine
20:59
Speaker 1: vintage of growth companies. In the vantage of growth companies,
21:02
Speaker 1: you know, we make a handful of investments each year
21:05
Speaker 1: because we believe in the five ten year vision that
21:09
Speaker 1: that company is trying to pursue UM and you know,
21:12
Speaker 1: sometimes that approach will be in favor and you get
21:15
Speaker 1: an environment like like twenty twenty one where money has
21:19
Speaker 1: been thrown at these companies, and in other times it
21:21
Speaker 1: will be it will be a much harder environment. And
21:24
Speaker 1: we're looking for the management teams that can can manage
21:27
Speaker 1: through that process and we hope to be consistent partners
21:30
Speaker 1: to them over over the course, whether that's in in
21:33
Speaker 1: good times in the twenties, actually we call it should
21:39
Speaker 1: caveat calling twenty good times, but from a capital provision
21:42
Speaker 1: point of view, or whether it's you know, as as
21:45
Speaker 1: the environment we find ourselves in today where people are
21:47
Speaker 1: worried about recession, where it's where it's hard to rate
21:49
Speaker 1: raise finance. Yeah, I mean it is a very concentrated
21:52
Speaker 1: port full of the top ten holding so what over
21:55
Speaker 1: of the absolutely and be wary of you know, just
21:59
Speaker 1: looking at the toe a number of holdings because because
22:01
Speaker 1: there is a high degree of stock ranking. If you
22:04
Speaker 1: put another way, the top thirty camp for eight percent
22:07
Speaker 1: of the assets, so so absolutely has a concentrated portfolio.
22:11
Speaker 1: Um and it's you know that again, that's that's what
22:15
Speaker 1: we believe our role is. You know, if you if
22:18
Speaker 1: you want a diverse set of companies by the index,
22:22
Speaker 1: pay a few basis points to do so. You know,
22:24
Speaker 1: I think that's a that's a perfectly rational decision. If
22:27
Speaker 1: you're going to pay an active farm manager, then this
22:30
Speaker 1: will don't pay them too much, make sure that they
22:32
Speaker 1: keep their fees to a minimum, and then make sure
22:35
Speaker 1: that they are doing something different, um and and and
22:39
Speaker 1: really providing you a genuinely different exposure for that theme.
22:42
Speaker 1: And we talk about two parts of the portfolio quickly
22:44
Speaker 1: before we want to talking about individual stocks, which is
22:46
Speaker 1: you know or anybody ever wants to hear about. They
22:48
Speaker 1: don't want to hear about all this general stuff. They're
22:51
Speaker 1: waiting for. This is what they consider to be the
22:53
Speaker 1: stock trips. At the end, there won't be stock trips,
22:54
Speaker 1: by the way, isn't it? UM? Can I ask you
22:56
Speaker 1: first about the Chinese exposure. I'm one of the things
22:59
Speaker 1: that you always saying, quite rightly, is that you focus
23:01
Speaker 1: on the fundamentals of an individual company, not so much
23:04
Speaker 1: on the politics around and on a global environment, not
23:06
Speaker 1: on not on the macroeconomic environment, but the company and
23:10
Speaker 1: in China that hasn't quite worked out, has it? So
23:13
Speaker 1: some of the some of your holdings that you've been
23:15
Speaker 1: setting down on the basis that the political and regular
23:17
Speaker 1: environment has really been changing against them, you know. I
23:21
Speaker 1: guess one sort of clarifying point is, you know, we
23:23
Speaker 1: don't we don't think that we operate in a vacuum
23:26
Speaker 1: and we can only look at companies. Of course, there
23:29
Speaker 1: must be context to to what you're doing in an
23:32
Speaker 1: investment portfolio, UM, But the way I would sort of
23:37
Speaker 1: characterize it is, we don't think that UM, considering macroeconomic
23:43
Speaker 1: variables is the right context because they're extremely difficult to predict.
23:48
Speaker 1: We don't claim any expertise in that. Instead, I'd say
23:52
Speaker 1: that the macro context that has been really important to us,
23:56
Speaker 1: if you look over the past ten years, is that
23:59
Speaker 1: we've seen some of these sort of exponential technology trends
24:03
Speaker 1: which are actually really quite predictable um so. More's law
24:07
Speaker 1: of the number of transistors you can get on a
24:09
Speaker 1: semiconductor chip for for a dollar, or the the cost
24:15
Speaker 1: of sequencing a base pair of DNA, or the cost
24:18
Speaker 1: of training a machine learning model, or which whichever trend
24:22
Speaker 1: of these you you wish to pick. But there have
24:24
Speaker 1: been actually these these really fundamental and actually quite predictable
24:28
Speaker 1: um sets of progress that have enabled all sorts of
24:32
Speaker 1: things from a from a company perspective, um so. And
24:37
Speaker 1: so one of those contexts, if you like, is that
24:40
Speaker 1: we've seen China's emergence as a global economic superpower, um
24:45
Speaker 1: tied with the fact that you've you've had a degree
24:48
Speaker 1: of entrepreneurialism and creativity and dynamism in the private sector
24:53
Speaker 1: that that we really have only seen elsewhere in the
24:57
Speaker 1: West coast of the US, and so we've been really
25:00
Speaker 1: interested in that set of companies. I think one of
25:04
Speaker 1: the things that that we've we've missed or we've been
25:07
Speaker 1: slow too, if you like. Is this changing attitudes to
25:11
Speaker 1: China in the US and the the moving from this
25:16
Speaker 1: environment where China's economic development was to be encouraged and
25:19
Speaker 1: supported to one where there's much more of dynamic of
25:23
Speaker 1: great power competition and UM. You know, there's there's no
25:28
Speaker 1: longer this drive to see see China succeed economically. UM.
25:34
Speaker 1: And at the same time, you've had a set of
25:37
Speaker 1: set of issues domestically in China where the agenda is
25:40
Speaker 1: as of government has has moved on, and it's been
25:43
Speaker 1: a much more difficult operating environment for for for private
25:47
Speaker 1: companies in China, particularly in the technology sector, particularly the
25:50
Speaker 1: marketplace type business model that sits between consumers and the
25:54
Speaker 1: underlying suppliers. UM. And so I think we've been critical
26:00
Speaker 1: of of ourselves. I think we've just been slow to
26:03
Speaker 1: recognize that in the scale of the waiting that we've
26:06
Speaker 1: had in China. And now when it comes to moving
26:09
Speaker 1: that on, I think it's really important to again to
26:11
Speaker 1: go back to the individual companies, which which are the
26:14
Speaker 1: companies that that changing backdrop makes things more challenging for UM,
26:19
Speaker 1: and which the companies that are well aligned with that
26:21
Speaker 1: with that different environment. And so what you've seen in
26:24
Speaker 1: the portfolio is it is is shift away from some
26:27
Speaker 1: of these big online platform models, um and based on
26:32
Speaker 1: concerns about actually, what's the growth trajectory for these companies
26:35
Speaker 1: if you look out over the next five or ten years. Okay,
26:39
Speaker 1: So that's that's a shift, thief, and it makes sense.
26:42
Speaker 1: The other one I wanted to ask you about, the
26:44
Speaker 1: other sort of largest part of the portfolio that that
26:47
Speaker 1: I'm sure people ask you about all the time, is
26:49
Speaker 1: the the unlisted component as a whole, So the private component.
26:54
Speaker 1: And we're hearing a lot in the market at the
26:55
Speaker 1: moment about how great it is to be in private
26:57
Speaker 1: equity in a market environment like this because it's holding
26:59
Speaker 1: up so well, um, And isn't that great that private
27:02
Speaker 1: equity is not under performing in quite the same way
27:05
Speaker 1: as everything else? But of course we all know, we
27:06
Speaker 1: all know that that's not true, and that will, of
27:09
Speaker 1: course private equity investments will be in fact performing just
27:11
Speaker 1: as badly as anything else were you to attempt to
27:13
Speaker 1: sell them and where you do, everybody to value them
27:16
Speaker 1: correctly relative to to listed investments. So that's a big
27:19
Speaker 1: concern in the market. And you've now got what is
27:21
Speaker 1: a sort of about thirty percent of the trust is
27:24
Speaker 1: in unlisted investments. Can you just reassure us on that? Okay,
27:30
Speaker 1: so I think you you'll you're absolutely right. So there's
27:34
Speaker 1: two issue, two issues to slightly separate. UM. One is
27:39
Speaker 1: if you don't revalue your private investments very often, then
27:43
Speaker 1: of course they seem like they're holding up very well.
27:46
Speaker 1: But you know, as as as you rightly say, if
27:48
Speaker 1: you're if you're listed Piers stock prices are formed by
27:50
Speaker 1: fifty pc, then your own valuation is followed by UM.
27:54
Speaker 1: And so the question is do you do you acknowledge
27:56
Speaker 1: that or not? And so from the point of view
27:59
Speaker 1: of scott Mortgage and our asset value, we revalue these
28:03
Speaker 1: assets extremely regularly based on what listed stock markets are doing.
28:08
Speaker 1: So there's no you know, let's let's just pretend the
28:12
Speaker 1: world hasn't changed. Our own asset value is very up
28:16
Speaker 1: to date, and we've published statistics about the hundreds of
28:20
Speaker 1: times we've we've we've looked at the valuation of these
28:23
Speaker 1: assets over the course of this year, for example. So
28:27
Speaker 1: I really have no concern that the book value of
28:29
Speaker 1: Scottish mortgages overstated in this environment. UM I think there's
28:34
Speaker 1: a there's a different set of issues around how how
28:38
Speaker 1: companies value themselves. And so you know, if you're a
28:41
Speaker 1: private company, you've got a different calculus then if you're
28:44
Speaker 1: a public company. At this point, um, you you you
28:48
Speaker 1: don't have to acknowledge what's going on in the world
28:49
Speaker 1: around you if you need to, unless you have to
28:52
Speaker 1: raise new money. And so what you see is companies
28:55
Speaker 1: are putting off the day they have to raise new money,
28:58
Speaker 1: either by reducing their spending plans, laying off employees. Um.
29:03
Speaker 1: You're just just and and if they do raise money,
29:06
Speaker 1: they can also do it in a structured way, which
29:08
Speaker 1: doesn't necessarily mean they have to embrace the current economic environment. Um.
29:14
Speaker 1: And so we've been relatively slow in deploying capital into
29:18
Speaker 1: private companies over the course of the past year, given
29:21
Speaker 1: the changing environment. Um. But on the but but equally,
29:26
Speaker 1: I think at some point that that changes and it
29:28
Speaker 1: will become attractive to to start to playing capital into
29:32
Speaker 1: private companies. And but but I don't feel we're at
29:35
Speaker 1: that point yet until until they've accepted the reality that
29:38
Speaker 1: you described. Okay, so it's a waiting game, waiting for
29:42
Speaker 1: private companies to fully understand that the old days aren't
29:44
Speaker 1: coming back, and they're going to have to change their
29:46
Speaker 1: own valuations if they want to raise more capital. At
29:49
Speaker 1: which point, at which point people like you with plenty
29:52
Speaker 1: of said capital I should find fabulous opportunities. Yeah, And
29:56
Speaker 1: I mean there's a danger in all these things in generalizing, right,
29:59
Speaker 1: because we also have private companies that are doing extremely well.
30:03
Speaker 1: And and this speaks to the point I think that
30:07
Speaker 1: to us, we're just trying to invest in attractive growth
30:09
Speaker 1: companies and actually whether they're private or public doesn't really
30:13
Speaker 1: matter a great deal. Um you know, I don't see
30:16
Speaker 1: private companies as riskier than public companies. They're not smaller
30:19
Speaker 1: than public companies. Um you know. They their their assets
30:23
Speaker 1: that actually in most of the areas would probably have
30:26
Speaker 1: been listed companies. It's just the specifics of the environment
30:29
Speaker 1: we find ourselves in today. So if you look at
30:32
Speaker 1: a company like SpaceX um in in in in accident
30:38
Speaker 1: driving down the cost of access to space, that that company,
30:41
Speaker 1: you can see in in new stories about raising new money,
30:45
Speaker 1: has been performing extremely well. Or if you look at
30:48
Speaker 1: if you look at our largest private holding, which is Northfolk,
30:51
Speaker 1: which is a producer row of batteries for electric vehicles
30:54
Speaker 1: in Europe UM again performing extremely well. You can see
30:59
Speaker 1: that dot option of electric vehicles. It's rising for all
31:02
Speaker 1: the geopolitical issues that we've talked about previously, having domestic
31:07
Speaker 1: supply of batteries or at least European supply of of
31:11
Speaker 1: batteries and controlling that supply chain is becoming more geopolitically important.
31:15
Speaker 1: So their prospects have improved a lot over the past
31:18
Speaker 1: year UM and so so you know, yes it's gloom
31:21
Speaker 1: and doom. Yes we're marking the prices of these these
31:23
Speaker 1: assets down in line with what's happening to public stock markets.
31:27
Speaker 1: But actually, underlyingly, you know that there's a mix from
31:30
Speaker 1: those that are doing very well like SpaceX and awful
31:32
Speaker 1: to to others which actually the withdrawal of funding at
31:35
Speaker 1: an earlier stage in their development is is being a
31:38
Speaker 1: really a really big headwind. Do you think that in
31:42
Speaker 1: the last ten years also have seen this huge shift
31:45
Speaker 1: from from companies growth companies in particular staying away from
31:48
Speaker 1: public markets and saying in private markets way way longer
31:51
Speaker 1: than they would have previously, as think it's harder to
31:54
Speaker 1: raise money outside the listed environment, which it slightly feels
31:58
Speaker 1: like it might overcome decades. Do you see possibly companies
32:03
Speaker 1: returning to public markets or has the regulatory overlay and
32:06
Speaker 1: transparency difficulties of being listed now become so so extreme
32:11
Speaker 1: that companies are likely to to stay private in the
32:13
Speaker 1: way they have for the last decade. So shift back
32:16
Speaker 1: coming or not? Do you think? I really don't know.
32:20
Speaker 1: It's the understandswer Um. There is a there is a
32:23
Speaker 1: lot of capital I think waiting in the wings in
32:27
Speaker 1: private markets. You know, Yes, it's is this supply is
32:30
Speaker 1: scarce at the moment and an activity has has dropped generally,
32:34
Speaker 1: But I don't think there's necessarily a structural change in
32:38
Speaker 1: the supply of capital. Um. I think what's what's important
32:42
Speaker 1: to my mind is just to have the flexibility to
32:45
Speaker 1: be agnostic, if you like. And so you know, we've
32:49
Speaker 1: we've been able to to go after these companies where
32:52
Speaker 1: they have been over the past ten years. If if
32:54
Speaker 1: in the next ten years that's in public markets, great, um.
32:57
Speaker 1: But it's I think the role we're playing for our
33:01
Speaker 1: shovelders again is getting getting access to these companies, particularly
33:05
Speaker 1: if they stay private. Is it's very difficult for an
33:09
Speaker 1: individual investor, and it's actually very difficult for an institutional investor,
33:13
Speaker 1: because when once you once you're an environment where companies
33:17
Speaker 1: are choosing their shareholders, um, then the question becomes what
33:21
Speaker 1: do you bring other than capital? And I think our
33:24
Speaker 1: reputation has been as being long term and serious investors
33:29
Speaker 1: in growth companies and public markets. Having a ten year
33:32
Speaker 1: average holding period in public markets really matters when when
33:36
Speaker 1: founders are considering who they want as their shareholders and
33:40
Speaker 1: so having that dynamic, but allowing the individual shareholders for
33:44
Speaker 1: Scottish Mortgage to get access to these assets again at
33:47
Speaker 1: a low fee level, not that the types of fee
33:50
Speaker 1: levels you you've become accustomed to in private equity is
33:53
Speaker 1: a really important part of the job we're trying to do.
33:56
Speaker 1: Must be really tough on to sell companies when you
34:00
Speaker 1: have this long term relationship with them and you talk
34:02
Speaker 1: about being partners with them of a long period of
34:05
Speaker 1: time and tenure holding periods, etcetera. When you look at
34:08
Speaker 1: a company then and you say, well, actually we're near
34:11
Speaker 1: the end of our holding period and either it's it's
34:13
Speaker 1: too expensive or it's not growing anymore or whatever it is,
34:16
Speaker 1: that's a tough relationship to break. Yeah, that's right, And
34:21
Speaker 1: I think that the it ought to be. You know,
34:24
Speaker 1: if you're a serious owner of business, if you you
34:27
Speaker 1: haven't just been sort of um anonymously, sort of trading
34:31
Speaker 1: bits of paper, if if you've tried to act like
34:33
Speaker 1: an owner, they're actually moving on ought to be something
34:36
Speaker 1: that's quite difficult to do. UM And I think the
34:41
Speaker 1: way that I would articulate it to to our holdings
34:44
Speaker 1: to companies is it goes back to the point we're
34:47
Speaker 1: talking about earlier. We have a very concentrated portfolio. Not
34:50
Speaker 1: owning a stock doesn't mean that we have a negative
34:52
Speaker 1: opinion of a stock. It's just that we we own
34:55
Speaker 1: relatively few UM and we we were the companies that
34:59
Speaker 1: we own a tied to a very clear philosophy and process.
35:03
Speaker 1: You know, we have very demanding growth ambitions for our
35:05
Speaker 1: companies UM and it may be that a company just
35:08
Speaker 1: doesn't match up to that, you know, to to to
35:12
Speaker 1: what we're doing in the investment philosophy, and so you know,
35:16
Speaker 1: if if it makes more sense for other types of
35:19
Speaker 1: investors to earn it, then that's you know, that's not
35:22
Speaker 1: something personal about the management team. It's not a criticism
35:25
Speaker 1: of the company, is just saying that you don't really
35:28
Speaker 1: fit with the you know, the growth criteria that we
35:31
Speaker 1: have if we look out over the next five or
35:33
Speaker 1: ten years. And so just having that grown up conversation
35:35
Speaker 1: with with management teams is you know, it's it's hard,
35:39
Speaker 1: but I think it's it's again it comes back to
35:42
Speaker 1: not trying to be all things to all people. Yeah, okay, Well,
35:45
Speaker 1: let's talk about some of the companies that do fit,
35:48
Speaker 1: that are growing, that you're still really happy with. Let's
35:51
Speaker 1: look at the top ten. Are there any in there
35:53
Speaker 1: that stand out for you at the moment that you're
35:55
Speaker 1: particularly happy with UM, And let's let's start at number one,
36:00
Speaker 1: Ma Dinner. UM. You know that so horrible performer. Horrible performer.
36:06
Speaker 1: So it depends what you mean by performance. So, you know,
36:10
Speaker 1: I look at UM, I look at what they're doing,
36:13
Speaker 1: and it's just so exciting and important what they're going
36:17
Speaker 1: to do over the next decade. So so we've become
36:21
Speaker 1: familiar familiar with this company because of its its COVID
36:24
Speaker 1: vaccine and UM. I think the first the first stage
36:29
Speaker 1: of what they're going to transform is respiratory disease. And
36:33
Speaker 1: so this season, people have been getting their COVID shot,
36:37
Speaker 1: they've been getting their flu shot, UM. The first step
36:41
Speaker 1: is to combine those two things. UM. So let's just
36:43
Speaker 1: have one shot UM. Now it doesn't sound like a
36:46
Speaker 1: big deal, but in terms of UM, the logistics, in
36:50
Speaker 1: terms of compatient compliance, that that would be a significant
36:54
Speaker 1: step forward. The next is that when we talk about flute,
36:59
Speaker 1: there are actually about ten different viruses that make up
37:02
Speaker 1: what we consider to be flu, and so you have
37:04
Speaker 1: two different dynamics at work. If you take your flu shot. UM,
37:08
Speaker 1: you've you've got an issue where people where experts decided
37:11
Speaker 1: which strain of the flu to target a year in advance,
37:14
Speaker 1: and we don't know if that's going to to be
37:16
Speaker 1: right a year later when we will take the flu shot.
37:19
Speaker 1: But also that there are these nine other respiratory diseases
37:22
Speaker 1: which this shot doesn't help you with. UM. What the
37:25
Speaker 1: Maderna's technology promises is first of all, greater accuracy and
37:28
Speaker 1: that effectiveness in that flu shot itself, but also the
37:32
Speaker 1: ability to target these nine other viruses and ultimately combine
37:36
Speaker 1: that into a single shot, and the impact that can
37:40
Speaker 1: have on healthcare systems which are clogged up by with
37:44
Speaker 1: patients in hospitals with with respiratory illness over over the
37:48
Speaker 1: winter months. Is huge UM, and that's the least exciting
37:52
Speaker 1: butter MADERNA. Then the next part is actually looking at
37:55
Speaker 1: latent viruses. And so there's there's a t r viruses
37:59
Speaker 1: that we know of the circulating population, about five of
38:03
Speaker 1: which have have UM have a vaccine UM. But we
38:09
Speaker 1: know that the health consequences of these viruses UM, so
38:13
Speaker 1: that's CMV, e b v HIV are very serious UM.
38:20
Speaker 1: So so about of cancers have a viral sort of
38:26
Speaker 1: origin UM. And what what we're dinner applying to do
38:30
Speaker 1: is to go after all of these viruses, both with
38:33
Speaker 1: with vaccines UM in younger individuals but also vaccine based
38:38
Speaker 1: treatments to suppress the virus and older individuals and it
38:41
Speaker 1: can start having the impact on these big disease categories
38:43
Speaker 1: that we don't think of as viral l cancer UM
38:46
Speaker 1: like ms UM. And then find the final part is
38:51
Speaker 1: personalized cancer vaccines. So can you actually UM start treating
38:56
Speaker 1: patients with cancer by using personalized treatments based on our
39:01
Speaker 1: our an a technology and all of these things are
39:04
Speaker 1: engineering charges and of these all based on the m
39:07
Speaker 1: RNA technology that was used in the COVID vaccine. They
39:11
Speaker 1: are and and so as as it's and it's is
39:14
Speaker 1: platform technology. So so we've seen the one output of
39:18
Speaker 1: this platform technology. And what do I mean by this,
39:21
Speaker 1: It's that there is there is a molecule which then
39:25
Speaker 1: the scientists can go in and modify and edit to
39:28
Speaker 1: to to activate our own cells in a defense against
39:32
Speaker 1: all these various illnesses UM. And what does that mean? Well,
39:36
Speaker 1: if you if you look at if you look at
39:39
Speaker 1: the way that drugs are designed, UM, efficacy, it's not
39:44
Speaker 1: usually a problem yet of drugs don't make it from
39:48
Speaker 1: the clinic to inter patients. Why when it's toxicity, it's
39:52
Speaker 1: that they have unintended consequences elsewhere in the body. Now,
39:56
Speaker 1: if you are using a single molecule which you're adjusting,
40:01
Speaker 1: which which occurs in nature, is well studied, is well understood,
40:04
Speaker 1: you start to you you avoid these toxicity and unintended
40:08
Speaker 1: consequences UM, and then you can start to talk about
40:12
Speaker 1: a much much higher successory than then we're used to
40:15
Speaker 1: in drug department. And so to my mind, this is
40:19
Speaker 1: this is not that different from what we've talked about
40:21
Speaker 1: in in information technology for for the past decade. It's programming.
40:26
Speaker 1: It's just that we're programming our own cells UM. Using
40:30
Speaker 1: using the tools of genetics rather than than than software programs.
40:35
Speaker 1: There might be a leak there to get everyone comfortable
40:38
Speaker 1: with that idea. But perhaps when they find out the
40:41
Speaker 1: potential results, that will get comfortable faster than one might expect.
40:44
Speaker 1: I think, yes, I mean and and that's what slows
40:46
Speaker 1: down the healthcare system, of course, But you know not,
40:48
Speaker 1: none of these things are going to arrive in patients
40:51
Speaker 1: without having gone through rigorous testing regimes. But when you
40:55
Speaker 1: when you start to look at the data the outcomes
40:58
Speaker 1: for patients that the safety profile, think, that's what will
41:00
Speaker 1: convince people. Pick another one, because you, you know, you
41:03
Speaker 1: made us all believe in Madonna, and we no longer
41:05
Speaker 1: think for a second that the forty percent of share
41:08
Speaker 1: price fall over the last however long is relevant. We're
41:10
Speaker 1: all rushing out to buy up for the long term
41:12
Speaker 1: um and it makes us understand the process a little more.
41:15
Speaker 1: Is there is there another that you can pull from
41:17
Speaker 1: the top ten that that you feel similarly positively about,
41:19
Speaker 1: Holy feel positively about all of them. Pick one we
41:23
Speaker 1: we've been adding to for the past year. Macaudolibre Um.
41:26
Speaker 1: So this is a Latin American or South South American
41:31
Speaker 1: e commerce platform businesses in Brazil, Mexico, Argentina, et cetera. UM.
41:36
Speaker 1: What we really like about it is that in the
41:41
Speaker 1: commerce business is continuing to to make the experience better
41:45
Speaker 1: and better for buyas UM. At the same time, it's
41:49
Speaker 1: using our position in commerce to build a finance business.
41:53
Speaker 1: So that's partly in payments, but it's also in in lending.
41:57
Speaker 1: It's in driving the efficacy of the fine to the system,
42:00
Speaker 1: what the financial system can do for individuals in Latin America. UM.
42:06
Speaker 1: It's it's a founder management team who know that market
42:09
Speaker 1: inside out, who have been very good at UM fending
42:14
Speaker 1: off the encroachment from the big global platforms UM not
42:19
Speaker 1: not by relying on local regulations, but just by out
42:21
Speaker 1: competing them in those markets. And this is a team
42:26
Speaker 1: that's operated through very difficult economic conditions for the past
42:30
Speaker 1: ten years, very high interest rates for the past ten years.
42:33
Speaker 1: There's nothing new about what's going on in this environment
42:36
Speaker 1: for them UM, so that there would be a more
42:39
Speaker 1: conventional example of a business that has just been a
42:42
Speaker 1: phenomenal executor, which we think is available at a very
42:46
Speaker 1: attractive price in this widespread sell off of growth assets
42:49
Speaker 1: that we've talked about brilliant. Tom. Thank you so much
42:52
Speaker 1: for joining us today. I think that will have been
42:54
Speaker 1: really useful for all the holders of the trust out there.
42:57
Speaker 1: Hugely appreciated and I hope we can talk again and
43:00
Speaker 1: in a bank six months or something and see where
43:02
Speaker 1: we're at. Thank you very much. It's it's great to
43:04
Speaker 1: be to be here talking with you. Thanks for listening
43:14
Speaker 1: to this week's Marion Talks Money. We'll be back next week,
43:16
Speaker 1: but in the meantime, if you like our show, please
43:18
Speaker 1: head on over to Apple Podcasts or wherever you listen
43:20
Speaker 1: to your podcasts and rate, review and subscribe. This episode
43:25
Speaker 1: was hosted by me Mary's some Setweb. It was produced
43:28
Speaker 1: by some AERSADI editing and sound designed by Blake Maple's
43:31
Speaker 1: Special thanks to Tom Slater and John Steppick. Don't forget
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Speaker 1: to sign up to John Steppics newsletter, Money Distilled, which
43:37
Speaker 1: is excellent for link to do so is in the
43:40
Speaker 1: show notes