- Sean Rapley
September 2020 - Luke's Global Fund Update
We are pleased to report Luke's Global Fund achieved a return of 5.2% (in constant currency) return over the month of September, and a 16.2% gain for the first quarter of the financial year on a constant currency basis. The top three contributors to the performance over the quarter were:
Crowdstrike Holdings, which contributed 31% of the returns over the quarter. Crowdstrike has been a beneficiary of the working from home disruption to the way we work, and continue to expand their market leading platform. The cloud based platform has disrupted the end-point security space, with a solution that provides unmatched threat identification and triage.
Stone Co, which contributed 15.9% of the returns over the quarter. Stone Co., along with the Brazil economy has suffered more than most during the COVID-19 pandemic, however, the uniquely Brazilian business model, of a Hub based service model, and providing small and micro businesses in Brazil the ability to accept digital payments, sets Stone Co. apart from its competitors. Stone Co. reported improving conditions, with a 128% yoy TPV growth in the month of July, following Q1 2020 results heavily impacted by COVID-19 shut-downs.
Tradedesk, which contributed 14.8% of the returns despite revenue falling 13% y.o.y. for the quarter. Jeff Green is a master salesman, and is selling the opportunity before Tradedesk, and the market continues to believe.
The key detractor for the month was Alteryx, which contributed -20.4% to the portfolio performance. As mentioned in our August report, Alteryx have experienced a significant slowdown, with less upgrades from existing customers, and new customers delaying their purchasing of licences. WE will maintain our position in Alteryx, as we are confident Alteryx's growth trajectory will recover in the post-COVID world.
Notable changes to the portfolio over the month of September included:
We sold half of our position in Tradedesk. We considered the valuation of Tradedesk as being rather stretched, at an EV/S in excess of 30, for a company growing revenue below 40%.
We opened a position in Sea Ltd. Sea Ltd have three Core Businesses; Shopee, Garena, and Sea Money. Sea Ltd reported adj. revenue growth of 93.4% in the July 2020 quarter. We believe Sea Ltd is an exceptional business, with a great leadership team, and provides exposure to the South East Asian market which remains in the early phases of digital transformation. We plan to prepare a more detailed write up on the business in the near future.
We also opened a small position in BASE Inc. Base Inc., in a nutshell, is the Shopify of Japan, and they experienced a tremendous surge in demand during COVID-19 lockdown periods, with bricks and mortar stores scrambling to build an online presence. An excellent write up of BASE Inc. as prepared by Will thrower can be found here.
If you have any opinions on the companies we hold, or would like to know more about our investments, we would love to hear your feedback.