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Want to sink your teeth into some baby FAANGs?

September 23, 2020
Warrick Lace

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Want to sink your teeth into some baby FAANGs?

The US market’s remarkable recovery since its lows in March this year is almost entirely attributable to its technology sector, and to the so-called “FAANG” stocks in particular. The reason why the FAANG Facebook, Amazon, Apple, Netflix and Google (now Alphabet) stocks got their well-known acronym is because they share an underlying link to the new online driven economy. 

The US market’s remarkable recovery since its lows in March this year is almost entirely attributable to its technology sector, and to the so-called “FAANG” stocks in particular. 

The reason why the FAANG Facebook, Amazon, Apple, Netflix and Google (now Alphabet) stocks got their well-known acronym is because they share an underlying link to the new online driven economy. 

Australia desperately needs its own “baby faangs”. Our stock market performance is too reliant on big banks, diversified miners and giant retailers. The new digital economy is where growth and innovation will come from.

One of Australia’s most well-known and respected technology investors is Alex Waislitz, founder of Thorney Investments and manager of two listed funds, one of which is a technology focused fund (ASX: TEK).

Alex recently spoke with Reach Markets (watch here) and he also recently updated shareholders about TEK’s progress this year.

 

Here are some highlights from of what he had to say and top stock picks in the TEK portfolio:

At June 30, TEK’s NTA after tax stood at 33.8 cps, and as at 31 August the unaudited NTA had increased to 41.7 cps, an increase of 23%.

This strong performance underlines the value of TEK’s investment strategy which is to invest in both public and private technology companies at every stage of the business life cycle from start-ups through to established enterprises.

Highlights over the course of FY 2020 included:

  • continued growth of companies operating in the ‘fintech’ sector, including ‘buy now, pay later’ favourites, Afterpay Limited (APT) and Zip Co Limited (Z1P);
  • solid gains by the professional firms payment solutions company QuickFee (QFE), particularly in the USA where, like Afterpay, it has first mover advantage;
  • the takeover of Credible Labs Inc (CRD) by The Fox Corporation at a significant premium to TEK’s entry price;
  • the announced scheme of arrangement between OneVue Group Limited (OVH) and Iress Limited (IRE) which remains incomplete, and, in the opinion of TEK and its associated companies undervalues OneVue – especially in the wake of OVH’s FY 2020 results,
  • the emergence of Mesoblast Limited (MSB) to a leading position as a global regenerative medicine company;
  • several of TEK’s unlisted company investments preparing to IPO this year.

 

Whilst remaining hugely supportive of, and impressed by, the continued growth of APT, TEK reduced its exposure to the company during FY 2020. APT has been a spectacularly profitable investment for TEK since the company’s inception.

Fellow BNPL player Z1P is today TEK’s largest holding. Z1P also continues to impress. Its recent acquisition of QuadPay in the USA, its announced link with eBay, and its additional financing facilities have provided the company with an ever expanding growth platform.

Following its strong recent share price gains, regenerative medicine biotech company, Mesoblast has become TEK’s second largest listed holding. MSB made major steps towards commercialisation during the year as well as reporting increased revenues and a strong cash position. Its potential to produce a possible off-the-shelf cellular treatment for the most severely affected COVID-19 patients has also captured the market’s attention. The next six months will hopefully be the most exciting in MSB’s history.

Apart from the companies already mentioned, other large positions in the TEK portfolio currently include Yojee Ltd (YOJ), Brainchip Holdings (BRN), Life 360 Inc (360), Nitro Software Ltd (NTO), Imugene Limited (IMU) and Dubber Corp Ltd (DUB).

TEK’s largest unlisted holding, New York based Updater Inc, was hit by the initial impact of COVID-19 in the USA. However, the company took the right steps to prepare for the pandemic and is now moving forward strongly and trading well as the US real estate relocation market starts to spring back to life.

We are excited that at least five of TEK’s other unlisted holdings are preparing to IPO in the current financial year.

The first of these is expected to be the fintech company Credit Clear which has a technology platform to help businesses achieve better debt recovery outcomes by providing their customers with simpler and more manageable bill payment options though a mobile phone app. Having already signed up more than 800 customers including major clients in Transport, Financial Services, Government and Utilities as well as strengthening its board and management, Credit Clear is well placed to hit the ground running as a listed public company.

We understand there has been considerable investment interest in the Credit Clear IPO and we look forward to its listing on the ASX in October or November this year.

One other unlisted company in which TEK has a considerable stake is AP Ventures, an investment vehicle in which Afterpay holds a substantial stake. AP Ventures provides high growth companies with access to capital and, where appropriate, to Afterpay’s experience and links with merchants and customers.

While it is early days in AP Ventures’ growth path, we expect it to become a significant player over time. TEK’s investment provides shareholders with exposure to this high growth potential. We expect AP Ventures will consider a public listing as one of its liquidity options in due course.

Previous online forums can be found here at https://www.thorneytechnologies.com.au/videos.html and the TEK Chairman’s Updates are found at: https://www.thorneytechnologies.com.au/chairman-updates.html

Alex Waislitz
Chairman
31 August 2020
Thorney Technologies Ltd 2020 Annual Report

 

Past performance is not a reliable indicator of future performance.


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