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Data as at 30 September 2021
The Top 10 holdings in the LF Blue Whale Growth Fund make up approximately 50% of the total value of the fund.
In picking our Top 10, we employ what we internally call ‘The Beautiful Companies Concept’. That is picking those companies which fulfil several important criteria that, we believe, makes them ‘beautiful’. They represent our highest conviction picks within the portfolio and offer, we believe, a significant upside to the current share price.
Here we take a look at each of our Top 10 holdings and explain why they feature in top positions within our portfolio.
Please note that the Top 10 is provided for information only and the views we express on holdings do not constitute Investment Recommendations and must not be viewed as such. The sectors stated are Blue Whale's proprietary classifications which may differ from the standard industry classifications referred to on the Factsheet.
Adobe has more than 50% of the digital content creation software market. Whenever you view an image, video, website, magazine, or even an app, there is a good chance it was created using its software. We believe Adobe will be a major beneficiary of continued explosive growth in this market, as ever-richer digital content is consumed across devices. Meanwhile, Adobe’s pioneering transition to a subscription model is unlocking international growth opportunities and helping to combat software piracy.
The first internet company whose name turned into a verb, Google has become synonymous with finding answers online. Branching out into maps and email, the company now provides services that are so embedded in our lives that we can’t imagine life without it.
Capitalising on its near-monopoly in online search, the company is reinvesting its profits from digital advertising into the platforms of the future - including driverless cars and augmented reality - which we see fuelling its journey to a multi-trillion dollar company.
Atlassian owns the de-facto collaboration tools used in developing the world’s most popular apps and software. Its flagship products, Jira and Confluence, enable software developers to communicate, share and plan new products and updates in a seamlessly efficient way with non-technical parts of the business, accelerating the pace of overall product improvement and new launches.
We are excited about Atlassian’s ability to extend its presence beyond tech companies as more businesses embark on the journey of digital transformation. Furthermore, by using its own products, the company has accelerated the creation of new tools for its die-hard userbase of developers. We are optimistic about these products contributing meaningfully to the company’s value over the long term.
How Facebook is used is often subject to debate, but we believe the outlook for the business is much more positive. 1.7 billion people or 20% of the world’s population log into Facebook every day. That number grows by a few hundred million every year. Advertisers continue to love the enormous reach and precise targeting that Facebook offers. They spent more than $10bn developing the platform every year. We are optimistic about future growth prospects driven by continued increase in the number of advertisers, further improvement in the relevance of ads, the nascent monetisation of WhatsApp, e-commerce particularly on Instagram and perhaps even digital payments.
Intuit is the company behind both QuickBooks, the leading accounting software for small businesses globally and TurboTax, the leading tax-filing software for individuals in the US. This niche focus and an excellent management team that embraces ‘self-disruption’ have helped Intuit to thrive across various technology era’s (DOS, Windows, Web and Mobile) since its founding in the 1980s.
While accounting and tax may sound ‘boring’, Intuit enjoys myriad growth opportunities. The majority of small businesses still don’t use any accounting software and the majority of US citizens still pay professionals to help file their taxes. Technology is helping to change both. For example, QuickBooks Online, the web and mobile based version, allows receipts and invoices to be captured in seconds using a smartphone camera and automatically matched to bank statements. QuickBooks Online has grown its subscribers from 700k to 3.4m in just 3 years – impressive, yet still only a fraction of the hundreds of millions of small businesses globally, that Intuit targets.
Mastercard is a high quality business benefitting from the structural shift of payments away from cash to mobile, online and contactless transactions. At its core, Mastercard runs BankNet, a global payment network connecting major banks for verifying and processing card payments. Mastercard is able to process hundreds of millions of transactions per day due to its superior technology. Looking ahead, Mastercard is seeking to build on its successes in consumer payments to business-to-business transactions (much of which is still made manually by cash or cheque) and we are confident in their ability to navigate and execute on this multi-decade opportunity.
Microsoft’s products; Windows, Office, server operating systems and developer tools, are part of the foundation of almost every enterprise. But history is littered with examples of companies in such enviable positions that abuse their power over customers and fail to adapt to a changing world. We believe Microsoft is a rare exception.
Since taking over as CEO in 2014, Satya Nadella has reinvigorated Microsoft by pursuing a more ‘open’ strategy (Office 365 works on Apple iPhones - unthinkable previously), overhauling internal culture to attract the best talent and focusing attention firmly on the future of technology (Microsoft is one of the top contributors to open source software and artificial intelligence research).
You may not have heard of Nvidia but chances are, you’re already a regular user of one of the many services their silicon chips enable, including video recommendations on TikTok, grammar checks in Word online, and augmented-reality shopping experiences on Facebook.
Nvidia’s premium processors were initially used for graphics-heavy computer games but their ability to accelerate the speed of data processing was quickly discovered by the major cloud service providers (Amazon Web Services, Google Cloud Platform, Microsoft Azure) and has now become the gold standard for running apps and processes in the Cloud.
We believe Nvidia’s opportunity lies at the confluence of three major secular trends over the next decade – artificial intelligence, augmented reality and 5G – all three of which drive increasingly higher demands on processing power, something Nvidia is well-positioned to supply.
Veeva develops software specifically for the life-sciences industry and was founded in 2007. A relentless focus on innovation and delighting its customers led Veeva to become the largest software vendor to the life-sciences industry just 10 years later.
Veeva has a dominant market share in pharmaceutical CRM software. We are optimistic about significant growth in the future as Veeva leverages its customer relationships, technology platform (Veeva Vault) and focus on innovation and customer surplus into many other niches within the life-sciences industry. And there are many; from the software used to manage vast amounts of data generated by clinical trials, to the software for a global pharmaceutical company to manage compliance with myriad regulations in the hundreds of countries in which it operates. Longer term, Veeva also has its sights on other industries that share some similar characteristics such as chemicals and cosmetics.
Visa is a high quality business benefitting from the structural shift of payments away from cash to mobile, online and contactless transactions. Visa operates VisaNet, a global payment network connecting major banks for verifying and processing card transactions. In 2018, Visa successfully merged its European and global operations so that its full array of value added products and services (especially in transaction security) could be rolled out across bank and fintech customers across Europe. Like Mastercard, Visa is building on its successes in consumer payments and bringing this to the B2B space. We are confident in their ability to navigate and execute on this multi-decade opportunity.