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Top 10.

 

Data as at 28 June 2019

 

The top 10 holdings in the 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.

 

Leaders in their field

 

You may notice that there are no competing companies in our top 10. Indeed, there are no companies that directly compete against each other across our entire portfolio.

The reason for this is because we believe in investing only in the best. Where we have chosen to invest in a company, it is because not only do we believe it to be a great company, but because it represents the best company competing in its respective field.

 

 

Company

Time in portfolio

Company Size

Adobe

Sep-17

£105bn  

  • 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. 

  • Amazon

    Sep-17

    £692bn  

  • Much of what we love about Amazon applies to both of its two largest businesses: online retail and AWS. They are market leaders by a wide margin, laser-focused on customer satisfaction, hellish to compete against, enjoy plentiful growth opportunities and plan for the long not the short term.

    We are particularly excited about AWS. It's the IT foundation for most of the latest generation of nimble, fast-growing companies such as Netflix, Uber, Lyft and Airbnb and is the first choice for the most of the software companies that we follow closely. It's large and well known already but we believe the potential is larger still. Today, only a fraction of the worlds computing is done in the public cloud. Over time we believe it will be the majority, suggesting scope for AWS revenues to increase many times over and become one of the world’s largest businesses in its own right.

  • Ansys

    Nov-18

    £12bn  

  • Ansys put it best themselves: “if you've ever seen a rocket launch, flown on an airplane, driven a car, used a computer, touched a mobile device, crossed a bridge, or put on wearable technology, chances are you've used a product where Ansys software played a critical role in its creation”. Ansys is the leading developer of ‘simulation software’ which takes digital designs and predicts how they will behave in the real world, saving its customers (almost every large industrial company) time and money. 

    We are optimistic about an acceleration in Ansys growth rate (an already respectable c9% organic revenue growth over the past 7 years). Products are becoming ever more complex, manufacturing techniques ever more advanced and competition ever more intense. Meanwhile new CEO Ajei Gopal has launched growth initiatives such as simplified versions of the software with broader appeal and is cutting deals that put Ansys simulation inside other pieces of software. 

  • Autodesk

    Mar-18

    £37bn  

  • AutoCAD, Revit and Inventor are industry-standard computer aided design (CAD) tools made by Autodesk that are deeply embedded in the construction and manufacturing industries.

    We’re optimistic about Autodesk for a number of reasons: Autodesk is helping to drive a long-overdue ‘digitisation’ of the construction industry with paper drawings and post-it notes being replaced by digital models and iPads. A subscription transition in the vein of Adobe and Microsoft should bring Autodesk closer to it’s customers, provide more predictable cash flows, help to combat software piracy, and allow delivery of continuous innovation to customers. On the final point we are excited about advances that Autodesk is making in areas like web-based CAD, Generative Design and software tools for 3D Printing.

  • Microsoft

    Sep-17

    £751bn  

  • 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 pursing 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). 

  • PayPal

    Sep-17

    £102bn  

  • PayPal is a high quality business benefiting from structural growth in digital payments. At its core is a global two-sided payment network operating at scale, storing payment details for consumers while processing online transactions for businesses. PayPal’s scale comes from its first mover advantage at the dawn of the consumer internet. Network effects and superior technology helped PayPal grow users in the tens of millions to more than 250 million in 2018. More recently, PayPal has been extending its lead over competitors through commercial partnerships spanning financial institutions (Barclays, HSBC, Amex) as well as tech giants (Facebook, Google).

    PayPal’s ability to keep growing its lead – commercially and technologically – gives us confidence that the business is likely to perform well in the long run.

  • Salesforce

    Mar-18

    £93bn  

  • Salesforce is one of the great success stories in enterprise software having pioneered the software-as-a-service model in the early 2000s. Their Customer Relationship Management software helps companies to manage customer information, deliver great customer service, market their products and services and sell online. 

    Salesforce growth is being driven by what visionary CEO Marc Benioff calls the ‘4th industrial revolution’; technology bringing companies close to their customers.  A statistic we love is that two years ago Salesforce had 24 ‘mega customers’ paying more than $20m annually (not bad!), but just one year later that number had risen to 40. This reflects the incredible traction that Salesforce is gaining as the trusted partner that large companies desperately need to thrive in the 4th industrial revolution. 

  • Smith & Nephew

    Aug-18

    £15bn  

  • Smith & Nephew is in the midst of a turnaround following the appointment of its new and highly regarded CEO, Namal Nawana. Nawana was only appointed CEO in May 2018 but he has already made impressive progress in transforming Smith & Nephew’s culture, organisational structure and strategy.  These changes should ultimately result in improved organic growth, operating profit margin expansion, improved returns from acquisitions and fundamentally a higher performing organisation. 

    While the market remains sceptical of this turnaround given Smith & Nephew’s historically lacklustre performance we see significant potential for the company to grow and cement its position as a leading global medical device company.

  • Veeva

    Jun-18

    £18bn  

  • 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. It’s no coincidence to us that Founder and CEO Peter Gassner cut his teeth at Salesforce.  

    Veeva has gained c70% 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 aforementioned 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 100s 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. 

  • Wyndham Hotels

    Jun-18

    £4bn  

  • Wyndham Hotels is one of the largest hotel franchisors in the world with number one positions in the economy and midscale segments. Following its recent spinoff Wyndham has a great opportunity to generate consistent revenue growth as it expands outside the US and benefits from continued growth in global travel spend.  Moreover, the highly experienced management team is continuing to generate value as they grow their recurring revenue and deliver the benefits from the recently acquired La Quinta brand. 

    As a result, we believe that the market underappreciates the quality of Wyndham’s business and its potential growth prospects thus making Wyndham a compelling investment.

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