Adyen has a better product: it has more precise processing technology, can better detect fraud, and you can use more payment types. And it innovates faster than competitors because they have built their own platforms flexibly, and many of their competitors are built on a bunch of different code bases.
Last year, Adyen’s payments increased by more than 50%. It is also very profitable, with an operating profit margin of over 40%. Obviously, this company is relying on product quality to win, not just price.
Adyen has stated that the compound payment in the medium term can reach more than 30%. We believe that this is achievable and can far exceed this goal.
Barron’s Weekly: Do you have any investments in Chinese companies?
Torse: A new relatively small position is Bilibili (BILI). We used to have larger positions on Tencent and Alibaba Group. Bilibili is an online video platform, similar to YouTube, on which users generate content. It is very popular among Gen Z in China, and its user base and content breadth are growing rapidly.
Its monetization methods are also more diverse: not only advertising, but also online tying and live videos of related products. Bilibili users are all in China. If Bilibili needs to be delisted in the US, we can hold stocks in China.
Barron’s Weekly: What else do you like?
Torse: Web development platform WIX. com (WIX). It is headquartered in Tel Aviv and has a market value of US$15 billion. It performs well in the COVID-19 environment. It allows any business to easily create a website, whether you are a law firm or an e-commerce company. It uses a freemium model, so you can start for free, and then if you want to add more features, you need to pay a monthly subscription fee. If you want to accept payments, it also has some transaction revenue streams, the charges will increase, and this business has been growing rapidly.
Believe it or not, before the COVID-19 pandemic, more than half of the world’s small businesses did not have a website. It is almost inevitable to have an online presence. This is a very large market, still has a long penetration runway, and its management team is also very strong. As the most important indicator for measuring revenue growth, the cash paid in advance by new users has accelerated by more than 30%. Wix.com can continue to expand profit margins and increase cash flow at a fairly fast rate. Although it is already profitable, it is still in the investment stage.
Barron’s: What is your most misunderstood position?
Fortier: Uber. Its previous poor governance has been fully reported in the media, but it has introduced a new chief executiveOfficer and the new CFO, they are both excellent. They navigate in two different basic backgrounds. On the one hand, the new crown pneumonia virus has crushed the driving industry, on the other hand, Uber Eats is growing at an incredible rate. With Uber Eats, we believe that the change in consumer behavior will be lasting.
Once people actually use this product and start ordering, stickiness will appear. For obvious reasons, the driving industry will fall into a cyclical downturn. But in the end, people will go out of their homes and use ride-hailing services again, and Uber should be a direct beneficiary. It is well positioned and has a strong business model around shared rides. In the long run, this is an excellent investment opportunity.