September, 2023
The Global Growth Companies Fund (Managed Fund) returned -5.5% for September, underperforming its benchmark (MSCI World Accumulation Index (AUD)) by 1.5%. Palantir Technologies Inc., Airbnb Inc., and Costco Wholesale Corp. saw the largest share price increases, while Block Inc., Kering SA, and Roku Inc. saw the largest declines over the month.
The global strategy produced mixed returns over the September quarter. The quarter started strong following an encouraging U.S. financial reporting season in July. However, economic uncertainty centering around further interest rate rises in the U.S. dampened returns into September. This shortterm uncertainty and volatility in global bond markets, which we believe is neither fundamental nor entrenched, is a headwind for longer duration assets like those in our global strategy. Short-term volatility often provides a brief opportunity for investors with a long-term mindset.
Hyperion believes the strong underlying fundamental and earnings characteristics of our portfolio holdings will be reflected in market valuations over the long term. As we enter the third-quarter global reporting season in October and November, we are hopeful that underlying results will lead to a rebasing of valuations after the recent rise in bond yields.
Our long-term view remains unchanged that we will revert to a lower growth, lower inflation, and lower interest rate world which is starting to be seen in parts of Asia. A lower growth environment is much more favourable for growth investing. With a strong performance for the year-to-date, we believe the long-term outlook for our portfolio remains attractive, with forecast internal return rates above their long-run averages.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-September-2023.pdfAugust, 2023
The Hyperion Global Growth Companies Fund (Managed Fund)* returned 0.7% for August, underperforming its benchmark (MSCI World Accumulation Index (AUD)) by 0.9%. Intuit Inc., Mastercard Incorporated, and Visa Inc. saw the largest positive share price movements, while Block Inc., Palantir Technologies Inc., and Roku Inc. saw the largest share price declines over the month.
The month of August was quieter as the market digested company results and further macroeconomic news. Hyperion was broadly pleased with our portfolio companies’ quarterly results, which were in line with our long-term forecasts.
Economic data continues to show that the economic jolt from the pandemic is subsiding and stability in bond yields is being maintained. Stability is important as it allows confidence to come back into markets. Short-term valuations from higher bond yields look to have rebased and we are now importantly seeing our companies’ underlying fundamentals and earnings be the basis for market valuations. Hyperion still believes that we will revert to a lower growth, lower inflation, and lower interest rate world and in fact we are starting to see that in some parts of Europe and Asia. A lower growth environment is much more favourable for growth investing.
Although we have seen strong performance for the year to date, we believe the long-term return outlook for our portfolio remains attractive, with forecast internal rates of return above their long-run averages.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-August-2023.pdfJuly, 2023
The Hyperion Global Growth Companies Fund (Managed Fund)* returned 3.3% for July, outperforming its benchmark (MSCI World Accumulation Index (AUD)) by 1.1%. Roku, Inc., Palantir Technologies Inc., and Block, Inc. saw the largest positive share price movements, while Spotify Technology SA, Intuitive Surgical, Inc., and Microsoft Corp. (Microsoft) saw the largest share price declines over the month.
Our global strategy saw continued strength in the month of July as many of our portfolios companies reported their quarterly financial results, which have broadly been positive and in line with our long-term forecasts. We believe several positive emerging themes will continue throughout the year and beyond.
The first is a shift in corporations focusing more on efficiencies within their businesses, particularly at the bottom line (earnings). We believe the ability for companies to run their businesses harder by being more astute with their spending and sizing their workforce appropriately can help them achieve earnings leverage; this may produce considerable upside to margins, which is starting to be seen in several companies’ second-quarter 2023 results. The second positive has been around artificial intelligence (AI) and machine learning (ML), where we are starting to see inflection points, for example, Microsoft trialling their “Copilot” product and ServiceNow, Inc.
launching a customer service AI tool, which we believe in time may provide revenue uplifts. A key structural theme that Hyperion identified approximately 10 years ago was AI and ML, however the potential upgrades to revenue streams, efficiencies in productivity and eventually earnings are only now starting to be recognised by market participants. Read more about the benefits of AI and ML within our Global strategy here.
Although we have seen strong performance for the year to date, we believe the long-term return outlook for our portfolio remains attractive, with forecast internal rates of return above their long-run averages.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-July-2023.pdfJune, 2023
The Hyperion Global Growth Companies Fund (Managed Fund)* returned 5.7% for June, outperforming its benchmark (MSCI World Accumulation Index (AUD)) by 2.6%. Tesla, Inc., Airbnb Inc., and Intuitive Surgical Inc. saw the largest positive share price movements, while Salesforce, Inc. and Alphabet Inc., were the only companies to see share price declines over the month.
The month of June closed off a strong month and financial year for the global strategy, and investors with long-term mindsets are being rewarded for their patience as a more stable 10-year U.S bond yield has helped the attractive economics of our portfolio produce positive results.
Hyperion has always believed that our portfolio would recover from what we viewed as a non-fundamental drawdown period and the negative duration impact from higher bond yields continues to provide an opportunity for long-term investors to increase exposure to some of the best listed businesses in the world at attractive prices. The global strategy continues to offer above average forecast 10-year returns at current prices. The portfolio has robust fundamentals with high and sustainable returns on capital, low financial gearing and the ability to produce positive free cash flows.
Our portfolio’s ability to take market share tends to increase during economic downturns when weaker competitors are suffering. This ability to grow by taking market share enables our stocks to handle cyclical earnings downturns relatively better than most listed companies.
In our most recent webinar (watch the replay here), we reminded our investors why we believe investing in high quality structural growth companies is important and discussed why we remain confident in our portfolio companies and their ability to produce excess returns.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-June-2023.pdfMay, 2023
The Hyperion Global Growth Companies Fund (Managed Fund)* returned 12.2% for May, outperforming its benchmark (MSCI World Accumulation Index (AUD)) by 11.1%. Palantir Technologies Inc., Tesla Inc. and ServiceNow Inc. saw the largest share price increases, while Kering SA, LVMH and Airbnb, Inc. saw the largest declines over the month. The month of May saw strong performance for the global strategy as a more stable 10-year U.S bond yield has helped the attractive economics of our portfolio to once again produce positive results. As we look forward, there are several positive emerging themes that we believe will continue throughout the year and beyond.
The first of which is a shift in corporations focusing more on efficiencies within their businesses, particularly at the bottom line (earnings). The ability to run these businesses harder and achieve earnings leverage may produce considerable upside to margins over the medium term. The second positive has been around artificial intelligence (AI) and machine learning (ML), where we are starting to see inflection points. A key structural theme that Hyperion identified approximately 10 years ago was AI and ML, however the potential upgrades to revenue streams, efficiencies in productivity and eventually earnings are only now starting to be recognised by market participants.
In our most recent webinar (watch the replay here), we reminded our investors why we believe investing in high quality structural growth companies is important and discussed why we remain confident in our portfolio companies and their ability to produce excess returns. We believe the long-term return outlook for our portfolios continues to look attractive with robust fundamentals, high and sustainable returns on capital, low financial gearing and the ability to produce positive free cash flows.
File:April, 2023
The Hyperion Global Growth Companies Fund (Managed Fund)* returned -1.1% for April, underperforming its benchmark (MSCI World Accumulation Index (AUD)) by 4.3%. Intuitive Surgical, Inc., Meta Platforms Inc., and Hermes International SCA saw the largest positive share price movements while Tesla, Inc., Roku, Inc., and Block, Inc. saw the largest share price declines over the month.
The first quarter reporting season for the global strategy has been very encouraging as a number of companies surprised on the upside, with revenue and earnings exceeding market expectations. We’ve seen a shift of focus from many companies to achieving bottom-line growth (earnings), rather than just top line (revenue) which we view as a positive move.
We believe this shift, coupled with the structural growth themes that we identify within our portfolios, is enabling our portfolio companies to continue their growth and profitability in a challenging consumer landscape. Ultimately, profitable businesses that grow by taking market share will become more valuable and should be in a better position to produce attractive returns over the long term.
File:March, 2023
The Hyperion Global Growth Companies Fund (Managed Fund)* returned 8.4% for March, outperforming its benchmark (MSCI World Accumulation Index (AUD)) by 4.5%. Salesforce, Inc., Meta Platforms, Inc., and Microsoft Corp. saw the largest positive share price performance while Block Inc. (Block) was the only position to see share price declines over the month.
It has been a very encouraging start to the year for our global strategy which has pleasingly responded well to several factors, including a strong reporting season and a continued decline in U.S. inflation which has seen a reduction in 10-year U.S. Treasury yields from a recent peak in October 2022. However, the unprecedented rise in interest rates by central banks has produced some casualties including Silicon Valley Bank, Signature Bank, and First Republic Bank. Hyperion did not and does not have any direct exposure to any of these companies nor any other mid/lower tier bank or traditional financial institution. We believe the recent events in the banking system may result in slowing credit growth and should be a net positive for long duration and higher quality assets.
While many of Hyperion’s portfolio companies have risen strongly since the start of the year, Block has underperformed recently after being the target of a short seller’s report. Overall, it is not unusual for Hyperion’s portfolio companies to face short sellers; this has occurred numerous times in the past. It is a function of our holdings being highly innovative businesses that are often difficult to assess.
Our ability to deeply analyse businesses is a key driver of our longterm success. We are however humble and cognisant that ‘short’ reports can in certain instances present information that may not be known to the market and/or ourselves. Following our initial review, we believe the evidence provided by Hindenburg’s short report is largely anecdotal and subjective and in our view is sensationalised.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-March-2023.pdfFebruary, 2023
The Hyperion Global Growth Companies Fund (Managed Fund)* returned 4.4% for February, outperforming its benchmark (MSCI World Accumulation Index (AUD)) by 2.3%. Tesla Inc, Meta Platforms Inc and Roku Inc. saw the strongest share price performance while Alphabet Inc., Amazon.com Inc and Intuitive Surgical, Inc. saw the largest price declines over the month. As we progress through the start of the year, Hyperion has been pleased with a number of our global companies’ full-year financial reports. Share prices over the month have responded positively to favourable financial reports released in February.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-February-2023.pdfJanuary, 2023
The Hyperion Global Growth Companies Fund (Managed Fund)* returned 15.0% for January, outperforming its benchmark (MSCI World Accumulation Index (AUD)) by 11.9%. Spotify Technology SA, Roku Inc. and Tesla Inc saw the largest positive share price return while Intuitive Surgical Inc and Microsoft Corporation were the only companies to see share price declines over the month. In the last week of January, several of our portfolio companies released their full year 2022 financial results which saw a strong start to the year for the global strategy after a period of capitulation into the close of 2022. Two of the portfolio’s largest weights, Tesla Inc. and ServiceNow Inc., produced particularly strong results. Tesla's 4Q result beat market expectations and was a record-breaking quarter with the highest ever quarterly revenue and net profit. On their earnings call, Tesla’s CEO, Elon Musk, noted that the company had experienced its strongest year-to-date order book ever in its history at almost twice the rate of production. ServiceNow also exceeded the high end of guidance for the quarter on both revenue and margins. While short-term results are pleasing to see, we will continue to assess the remainder of reporting season with our focus on the longterm fundamentals of our portfolio companies. It is our view that the global portfolio continues to trade at an attractive discount to our long-term valuations. Businesses that grow by taking market share will become more valuable and should be in a better position to produce attractive returns over the long term.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-January-2023.pdfDecember, 2022
The Hyperion Global Growth Companies Fund (Managed Fund)* returned -12.8% for December, underperforming its benchmark (MSCI World Accumulation Index (AUD)) by 7.4%. Meta Platforms, Inc. was the only company to see positive share price performance while Tesla Inc., Roku, Inc., and Salesforce, Inc. saw the largest share price declines. 2022 was a very challenging year for the portfolio and has been one of the more hostile equity markets we have seen in over 20 years. We believe the rapid change in long-term bond yields over the past 12 months has been the primary cause of the decline in the market value of the portfolio.
The portfolio’s underlying earnings per share (EPS) growth has been unable to offset the valuation impact from lower Price to Earnings (P/E) ratios due to this rapid change. This inability of EPS growth to offset the duration impact of higher bond yields is because EPS growth is time-dependent whereas bond yield and P/E ratio changes are not time constrained. EPS growth tends to dominate valuations over more extended periods, but significant changes in bond yields over short periods can overwhelm the impact of EPS growth.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-December-2022.pdfNovember, 2022
The Hyperion Global Growth Companies Fund (Managed Fund)* returned -3.0% for November, underperforming the MSCI World Accumulation Index (AUD) by 5.1%. In Australian dollar terms, Kering SA, Meta Platforms Inc., and Hermes International SCA saw the strongest share price performance while Palantir Technologies Inc, Tesla Inc., and Amazon.com, Inc. saw the largest share price declines. Share market volatility continued throughout November as macroeconomic news dictated share market directions.
As we have stated throughout the past year, the rapid change in longterm bond yields, particularly over the past 12 months, has represented the worst macroeconomic environment for longduration assets in a very long time. Importantly though, our portfolio has continued to perform well fundamentally. For the year ahead, while Hyperion believes that a cyclical recession is probable, we believe a recession is unlikely to impact our portfolios' long-term earnings per share forecast and valuations due to the strong value propositions of our portfolio companies relative to their peers, their high levels of innovation and their low penetration rates.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-November-2022.pdfOctober, 2022
The Hyperion Global Growth Companies Fund (Managed Fund)* returned 2.1% for the month of October, underperforming its benchmark (MSCI World Accumulation Index (AUD)) by 5.7%. Intuitive Surgical, Inc., Visa Inc., and Mastercard Incorporated saw the strongest share price performance for the month while Meta Platforms Inc., Tesla Inc. and Amazon.com, Inc. saw the largest share price declines.
The recent quarterly reporting season for our global strategy was solid, with strong short-term results from Tesla, ServiceNow, Airbnb, Block, our luxury brand holdings, and payment companies, although this did not guarantee positive share price movement. Growth rates for some companies such as Amazon.com, Inc and Microsoft Corporation appear to have temporarily moderated but remained consistent with our longterm valuations. Unsurprisingly, some businesses are starting to lower their earnings and forward guidance as consumers begin to reduce their spending to more normalised levels, and broader macroeconomic pressures are felt throughout the economy. Equity markets are currently being ruthless in their short-sighted nature and allocating capital quickly away from companies that are not producing positive short-term results (quarter-on-quarter).
While we are seeing persistent short-termism from market participants, we are confident that once economic and bond yield volatility stabilises, our portfolio's strong fundamentals and sustainable competitive advantages will become a focus of capital allocators. Hyperion believes that lower growth and lower inflation still appear to be the most likely long-term scenario and in the long run, this is the best environment for our investment style. We believe our portfolio companies will produce materially higher earnings growth than the broader market over the long term due to their superior value propositions, strong pricing power and low penetration rates.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/02598209.pdfSeptember, 2022
The Hyperion Global Growth Companies Fund (Managed Fund)* returned -4.3% for the month of September, underperforming its benchmark (MSCI World Accumulation Index (AUD)) by 1.1%. Palantir Technologies Inc. saw positive share price performance for the month while Spotify Technology SA, Block Inc., and Roku Inc. saw the largest share price declines.
Throughout the month of September, we saw continued volatility across capital markets, with broad-based declines across industry sectors as central banks continued to tighten monetary policy. Hyperion believes that the global economy is transitioning from growth abundance to growth scarcity. There are several economic indicators suggesting that the global economy is heading towards a period of low economic growth, including declining PMIs, inverted yield curves and low consumer confidence.
Hyperion believes that low growth and inflation still appears to be the most likely long-term scenario and in the long run, this is the best environment for our investment style. While short-term performance has been unpredictable and it has been a difficult period for investors, Hyperion believes that we have allocated capital to businesses that will produce superior long-term results.
Our global portfolio continues to produce strong short-term financial results which are consistent with the assumptions that underpin our long-term valuations. Broadly, we have seen strong organic sales growth, robust free cash flow generation and strong balance sheets. The long-term intrinsic value for the portfolio remains unchanged and we believe our portfolio should perform relatively well in an economic downturn.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-September-2022.pdfAugust, 2022
The Hyperion Global Growth Companies Fund (Managed Fund)* returned -4.3% for the month of August, underperforming its benchmark (MSCI World Accumulation Index (AUD)) by 1.9%. Workday, Inc., Roku, Inc., and Meta Platforms, Inc. saw the strongest share price performance for the month. Palantir Technologies Inc., Salesforce, Inc., and Kering SA saw the largest share price declines. We believe the recent reporting season provided further evidence that the fundamentals of Hyperion’s portfolio businesses remain robust and that structural themes are intact.
Broadly, we have seen strong organic sales growth, robust free cash flow generation and strong balance sheets. The results the portfolio holdings have delivered are what we consider to be strong and consistent with our long-term expectations. The long-term intrinsic value for the portfolio remains unchanged. We think the rotation from long duration, high quality, structural growth companies into lower quality, lower duration, “old world” cyclical businesses over the past nine months has been largely driven by short-term macroeconomic factors, including a sharp increase in long-term government bond yields over a very short time period and elevated shortterm nominal GDP growth.
However, over the long run, it is the compounding effect of sustained earnings growth that dominates share price returns, not changes in bond yields. We believe the earnings strength of the companies within our portfolios will vastly outweigh short-term macroeconomic factors in the long run. We think the new world businesses in Hyperion’s portfolios are transforming industries and will likely be able to produce high sustained relative growth rates in the long run by expanding into large addressable markets and sustaining their innovative cultures.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-August-2022.pdfJuly, 2022
The Hyperion Global Growth Companies Fund (Managed Fund)* returned 13.1% for the month of July, outperforming its benchmark (MSCI World Accumulation Index (AUD)) by 6.7%. Tesla Inc., Amazon.com, Inc. and Airbnb, Inc. saw the strongest share price performance for the month. Roku, Inc., ServiceNow, Inc., and Meta Platforms Inc. saw their share prices decline. As we have stated throughout the year, the selloff in high quality growth-oriented, long duration companies has undoubtedly been challenging for investors.
Rather than being fundamentally driven, we believe that the sharp selloff in these companies has largely been driven by short-term macroeconomic factors, contagion, and fear (read more here). As we move through the current global reporting season, we are seeing further evidence that our portfolio companies are able to produce attractive levels of growth in arguably one of the more challenging economic landscapes we have seen since the GFC. The market is beginning to take notice of the strong underlying fundamentals of these companies. We believe the earnings streams of our portfolios are more robust than the broader market, particularly in a recessionary environment.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/02552827.pdfJune, 2022
The Hyperion Global Growth Companies Fund (Managed Fund)* returned -5.8% for the month of June, underperforming its benchmark (MSCI World Accumulation Index (AUD)) by 1.1%. Palantir Technologies Inc., Salesforce, Inc. and Costco Wholesale Corporation saw the strongest share price performance for the month. Block Inc., Airbnb Inc., and Spotify Technology SA saw the greatest share price declines.
It has undoubtedly been a challenging time for long duration stock investors. Short-term market valuations of high quality, structural growth stocks have been heavily influenced by significant changes in long-term bond yields.
Rather than being fundamentally driven, we believe that the sharp sell-off in high quality, structural growth stocks has been largely driven by short-term macroeconomic factors including a significant increase in long-term government bond yields and an “abundance” of nominal economic growth (read more here). We expect both factors to be temporary in nature and to reverse in the future.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-June-2022.pdfMay, 2022
The Hyperion Global Growth Companies Fund (Managed Fund)* returned -7.0% for the month of May, underperforming its benchmark (MSCI World Accumulation Index (AUD)) by 6.2%. Spotify contributed to performance during the month while Workday and Airbnb were detractors.
As discussed in our latest Webinar (replay here), inflationary pressures have continued to dominate headlines and put pressure on asset prices. Our view remains unchanged that high levels of inflation will likely be temporary as supply-side disruptions ease, higher oil prices impact demand, and as central banks begin withdrawing monetary policy support. All of these actions act as a tax on the consumer.
There is increasing evidence emerging to suggest that we may be near peak inflation and growth is starting to roll off with signs of a slowing consumer demand profile. For example, retail inventory has been building up that we think is indicative of consumer-demand falling, real wages have been falling in most countries around the world, and government spending has declined significantly which would create a drag on economic growth. Read more on our views here.
We think that the recent selloff does not reflect the robust and improving value of the businesses within the Hyperion portfolios, and we remain confident that the companies we invest in will achieve attractive rates of organic revenue, EPS and DPS growth over the next ten years, well ahead of the broader market.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-May-2022.pdfApril, 2022
The Hyperion Global Growth Companies Fund (Managed Fund)* returned -13.4% for the month of April, underperforming its benchmark (MSCI World Accumulation Index (AUD)) by 10.3%. Visa Inc. and Mastercard Inc. performed well during April reporting strong quarterly financials, while Amazon.com, Inc. and Block Inc. were detractors.
While we believe the quarterly financial reports of our portfolio companies released in April were compelling and in line with our long-term forecasts, global macro pressures continue to weigh heavily on equity markets. Macro factors (not stock fundamentals) appear to be driving the recent portfolio underperformance. Capital rotation continues, what we describe as selling the future to buy the past or selling long duration, high growth (non-cyclical) stocks, and buying short duration, low growth (cyclical) stocks.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-April-2022.pdfFebruary, 2022
Block, Inc. (Block), formerly Square, released its FY21 Q4 and full-year results in February. Over FY21, total revenue (including Bitcoin revenue) grew 86% year-on-year (YoY) to US$17.6b, gross profit increased 62% to US$4.42b and adjusted EBITDA more than doubled to US$1.01b. Both of Block’s core business lines performed strongly. The Cash App business achieved revenue growth (excluding Bitcoin) of 65% to US$2.3b, driven by a growing base of Monthly Active Users (MAU), up 22% to 44m, and higher average revenue per user, up 22% to US$47. There was also strong adoption of Block’s Cash Card with the product now having 13m MAU’s. Square, previously called Seller ecosystem, achieved revenue growth of 47% to US$5.2b, driven by increased product adoption. In FY21, 38% of the segment’s gross profit was from sellers who utilised 4 or more products compared to only 10% five years ago. The company also provided a positive initial FY22 outlook with gross profit growth to continue and improve sequentially over the year. The acquisition of Afterpay Limited was also completed in January which has since been integrated within Block’s ecosystem.
Amazon.com, Inc. (Amazon) released its FY21 Q4 and full-year results in early February, reporting YoY revenue growth of 22% to US$469.8b for the full year ending December 2021. Group operating income came in at US$24.9b for the year compared to US$22.9b in FY20 with the company incurring additional costs arising from labour shortages and inefficiencies that are primarily temporary in nature. Over Q4 FY21, revenue grew by 9% to US$137.4b, driven by a continued reacceleration of Amazon’s AWS business which saw revenue increase 40% to US$17.8b for the quarter. The AWS segment saw significant customer momentum over the quarter with new commitments and migrations from customers (including of note, Nasdaq, Meta, Rivian, and Goldman Sachs) taking the revenue run rate to US$71b vs US$51b the prior year. Globally, AWS now has 84 availability zones across 26 geographic regions with plans to launch 24 more zones and expand to 8 more regions. The Online Stores segment saw revenue fall 1% to US$66.1b in Q4 while Third-party Seller Services revenue grew 11% to US$30.3b.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-February-2022.pdfDecember, 2021
Costco Wholesale Corporation (Costco) released its results for the first quarter of fiscal 2022, reporting Year-on-Year (YoY) net sales growth of 16.7% to US$49.4b and net income growth of 13.6% to US$1.3b. Comparable sales for the first quarter increased 15.0% or +9.8% when adjusted for changes in currency and gasoline prices. In terms of Q1 sales metrics, the average transaction increased 7.7% worldwide and +8.5% in the US. Renewal rates also improved during the quarter, increasing by 0.3% in both North America and Worldwide to 91.6% and 89.0%, respectively. Management suggested renewal rates are benefiting from more members auto-renewing as well as increased penetration of executive members who, on average, renew at a higher rate than non-executive members. Total card holders grew over the quarter by 1.5m to 113.1m. During Q1, Costco opened 8 new warehouses net of relocations, and provided guidance for the net opening of 27 warehouses in total during FY22. Management flagged elevated costs and believe inflation in the business is running at 4% to 5% p.a. Given Costco’s scale and bargaining power, they are well positioned to manage inflation costs while maintaining a strong customer value proposition.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HAGCF-Fund-Update-December-2021-1-1.pdfNovember, 2021
PayPal Holdings Inc. (PayPal) released its results for the third quarter ended 31 October 2021, reporting net revenue growth of 13% to US$6.2b. Compared to the prior corresponding period, PayPal grew net revenue in the U.S. by 23% to US$3.5b, while Other Countries net revenue increased 3% to US$2.7b. Divisionally, Transaction Revenue increased 10% to US$5.6b, driven by growth across core PayPal products and services, Braintree and Venmo. PayPal’s Revenues from Other Value-Added Services was up 50% to US$575m driven by increases in the revenue share with Synchrony Bank and loan servicing fees from PPP loans. Operationally, the company continues to produce strong engagement metrics after reporting that the number of active accounts increased 15% to 416m. The number of total payment transactions processed by PayPal grew 22% to 4.9b, Total Payment Volumes (TPV) increased 26% to US$310b with Venmo TPV up 36% to US$60b. Management also announced Venmo will become a checkout option on Amazon.com however the launch date is yet to be disclosed. PayPal provided full year FY21 guidance and expects revenue growth of 18% to US$25.3-$US25.4b, non-GAAP EPS growth of 19% to US$4.60 per share, and TPV growth of 33-34%.
Intuit Inc (Intuit) released its results for the first quarter ended 31 October 2021, reporting revenue of US$2.0b, up from $1.3 billion the prior year, including the addition of Credit Karma. Compared to the prior corresponding period, Intuit increased Small Business and Self-employed Group revenue 22% to US$1.4b, grew Online Ecosystem revenue by 36% to US$845m and reported Credit Karma revenue of US$418m. Management reiterated their confidence on the sub growth and cross-sell opportunities in both Credit Karma and Mailchimp, both of which materially improve the customer value proposition in the Consumer and Small Business ecosystems. With the addition of Mailchimp starting Nov. 1, Intuit raised its fiscal year 2022 revenue growth guidance to 26 to 28%. Excluding Mailchimp, the company expects organic revenue growth of 18 to 20%, up from prior guidance of 15 to 16%, driven by strong performance in QuickBooks Online and Credit Karma.
Airbnb, Inc. (Airbnb) released its results for the third quarter ended September 2021, reporting record quarterly revenue of US$2.2b, an increase of 70% Year-on-Year (YoY). Net Income increased by 280% to US$834m, driven by higher revenue and improved cost structures. Reported Gross Booking Value of US$11.9b represented a 48% increase, which was driven by strength in Average Daily Rates (ADR). During the quarter the company surpassed 1 billion cumulative guest arrivals, with increases in globally vaccinated people and easing of travel restrictions facilitating Airbnb’s strongest ever quarter. Management noted its ‘I’m Flexible’ feature has been used over 500 million times, with its growth in popularity stemming from a shift in flexible working environments globally. The company continues to push for innovations and end-to-end improvements in customer experience, having made over 100 upgrades across Airbnb’s services in Q2 2021 (website, app, community support, policies), and having planned a further 50+ upgrades for Q4 2021. Looking forward, management noted of the likely improvement in travel conditions as COVID-19 restrictions ease, and the company’s unique position in the ‘travel revolution’ which is transforming how people live and work (allowing them to travel anytime, anywhere, and for any duration).
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-November-2021.pdfSeptember, 2021
Global equity market indices were broadly down during September, as inflation and the continued spread of the Delta COVID-19 variant remained topical. In the U.S., the S&P 500 returned -4.7% during September, the unemployment rate declined by 0.2% to 5.2% in August, the Composite PMI fell to 55.0 in September, whilst the consumer price index rose slightly to an annualised rate of 5.3% in August. The Federal Reserve also declared a path to tapering its monthly bond purchases in the near term with the process expected to start after the November meeting and conclude around the middle of 2022. In Europe, the FTSE 100, Euro STOXX 50 and German DAX returned -0.2%, -3.4% and -3.6%, respectively.
The latest unemployment figures released during the month reflected a slight decline to 7.5%, whilst the IHS Markit Eurozone Composite PMI declined to 56.2 in September as shortages of inputs impeded both manufacturing and services sector output. The European Central Bank also announced that it will reduce the pace of its Pandemic Emergency Purchase Programme over the final quarter of this year to a moderately lower pace than the approximate €80b per month that has prevailed during the past six months. In Australia, the ASX 300 returned - 1.9%, the unemployment rate declined slightly to 4.5% in August, partly due to a sharp decline in the participation rate from 66.0% to 65.2%, and the Composite PMI increased to 46.5 in September. The Reserve Bank of Australia also declared that it would reduce the level of weekly asset purchases from A$5b to A$4b and expects to continue purchases at this rate until at least the middle of February 2022. Energy (+10.2%) was the only MSCI World Index sector that achieved a positive return during the month, whilst Materials (-6.6%), Utilities (-6.4%), and Communication Services (-5.5%) were the worst performers. The U.S. dollar was stronger against all G10 currencies during September
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-September-2021.pdfJuly, 2021
Global equity markets experienced mixed results during July as the spread of the Delta COVID-19 variant dominated headlines. On the economic front, the IMF maintained its 2021 global growth forecast of 6% and upgraded its 2022 forecast to 4.9%, but warned of a widening divergence in the global economic recovery between advanced and developing economies. In the U.S., the S&P 500 returned +2.4%, second quarter GDP increased at an annualised rate of 6.5% in June, the Composite PMI fell to 59.7 in July, whilst the core Personal Consumption Expenditure Index, the Fed’s preferred inflation measure, rose to annualised rate of 4.0% in June. The Federal Reserve maintained its target range for the federal funds rate at 0.00% to 0.25% and expects to maintain an accommodative stance on monetary policy until labour market conditions improve and inflation is expected to moderately exceed 2% for some time.
In Europe, the Euro STOXX 50, German DAX and FTSE 100 returned +0.8%, +0.1% and +0.1%, respectively. During the month, the IHS Markit Eurozone Composite PMI increased to 60.2 in July, reflecting the highest reading since July 2000, whilst second quarter GDP increased at an annualised rate of 13.7% in June. The European Central Bank held its refinancing operations, marginal lending facility and deposit facility rates at 0.00%, 0.25% and -0.50%, respectively, and will continue to conduct net asset purchases under the pandemic emergency purchase programme worth €1,850b until at least the end of March 2022. In Australia, the ASX 300 returned +1.1%, the unemployment rate fell to 4.9% in June, and the Composite PMI fell to a 14-month low of 45.2 in July, as private sector output and demand across both the manufacturing and services sectors declined. Real Estate (+3.7%), Information Technology (+3.5%), and Health Care (+3.5%) were the best performing MSCI World Index sectors, whilst Energy (-6.1%), Financials (0.0%), and Consumer Discretionary (+0.2%) were the worst performers. The U.S. dollar was broadly stronger against most G10 currencies during July, except against the Pound Sterling, Japanese Yen, and Swiss Franc
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-July-2021.pdfJune, 2021
Global equity markets rose modestly throughout June as inflation fears remained topical. In the U.S., the S&P 500 returned +2.3%, with the Federal Reserve (Fed) releasing positive bank stress test results and President Biden announcing an agreement with a bipartisan group of senators on a US$579b infrastructure plan. Data revealed that the unemployment rate was little changed at 5.9% in June, the Composite PMI fell from the May record of 68.7 to 63.7, whilst the core Personal Consumption Expenditure Index, the Fed’s preferred inflation measure, rose to 3.4% in May. In Europe, the Euro STOXX 50, German DAX and FTSE 100 returned +0.7%, +0.7% and +0.4%, respectively. During the month, the Composite PMI increased to 59.5, reflecting the fastest increase in private sector activity since June 2006.
The European Central Bank quelled concerns of heightened inflation by committing to maintain its €1.85t pandemic emergency purchase programme with purchases expected to run at a significantly higher pace than during the first months of the year. Furthermore, the Bank of England kept its bank rate at 0.1% and maintained the total size of its asset purchase programme at £895b. In Australia, the ASX 300 returned +2.3%. Australian Prime Minister, Scott Morrison, finalised the Australian-United Kingdom Free Trade Agreement with UK Prime Minister, Boris Johnson, facilitating the deregulation of Australia’s lamb, beef, and sugar exports. Additionally, during May the unemployment rate decreased from 5.5% to 5.1% and 115,000 jobs were created. Information technology (+12.4%), Communication services (+5.6%) and REITs (+5.6%) were the best performing S&P/ASX 300 Index sectors, whilst Financials (-0.2%), Materials (+0.1%) and Health Care (+2.1%) were the worst performers. Information Technology (+7.2%), Energy (+4.4%) and Health Care (+3.8%) were the best performing MSCI World Index sectors, whilst Materials (-2.5%), Financials (-2.2%) and Utilities (-1.7%) were the worst performers. The U.S. dollar was stronger against all G10 currencies during June.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/Hyperion-Global-Growth-Companies-Fund-Managed-Fund-Update.pdfMay, 2021
Global equity market indices broadly rose during May, as inflation expectations in the U.S. and COVID-19 restrictions across Europe remained topical. In the U.S., the S&P 500 Index returned +0.7% with data revealing that the IHS Markit U.S. Composite PMI climbed to an all-time high of 68.1 in May, whilst the core Personal Consumption Expenditure Index, the Fed’s preferred measure of inflation, rose to an annual rate of 3.1% in April. In Europe, the Euro STOXX 50, German DAX, and FTSE 100 indices returned +3.3%, +2.5% and +1.1%, respectively.
The IHS Markit Eurozone Composite PMI increased to 56.9 in May, with manufacturing continuing to perform strongly whilst services improved to a rate not seen since June 2018 as the easing of COVID-19 related restrictions facilitated a revival in demand. Furthermore, the Bank of England increased its 2021 growth forecast for the U.K. from 5.00% to 7.25% and maintained its quantitative easing target of £875b, but reduced its weekly asset purchases from £4.4b to £3.4b. In Australia, the S&P/ASX 300 Index returned +2.3%. Economic data revealed that the unemployment rate declined to 5.5% and the IHS Markit Australia Composite PMI fell to 58.1 in May following a slight slowdown in aggregate new order growth due to supply constraints.
Additionally, the Australian Federal Budget was released and forecasts a deficit of $106.6b or 5% of GDP for the 2021-22 Year, peaking at 40.9% of GDP in 2025, and then declines over time. Energy (+4.5%), Financials (+4.3%) and Materials (+3.5%) were the best performing MSCI World Index sectors, whilst Consumer Discretionary (-1.4%), Utilities (-1.2%) and Information Technology (-1.1%) were the worst performers. The U.S. dollar was weaker against most G10 currencies during May, except against the Norwegian Krone and Japanese Yen.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-May-2021-1.pdfApril, 2021
Global equity market indices broadly extended their gains for a third consecutive month, despite inflation fears in the U.S. and a new wave of COVID-19 infections dominating headlines across Europe. In the U.S., the S&P 500 Index returned +5.3% with data revealing that the unemployment rate was little changed at 6.1% in April, the IHS Markit Composite PMI increased to 63.5 in April, and the advanced GDP report indicated an annualised gain of 6.4%.
In addition, the Federal Reserve left rates unchanged, acknowledging that the economy was improving whilst continuing to buy at least US$120b of bonds each month. In Europe, the FTSE 100, Euro STOXX 50, and German DAX indices returned +4.1%, +1.9% and +0.8%, respectively. During the month, the IHS Markit Eurozone Composite PMI increased to 53.8 in April, with manufacturing continuing to perform strongly whilst services improved despite the negative impacts of ongoing lockdowns in the region. Furthermore, the European Central Bank held its refinancing operations, marginal lending facility and deposit facility rates at 0.00%, 0.25% and -0.50%, respectively, and will continue to conduct net asset purchases under the pandemic emergency purchase programme worth €1,850b until March 2022.
In Australia, the S&P/ASX 300 Index returned +3.7%. Economic data revealed that the unemployment rate fell to 5.6% and dwelling prices increased 1.7% in April after a 2.6% increase during March, the strongest monthly increase since 1988. In addition, the Reserve Bank of Australia left its policy settings unchanged noting that the economic recovery was well under way and had been stronger than expected. Information Technology (+9.8%), Materials (+7.5%) and Industrials (+4.1%) were the best performing S&P/ASX 300 Index sectors. Energy (-4.7%), Communication Staples (-2.4%) and Utilities (-1.2%) were the worst performers. Bulk commodity prices were broadly up during the month, whilst the U.S. dollar weakened against all G10 currencies
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-Fund-Update-April-2021.pdfDecember, 2020
Salesforce.com, Inc. (Salesforce) released its results for the third quarter ended 31 October 2020, reporting total revenue growth of 20% to US$5.4 billion and operating margin expansion of 40bps to 19.8% (non-GAAP). Divisionally, Sales Cloud revenue was up 12% to US$1.3 billion, Service Cloud revenue was up 21% to US$1.4 billion, Platform & Other revenue was up 24% to US$1.6 billion and Marketing and Commerce Cloud revenue was up 25% to US$804 million. Geographically, Americas revenue increased 17% to US$3.8 billion, Europe revenue increased 31% to US$1.1 billion and Asia Pacific revenue increased 23% to US$512 million. FY21 guidance was raised to US$21.10 – US$21.11 billion, and at the subsequent investor day FY22 guidance was confirmed at US$25.6 billion and a FY26 revenue target of US$50 billion was set. In addition, the acquisition of Slack Technologies, Inc. (Slack), a modern enterprise communication platform, was announced for an Enterprise Value of US$27.7 billion. Slack will become an operating unit of Salesforce and will continue to be led by current CEO and co-founder, Stewart Butterfield. It was noted that 90% of Slack enterprise users are also Salesforce customers, with the integration of Slack into every Salesforce Cloud expected to increase the value proposition to customers.
Costco Wholesale Corporation (Costco) released its first quarter FY21 operating results. The company reported net sales during the quarter increased 16.9% to US$42.4 billion due to elevated sales during COVID-19, while greater efficiencies on higher throughput increased the company’s operating margin. Total gross margin increased by 50bps year-on-year while the Core Merchandise category margins, in relation to own sales, increased by 65bps year-onyear. The company noted fresh food was a large driver due to efficiency gains, labour productivity, and lower product spoilage. Operating income benefitted from stronger margins with Costco reporting an increase of 35% to US$1.4 billion year-on-year. Online sales for the business continue to be strong, now comprising 7% of Group Sales, as e-commerce comparable same store sales increased 86.4% for the quarter. Management noted the stronger departments of food and sundries, housewares, and pharmacy, among others. Shopping frequency for the business increased 5.5% globally and 7.6% in the U.S., with average transactions increasing by 9.4% and 6.5% for the group and the U.S. respectively. During the quarter, Costco opened 8 new warehouses net of relocations, providing guidance for the net opening of 20 to 22 warehouses for the FY21 period.
Visa Inc. (Visa) released a payment volume update for October and November 2020. The company noted year-onyear spending had slowed in regions impacted by increased COVID-19 restrictions, whilst in some countries increased holiday spending had offset this decrease and supported payment volumes. In the U.S., total payments rose 10% and 6% in October and November respectively as debit transactions continued to experience strong growth, increasing 19% in November, while credit transactions lagged, declining 5% for the month. Internationally, management also noted mixed market trends as a result of varying COVID-19 restrictions and holiday-period spending. In European countries such as the U.K., Italy and Germany, card-not-present payments were supported by increased COVID-19 restrictions however overall volume growth slowed. In India and Hong Kong, national holidays benefitted domestic spending while domestic spending in Australia, UAE, Japan and Brazil was similar to October. Management do not expect week-by-week comparisons to be largely reflective of holiday spending due to COVID-19 restrictions. Overall, the company reported ongoing growth of card-not-present transactions while card present volumes declined. Travel-related cross-border volumes were depressed by 65%, with management citing COVID-19 is likely causing the holiday period to look different than prior years in terms of consumer buying behaviour.
File: https://commentary.quantreports.net/wp-content/uploads/2021/02/HGGCF-B-Fund-Update-December-2020.pdfasset_class: Foreign Equity
asset_category: Large Growth
peer_benchmark: Foreign Equity - Large Growth Index
broad_market_index: Developed -World Index
manager_contact_details: Array
ticker: WHT8435AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
https://www.hyperion.com.au/funds/hyperion-global-growth-companies-fund/
Monthly Fund Update
Note: Use PORTFOLIO HOLDINGS UPDATE
fund_features:
Hyperion Global Growth Companies B seeks to achieve medium to long-term capital growth and income by investing in high calibre companies primarily listed on a recognized global exchange, at the time of investment.
- Hyperion is a fundamental bottom-up growth style manager.
- To outperform the market by identifying and investing in high quality companies with a sustainable and transparent competitive advantage that can grow sales and earnings at rates higher than the general economy
structure: Managed Fund