Wall Street Wildlife Investing Podcast

On this week’s pod, we discuss the megatrend of an ageing population and some of the investing opportunities (and risks) this trend creates in society. The average human life expectancy has increased by 10 years since 2000 to almost 73 - modern medical technology, pharmaceuticals, and standards of care mean we’re all living longer healthier lives. At the same time, birth rates are declining. If these trends continue, most countries are projected to have shrinking populations by the end of the century, with some countries expecting their populations to halve by 2100! A longer life expectancy is great for the individual but may mean that younger generations will have to contribute more to support older ones, or that people will have to work longer and retire later. Key challenges such as funding for healthcare and social care for the elderly need to be tackled by governments, supported by private industry It’s a fact of life that we are more susceptible to ailments as we get older. A healthy lifestyle can only reduce the chances of serious illnesses, not eliminate them completely. Preventative and proactive healthcare solutions can help to mitigate the conditions that occur more frequently in later years, such as diabetes, heart disease and cancer. Companies such as Teladoc, Alphabet and Apple are delivering technology to assist with health monitoring, and enable preventative healthcare A larger retired population will increase the demand for cost-effective and also luxury travel and entertainment. Those leading longer and healthier lives will want to enjoy themselves in their golden years, and this will create a greater need for social hubs and activities for retirees Calico, a ‘moonshot’ subsidiary of Alphabet, are a research lab with the goal of combating ageing and associated diseases. They’re partnering with other research labs and companies to deliver healthcare solutions, and in 2020 announced a drug for treating solid tumours Alphabet also has Verily Life Sciences (formerly Google Life Sciences), a research organisation devoted to the study of life sciences with the aim of digitising healthcare with research programs in digital surgery, pathology and immunology The following companies are mentioned in this episode: GOOG, TDOC, AAPL, ISRG ----- If you enjoyed this episode, please consider subscribing at https://telescopeinvesting.com/subscribe/ Or you can contact the hosts: LukeTelescope AlbertTelescope

Just over a year ago, when the coronavirus pandemic was beginning, we both started investing journals, to capture our thoughts about life, and the investment opportunities presented by the rapidly changing environment. Initially, our diaries were intended to stop us from making rash investment decisions during a time of mass panic and high uncertainty, but these personal reflections have since evolved into the Telescope Investing podcast! In this week’s pod, we revisit some of our journal entries from that period of wild volatility and uncertainty. We saw early signs of the types of businesses that would benefit from stay-at-home orders, and we make some predictions and some investments based on our forecasts of how the business landscape would be impacted. It's now one year later, so how did we do? The following companies are mentioned in this episode: NFLX, SHOP, ZS, TRIP, ZG, MELI, DIS, SQ, DOCU, ZM, BYND, TDOC, FB, TSLA, GOOG ----- If you enjoyed this episode, please consider subscribing at https://telescopeinvesting.com/subscribe/ Or you can contact the hosts: LukeTelescope AlbertTelescope

On this week’s pod, we take a look at another hypergrowth investment opportunity, the US pet insurance company, Trupanion. Trupanion is North America’s largest publicly traded provider of pet insurance. It has focused exclusively on pets during its two-decade operating history, and currently insures over 940,000 cats and dogs in the United States, Canada, Australia, and Puerto Rico (an increase of 37% YoY). Pet ownership has grown significantly during the pandemic, many households have bought or adopted a pet to help them get through the social isolation of lockdown. In the US 23 million households acquired a pet between March 2020 and May 2021, and today 67% of American households own at least one kind of pet The North American pet insurance market was worth $1.9B in 2020 and is expected to grow to $3.8B by 2027. However, today less than 2% of North America’s 200 million dogs and cats have pet insurance, creating a large growth opportunity Trupanion were recently rated as the #2 US pet insurer, just behind Healthy Paws. They have a 4.4 / 5 score on trustpilot, and their customers are strong advocates for the company - an interesting contrast to their insuretech competitor, Lemonade, who score a woeful 2.6! However Trupanion are one of the more expensive pet insurance offerings, and a price-sensitive consumer may find that other insurers offer better value In Q1 2021, Trupanion’s monthly average revenue per pet was $62.97. Costs per pet currently exceed revenue by around $1, primarily driven by high subscription acquisition costs. The ‘lifetime value per pet’ insured by Trupanion is $634, however over $270 is spent acquiring a pet, so a customer needs to be retained for three years before Trupanion realises a return on the high acquisition cost! 2021 Q1 results showed revenue of $155M, an increase of 39% YoY. Average monthly retention was 98.73% compared to 98.59% in the prior-year period, and the average pet's life with Trupanion increased to 79 months, up from 71 months in the prior 12-month period. The company recognise that they still have opportunities to improve the retention of pets that drop out after one year The company’s financial position is strong with cash and assets of over $500M. The net loss for Q1 2021 was $12.4M, compared to a net loss of $1.1M in the same period last year. This was primarily driven by increased stock-based compensation expenses and a one-time performance grant to all employees that totalled $4.3M The following companies are mentioned in this episode: TRUP, LMND ----- If you enjoyed this episode, please consider subscribing at https://telescopeinvesting.com/subscribe/ Or you can contact the hosts: LukeTelescope AlbertTelescope

It’s an unwritten rule that at some point every finance podcast needs to release an episode on the power of compound interest. Well this week, it’s Telescope Investing’s turn! "Money makes money. And the money that money makes, makes money" - Benjamin Franklin Successful investing really just boils down to just two things - picking good quality companies and holding them for a long-time. Time is the operative word in that statement, it takes decades for the exponential growth of compound interest to show its true power. It’s a rare investor that has a lifetime in the market, but over the very, very long run, compound interest can deliver staggering returns. Warren Buffett is the greatest living example of this. Over 99% of Warren’s net worth of ~$110B was accumulated after the age of 52, and one of the reasons he’s among the most successful investors of all time is that he started so early (buying his first stock when he was 11 years old) and has been investing for almost 80 years Berkshire Hathaway shares have grown on average 20% per year compounded since 1965. That doesn’t sound particularly exciting until you realise this means doubling your money every three and a half years. If you can do that for 80 years, you’ll end up with nearly eight million times the amount of money you started with Developing a savings habit and investing is one of the best things you can do for your future self, and one of the most common things we hear is that people wish they had started earlier. We both started investing in our twenties, but we wish that had been in our teens when we had summer jobs! You can jump-start this by investing for your children (or nieces and nephews). A small amount of money invested each year, compounded over 20 years, can give them a sizable base from which to build It’s said that “the first million is the hardest”, but even harder is the first $100K, and harder still is the first $10K. Investing at the beginning is hard because living expenses make up a large part of your income, and there may be little if anything left over to invest. As your investments grow, your passive income increases, and your living expenses as a percentage of your income drops. The goal of financial independence is for your passive income to cover your living expenses, at which point you’ve basically achieved financial freedom. You can do this by either increasing your passive income or reducing your living expenses, or ideally both! Fees and taxes on your investments can have a material impact on your returns, and this is magnified in the long run as those fees also compound! Passive index funds typically charge less than a 0.25% fee (some Vanguard funds are as low as 0.03%), compared to actively managed funds which are generally over 1% and can be as much as 2% annually plus a 20% charge on any profits made. This really adds up in the long-term, and it’s especially galling when you realise that most active fund managers actually underperform the market! We’re nearly twenty years into our own investing careers. If you haven’t begun your own journey yet, the most important takeaway from today’s pod is to just get started. The best time to start investing might have been twenty years ago, but the second-best time is today! The following companies are mentioned in this episode: BRKB, AAPL ----- If you enjoyed this episode, please consider subscribing at https://telescopeinvesting.com/subscribe/ Or you can contact the hosts: LukeTelescope AlbertTelescope

Square was founded in 2009, when glass-blower Jim McKelvey found he was unable to complete a sale because he couldn't accept credit cards. He discussed the problem with his friend Jack Dorsey, and they co-founded Square, initially selling a cost-effective mobile phone accessory that allowed small businesses to accept credit card payments. This has since expanded to over 30 products and services for both sellers and consumers. Square is one of our model portfolio stocks, and in this week’s pod we deep dive into the company and discuss recent developments for this fast-growing player in the e-payments space. What started with a dongle for a mobile device to allow sellers to accept credit cards has since expanded to a range of point-of-sale (POS) systems and seller services. Square have also launched tailored products and services for specific businesses, for example the Square Kitchen Display System (KDS) recently launched as a standalone product worldwide to help restaurants manage and fulfil orders more efficiently The use of electronic payments has been increasing for many years and was accelerated by the pandemic. Digital wallets are now the most popular form of payment globally. The Square Cash App introduced in 2013 is one of the most popular digital wallets in the US, with 36M monthly active users at the end of last year, a jump from 24M at the end of 2019 Square started offering Bitcoin trading in its Cash App in 2018 and the company has increased its stake in crypto by buying $170M of Bitcoin, representing 5% of its cash reserves. They saw over 1M users buy Bitcoin for the first time in January of this year, and their revenue from Bitcoin trading surged to $3.5B in Q1. This may be a cause for concern if crypto sees increasing regulation, restrictions, or volatility Square acquired the music streaming service, Tidal, earlier this year. Tidal’s once distinguishing feature of high-quality lossless audio are now available on other music streaming services, but the relationships with the artists may be the key differentiator. Could Square and Tidal become the "Shopify for music artists"? Another recent acquisition was Credit Karma Tax, a free tax filing tool that Square plans to integrate into its Cash App, further enhancing the Square payment ecosystem. Square payment processing is currently integrated with TurboTax from Intuit to simplify the tax filing for sellers. The acquisition of Credit Karma Tax may suggest a bigger move into the tax filing business, perhaps competing with Intuit instead? Square officially became a bank earlier this year. Previously, Square offered financial products such as small business loans via a partnership with Celtic Bank. They are now able to offer these products directly, and have recently announced they will launch checking and savings accounts, competing with incumbents such as JP Morgan and Wells Fargo The following companies are mentioned in this episode: SQ, INTU, SHOP, MELI, SE, GOOG, APPL, PYPL ----- If you enjoyed this episode, please consider subscribing at https://telescopeinvesting.com/subscribe/ Or you can contact the hosts: LukeTelescope AlbertTelescope

Have you become numb from seeing wave after wave of red days in your portfolio? Are you unsure whether it’s the right time to buy or to sell as you’re buffeted by the market? Then maybe it’s time for some stock therapy! After a fantastic start to the year, our model portfolio has turned south, along with the majority of high-growth stocks as investors run to the 'safe haven' of value stocks. In this week’s pod, we talk about what’s happened to growth stocks in the last few months, the possible reasons why, and more importantly what we can do about it. Long-time listeners will already know the answer, but it feels good to get it all out! (apologies for Luke's fairly terrible audio quality on today's Pod, a rather silly technology error that was overlooked, we'll have to write a checklist for future recording sessions!) ----- If you enjoyed this episode, please consider subscribing at https://telescopeinvesting.com/subscribe/ Or you can contact the hosts: LukeTelescope AlbertTelescope

Unity Software is best known for its game engine, which was used for over 50% of all video games in 2020. But Unity is also used to create over 60% of all VR/AR applications, and is starting to expand into other industries such as automotive, architecture, manufacturing, film, and retail. It’s not just about Pokemon Go! In this week’s pod, we take a deep dive into Unity, and have a fantastic discussion with Karle Kane, the founder of Rainfall Games. Unity is one of the largest development platforms for gaming and was used to create over 50% of video games across 20 platforms in 2020. It is even more dominant in mobile gaming where 71% of the top 1,000 mobile games in 2020 used Unity. 93 of the top 100 game studios by revenue are Unity customers, and on average there were 2.7B people each month who consumed content created with Unity in 2020. Unity estimates their addressable market in gaming at $12B growing to $16B by 2025 Over 60% of all VR/AR experiences are created with Unity, and this platform was used to create 90% of all Microsoft HoloLens and Samsung Gear VR experiences. AR/VR is seeing increased adoption, not just in gaming but also in other industries including healthcare, manufacturing, architecture and design and the VR/AR market is projected to grow by 63% per year through 2025. Unity estimates their current opportunity in VR/AR at $17B They have three main business segments: Create Solutions, a subscription-based business providing access to Unity’s development tools; Operate Solutions, a usage-based business helping game developers to run and monetise their games; and Strategic Partnerships, where tech partners such as Apple, Microsoft, Nintendo and Sony pay Unity to support their hardware and software. These three segments contributed 30%, 61% and 9% of revenue respectively in 2020, with Operate Solutions growing the fastest Unity acquired Applifier and launched their in-game advertising network in 2014, and this is now one of the world’s largest mobile ad networks serving 23B ads per month. Unity does not break-out advertising revenue from their Operate Solutions segment, but the whole segment had revenues of $471M in 2020, an increase of 61% from the previous year. However, recent changes in iOS to prevent app tracking is estimated to reduce revenues by $30M in 2021, which represents 3% of total revenue Total revenue for 2020 was $772M, an increase of 43% from the previous year. Existing customers are buying more each year, with DBNERs of 138%, 133% and 124% for 2020, 2019 and 2018 respectively. The business is reinvesting in growth and has not shown a consistent profit as yet, having just become free cashflow positive in Q4 2020. They ended 2020 with $1.3B in cash with a further $480M in marketable securities and zero debt Unity currently has a market cap of $23B with a P/S ratio of 24. Despite the huge 50% drop from its all-time high in January, the stock remains relatively expensive and will need to maintain continued high revenue growth to justify the valuation The following companies are mentioned in this episode: U, VUZI, AAPL, FB ----- If you enjoyed this episode, please consider subscribing at https://telescopeinvesting.com/subscribe/ Or you can contact the hosts: LukeTelescope AlbertTelescope

At Telescope Investing, we believe that individual investors have an advantage over the professionals - they don't have to answer to anyone but themselves, and can more easily invest for the long-term without the need to 'beat their benchmark' every quarter or year. Thinking long-term helps minimise excessive trading, which often results in lower returns, whether it's from trading fees, buy-sell spreads, high short-term capital gains taxes, or more likely missed gains. In this week’s pod, we answer some listener questions on portfolio management and talk about how we approach starting, adding, trimming and sometimes exiting a position. ----- If you enjoyed this episode, please consider subscribing at https://telescopeinvesting.com/subscribe/ Or you can contact the hosts: LukeTelescope AlbertTelescope

Communication is a core function of almost every app, from ordering a pizza, hailing a ride, to booking a doctor’s appointment. This week, we deep dive into one of the leading providers of this core functionality, Twilio. Twilio is one of the stocks in our model portfolio for 2021 and we discuss why we think it is a strong company with room to grow. Also, Luke muses on his dreams of a space economy. Twilio is the world’s leading cloud communication platform, allowing other companies to embed multiple communication channels into their web, desktop, and mobile applications. They have grown revenues 10x in five years as digital transformation trends gather pace and were accelerated by the pandemic. Twilio estimates that their total addressable market is valued at $79B Its communications-platform-as-a-service business (CPaaS) is a scalable 'land & expand' business model, where marketing is targeted at developers and product managers. This strategy is clearly working as their customer count has increased 350% in three years to reach 221,000 by the end of 2020. Twilio's dollar-based net expansion rate (DBNER) has averaged around 140% each quarter in that time, meaning that customers are spending more on Twilio’s products and services over time Twilio has a strong focus on developers, providing them with all the tools to use Twilio’s services, and running an annual conference called Signal, where the company showcases its products and runs workshops to help developers get the most out of them. Over 10 million developers use Twilio services, generating network effects through a huge pool of developer expertise. The CEO, Jeff Lawson, has published a book titled “Ask Your Developer: How to Harness the Power of Software Developers and Win in the 21st Century” Twilio Flex is their fully-programmable contact centre platform, which includes features such as intelligent call routing and AI-powered chatbots. Flex came about from feedback from customers, who were building their own contact centre solutions using Twilio’s communication service. Flex now has 600 customers and its revenue in 2020 increased 184% from the previous year. Twilio completed its acquisition of Segment last year, a leading customer data platform (CDP) that allows customers to see a single unified view of all their customer interactions, and improve customer experience by tailoring communications to their usage patterns and preferences. As well as addressing the estimated $17B CDP market, Segment is a key part of Twilio’s plans to become the world’s leading customer engagement platform However, Twilio is not profitable yet as it reinvests heavily in growing its business, and with a market cap of $66B and a P/S ratio of 31, it has a rich valuation, higher than it has been historically. And the competition is heating up, not just from tech giants such as Microsoft and Cisco, but also from smaller pure plays such as Bandwidth and MessageBird. MessageBird, in particular, has a strong presence in Europe and Asia and may impact Twilio’s international growth, which currently only accounts for 27% of its revenues The following companies are mentioned in this episode: BAND, FB, MessageBird, MSFT, TWLO, UBER ----- If you enjoyed this episode, please consider subscribing at https://telescopeinvesting.com/subscribe/ Or you can contact the hosts: LukeTelescope AlbertTelescope

We get some fantastic stock suggestions from our listeners and one that has popped up several times is a gaming company called Gravity. Gaming is not a sector we follow closely, so we’re pleased to have Zippy Capital (@zippy_capital) on this week’s podcast to share his insights about this fast-growing publisher of mobile games. Gravity is a South Korean gaming company, and are publishers of games based on the Ragnarok franchise, which is extremely popular in South East Asia. Zippy Capital publishes his analysis on Gravity and other investing topics on his substack and at Seeking Alpha. Gravity works with developers such as Dream Square, Tencent and Bytedance to develop games in exchange for distribution rights in the China market, while Gravity retains distribution rights in all other markets. The Ragnarok franchise has transcended its comic book roots and is part of South East Asia popular culture, with live concerts based around the games selling out in minutes. Gravity has had hit games in Ragnarok: Eternal Love and Ragnarok: Origin, with more on the way, and have recently announced a partnership with the NBA to launch an NBA based game in South East Asia. With a market cap of just under $1B and trading at 9x trailing EV/EBITDA, the potential upside is large given the increasing popularity of mobile games all over the world and especially in South East Asia, but mobile games have a relatively short shelf life and competition in this sector is very high. The following companies are mentioned in this episode: Sea Limited (SE), Teladoc Health (TDOC), Tencent Holdings (TCEHY), Activision (ATVI), Take-Two Interactive (TTWO). ----- If you enjoyed this episode, please consider subscribing to the Telescope Investing website at https://telescopeinvesting.com/subscribe/ Or you can contact the hosts Luke & Albert at https://twitter.com/LukeTelescope https://twitter.com/AlbertTelescope