Welcome to the CTHGPRO September 2021 update.
Wow, what a month! September was possibly the wildest month the portfolio has ever experienced.
Firstly, Valneva, what can we say but we didn’t see that one coming. The UK government announced on September the 1st, that it was pulling out of the $1.7 Billion agreement. The UK government first announced it was because Valneva had failed to live up to its side of the supply agreement but later changed their reasoning announcing Valneva’s vaccine was unlikely to be approved for use in the UK. It also came at the same time the UK announced their preferred booster was the Pfizer vaccine which they have already ordered in large supply. Whatever the real reason, we exited our position on the news. Just to rub salt into the Valneva wounds the very next day ASIC announced UWL’s executive director was being investigated for insider trading. The investigation related to the period prior to his time at UWL.
This presented both an opportunity and a moment of sheer panic for the CTHGPRO Team. Fortunately, I was at my desk when the price of UWL began to crater. As such I was able to call the whole team to search for possible reasons for the fall, once establish, we decide to add to our position at $3.50 and we were able to exit our trading position a short time later north of $4. The portfolio will generally not engage in such short-term trading but believing the market was panicking for the wrong reasons, we decided that the new information would not affect the day-to-day business and would soon be forgotten.
Most will know the original portfolio did not engage in such short-term trading and it’s unlikely the portfolio will do so again. Just for reference while my overall record for short term trading is profitable the % return on turnover is much lower and requires much more emotional capital then I am now prepared to give on a day-to-day basis. Emotional capital and the preservation of emotional capital should always be in the front of any trader or investor’s mind. If you can place your mind and emotions in equilibrium when making any decisions, and this applies to not just investing the better your final decision will be. On many occasions in your investing journey you will feel the need for speed, when in truth that is rarely the case. If you can slow down the process and remember the market will always be there offering you choices, all of which you can decide not to engage in, the better off your results will be.
World News
If you had never heard of Evergrande before September, you’re not alone but by the end of September it seemed like everyman and his dog was an expert on the company. Various analysts for what seemed like the whole month were gracing the media explaining why Evergrande would or wouldn’t bring down the market. Personally, I am not greatly concerned by the real estate market in China. I believe the Chinese Government will do everything to stop the real estate market falling apart but they have voiced their concerns on housing prices and borrowings, so the current events come as no real surprise to the team at CTHGPRO. Again, I repeat while I find macro events interesting, they do not generally affect how we invest.
One of the smartest things I have read outside of the CTHGPRO newsletter 😊 was written by another fund manager who made a key component of his fund’s mandate was to always remain optimistic about the market and the world. I think a lot of investors can learn and prosper from taking the same approach to their investing careers.
Portfolio News
Besides the two disasters mentioned above I can now announce 3 new positions which I have already announced on the CTHGPRO forum. CHL, CXL and PPL.
Each month I will generally look at a holding and try to explain a little on how I found the position and why I like the company. This month’s company is CHL.
I will now pass you over to “the analyst” for his take on Campify.
Camplify
Camplify is Australia’s largest digital peer-to-peer RV rental platform. The Camplify platform provides a marketplace to match owners with hirers and covers all the necessary steps to ensure both parties are looked after throughout the duration of the rental period.
Camplify’s platform is well constructed, being developed in Australia with a team of 15 developers. Camplify’s platform is aimed at providing users with the best possible experience, including having 99% of owners approved within the first 24hrs of registration. Their platform further handles all forms of payment processing, insurance claims and any other form of customer support. Moreover, Camplify has strong room for growth, as the supply of RVs in Australia sits at 741,000 (Jan 2021), with Camplify only having 6,000 registered on their platform (<1% TAM). Further growth in Australia, as well as overseas, is strongly expected by the company.
In terms of revenue, Camplify makes money by charging a commission, as well as offering premium memberships. In terms of commission, Camplify charges users a percentage of sales (25.7%). For memberships, subscribers are charged a monthly subscription fee and receive additional benefits, including marketing, reduced commission, and full insurance.
For the Financial Year to June 30, 2021, Camplify facilitated more than 30,000 user bookings, with an average user booking value of $1,019 (with a 25.7% take rate). The company finished the year with $8.4m in revenue, representing a 190% increase over the prior corresponding period.
Alonzo’s Camplify wrap.
I have already told this story on Twitter but I feel it’s worth repeating here. A father and son were working on a van just up the road from my home. They installed a bed, table and sink inside the van along with a pull out annex to the side of the van. I’d often stop to chat with them about their plans and how great I thought it was for them to be working on the project together. During our conversations they mentioned the “van” movement and from there I found Campify. I must admit when I was around 19 years old, I thought of buying a Kombi and traveling around Australia, not sure now why it never happened but I think it would be a great idea for any young single or couple to try now, especially with Covid19 part of lives and who knows what winter will bring for overseas travel.
So what should you take from this story as a new investor?
No doubt you’ve heard the saying that “investing is more art than science” well for me that means, you should allow your inner artist to research and find the companies, while ensuring your inner scientist always manages the risk”
Portfolio returns
The team at CTHGPRO is pleased to advise of a positive 15% return for September and we thank our shareholder for showing faith in the CTHGPRO team despite demanding to redeem every cent after the Valneva fiasco. Fortunately, “the analyst” in the well honoured tradition of elite fund managers hit the no redemptions button seconds before our investor was able to hit the cash out option.
While Valena was the biggest detractor on performance, Pure Profile and Camplify more than made up for its demise.
Top 5 Portfolio Holdings
CTT, UWL, CHL, PPL, CXL
Current Cash Levels..Approximately 40%
Again, I would like to advise all readers that nothing in this update is financial advice. Please do your own research and consult a financial advisor before investing in anything or even when deciding the correct way to tie your shoe laces.
As always I would like to take the opportunity to thank me, for trusting us, with my money.
Regards
Alonzo and “The Analyst”
CTHGPRO Portfolio Connoisseurs
