Very few fund managers would be able to offer better insights into the customer bases of stocks Adore Beauty and Afterpay like Firetrail Investment Management’s Eleanor Swanson.
As a rising star within Firetrail’s small companies team, she has a sharp insight into how the younger generation think, act and spend differently.
She was central to the firm’s success in backing Afterpay, with her determination the stock was worth backing winning over senior fund managers.
“We had debate within the investment team where I was saying, ‘guys, people love this, they’re using it over and over again’, and they’d say: ‘why are they using it? It’s just a fad’,” she says.
“I was bringing that more Millennial perspective, that when you’re at university, going from paycheck to paycheck, maybe you can’t afford that dress you want, and so it’s great to pad your paycheck out for an extra six weeks.
“I guess being younger, you definitely have a different viewpoint, and you definitely bring something to the team.”
Swanson’s battle to win over Firetrail’s analysts and invest in Afterpay is recounted in Buy Now, Pay Later: the incredible story of Afterpay written by The Australian Financial Review’s Jonathan Shapiro and James Eyers.
“In early 2019, she’d convinced one of Firetrail’s funds to buy into Afterpay at around $20. Her pitch at the time was that it was a $56 stock. Her models suggested it was worth even more, but was wary of startling her colleagues who already thought it was too expensive,” the authors wrote.
Swanson first pitched Afterpay to the value-orientated Firetrail when the stock was just north of $10. But risks were swirling at the time as policymakers debated whether the company’s business model should be classified as providing credit.
“The real ‘aha’ moment with Afterpay was when we started to understand those customer cohort trends,” she says.
“If you look at Afterpay in the early days, you could see with the customers, the frequency of spend was just ratcheting up every year. They’d go from using it two times a year, eight times a year, and up to 20 times a year.”
Swanson says Afterpay’s movement into other verticals outside fashion and make-up also helped bolster the investment case.
“You could just see that the potential for the average order value to tick up and the frequency of spend was building out even more, so they were just building this incredible ecosystem,” she says.
“And when you run frequency of spins, and average order value through your model, you just get the most incredible uplift in revenue.
“The final piece of the puzzle is just the penetration of the Millennial population in each market. We saw what they did in Australia, where they got up to 40 per cent penetration of Millennials. If they could get anywhere close to that in the US, it was just going to be extraordinary.”
Her unique insight into Adore Beauty was a key reason behind the firm backing it early on, although its fortune hasn’t quite mirrored Afterpay’s.
“A lot of my friends loved Adore Beauty, and they used it all the time,” she says. “It definitely helps knowing people that know about the company.
“We’re currently at about 12 per cent of beauty spend being online in Australia, whereas the UK and the US is closer to 30 per cent. So just from a top-down perspective, it looks super compelling.”
Swanson admits the performance hasn’t been as good as she might have hoped, but still believes there’s more to come from the online beauty retailer.
“The thing we underestimated with adult beauty is that they were adding so many customers during the COVID period, and we underestimated the churn of those new customers off the platform,” she says.
“We still like the business, though, and we still think from a thematic, top-down market share perspective, they’ve got huge runway. But we probably overestimated the potential loyalty of those COVID customers.”
Swanson’s passion for investing was sparked during her university days, where she studied a double degree in commerce and science, majoring in immunology.
“I thought I wanted to be a doctor and go down that route,” she says.
“But there was this great subject at the University of Sydney called ‘vals’, or financial valuations, and that’s where it kind of clicked I loved looking at companies, understanding their business models, figuring out the cash flows, valuing it and then figuring out whether you wanted to buy or sell it.”
After a graduate stint with JPMorgan, Swanson moved to Macquarie Investment Management, where she worked under Blake Henricks, who would go on to found Firetrail alongside Patrick Hodgens.
When the pair split off to open the new boutique, Swanson didn’t hesitate in joining them.
“Honestly, I didn’t feel like it was a big risk because Patrick and Blake, have such great brands in the market as great stock pickers, and they built up a huge client base at Macquarie that were very loyal,” she says.
She sits on the investment team of the firm’s small companies fund, which made a return of 56.44 per cent in the 12 months to October 31, an excess return above benchmark of 25.42 per cent.
“I love the alpha potential in small caps,” she says. “The large cap guys get excited if they’ve got 30 per cent upside in the stock, whereas we would get excited if there’s 200 or 300 per cent upside.”
Swanson is presenting at this year’s Sohn Conference, joining the likes of Charlie Munger, Phil King and Mark Nelson at the philanthropic investment conference in December.
“From a personal perspective, I’m super excited to present at Sohn because they support the Shake It Up foundation,” she says.
“I’ve got two grandparents who’ve suffered from Parkinson’s, and they do incredible work, funding research into Parkinson’s because there’s so much they don’t know about it and there’s very little treatment to help out. It’s degenerative and it’s horrible.”
Her background studying immunology has been a boon to her analyst career, giving her a unique ability to provide an insight to the medical technology sector.
When asked about the fund’s investments in Telix Pharmaceuticals and Aroa Biosurgery, she’s quick to descend into technical medical jargon even the most seasoned fund manager would struggle to keep up with.
“With Telix, they’re trying to diagnose the cancer through imaging through PET scans or SPECT imaging,” she says.
“They’ll actually take a radioisotope and bind it to an antibody injected into you, and that antibody will bind specifically to the antigen, so when you’re imaging the patient, it just lights up the tumour.”
Firetrail was also a pre-IPO investor in Aroa Biosurgery, which is up 50 per cent since listing in July 2020.
The firm isn’t afraid to play around in the IPO and pre-IPO market, making some big early wins from a number of recent floats.
“We’re very active in that part of the market and there’s so many opportunities, particularly at the moment,” she says.
Swanson says the firm’s success is cemented in its view that every company has its price.
“We very much need to know what that price is, so we build super detailed models, figure out how we’re different, figure out the earnings, and then we can take a view on the stock and figure out the right time to get in,” she says.
“The process is very much founded in valuation, which I love because it takes away the stress of just trying to follow the crowd. We’re just looking for the metrics we know we want the company to hit.”
This article was originally posted by The AFR here.
Licensed by Copyright Agency. You must not copy this work without permission.
It’s an “age of instant gratification”, according to Tekne Capital Management’s Beeneet Kothari, and he is picking restaurant delivery group Delivery Hero to ride the innovation in last-mile logistics in the $US1 trillion takeaway food sector.
Firetrail’s Eleanor Swanson believes Megaport is currently one of the best stories on the sharemarket, and has the potential to join the ranks of Australian-founded technology companies such as Atlassian and Afterpay.
Jay Kahn of Flight Deck Capital has pitched Nikkei-listed Bengo4 as his stock pick for this year’s Sohn Hearts & Minds conference, following the recent acceptance of the electronic signature in Japan due to the Covid-19 pandemic.
Jay Kahn’s Flight Deck fund seeks out stocks in “roads least travelled”, and Kahn reckons it has unearthed a “multi-bagger”: Bengo4, which he describes as Japan’s DocuSign.
Builders Unions', Markus Bihler pitched Wise at the sixth annual Sohn Hearts & Minds Conference. Over the next five years, the fund manager expects the target share price to hit 30 pounds by 2027, a 27 per cent five year annualised return.
Builders Union’s Markus Bihler has picked the freshly listed London-based fintech Wise as his top pick at the 2021 Sohn Hearts & Minds Conference.
Cooper Investors’ Qiao Ma says that despite cordless power tools provider Techtronic Industries being an industrials company, it’s really a technology company at heart.
Regal Funds Management co founder, Phil King is recommending that investors sell shares in travel company Flight Centre, arguing that the stock has rebounded too strongly since its lows of last year with the company still facing headwinds with the shift to online travel bookings.
Yen Liow, managing partner of Aravt Global has pitched Gitlab, a founder-led software business that is focused on DevOps at the Sohn Hearts & Minds Conference. Liow stumbled upon the company while researching Atlassian, which itself generated 20 times the return on capital since its IPO.
Yen Liow, founder and portfolio manager of Aravt Global, has a bullish take on Nasdaq-listed software development company GitLab, which he expects to soar in the coming years.
Pinnacle Investment Management is a multi-boutique fund manager that owns stakes in 16 Australian fund managers across Australia of between 23 to 49 per cent. It is led by CEO Ian Macoun who is said to be famous for picking star portfolio managers.
Atreides Management’s Gavin Baker has picked cryptocurrency exchange Coinbase Global at the Sohn conference, believing in its growth opportunities as more people embrace the crypto world.
Gavin Baker, managing partner and CIO of Atreides Management, a $4.5bn crossover firm based in Massachusetts, recommends investors hold Coinbase, a platform for investing in cryptocurrency.
There is no bigger or unsolved problem than taxes which remains consuming, complicated and error prone. Businesses still manage their taxes with a combination of pen and paper and excel and the complexities are only increasing. Babak Poushanchi says Avalara, based in Seattle, is solving the problem.
Spotify’s market-leading position in the future of audio will catapult the business to among the so-called FAANG stocks alongside the likes of Apple and Amazon, powering revenue growth and its share price, according to Hamish Corlett, co-founder of TDM Growth Partners.
FACT Capitals' Joyce Meng pitched Beauty Health Company at the sixth annual Sohn Hearts and Minds Conference. Meng is forecasting 30 per cent durable and organic growth driven by accelerating equipment placements and a price target of $40 a share for 40 per cent upside.
Moderna co-founder Robert Langer has said he’s confident the company’s vaccine will be effective against the omicron strain of COVID-19, but not as effective as it is against the original variant. “But that doesn’t mean it won’t be effective,” said Mr Langer.
Regal Funds Management has upended its short selling approach to combat the pressures of a rising bull market, focusing instead on share price blips that have included so-called meme stock GameStop, according to chief investment officer Phil King.
An experienced investor with a track record of short selling, King will be the only fund manager on the day tipping a short stock at the annual Australian Sohn Conference on Friday.
Peter Cooper, the founder of Cooper Investors, HM1 Core Fund Manager, shares his learnings from Charlie Munger.
Fund manager, Qiao Ma has tipped Hong Kong based global power tools and outdoor equipment company Techtronic Industries at the Sohn Hearts & Minds conference on Friday.
Hamish Corlett is the only stock picker in the history of the Sohn Hearts & Minds Investment Conference to pitch exactly the same company twice.
Firetrail Investments’ Eleanor Swanson has tipped ASX listed telco software company, Megaport, as the best stock for 2022 at the annual Sohn Hearts & Minds Conference.
Beeneet Kothari of Tekne Capital Management has chosen Delivery Hero as his stock pick at the Sohn Hearts & Minds conference, saying it is the best way to play the innovation and last-mile logistics trend.
Munro Partners’ Nick Griffin has pitched Nasdaq-listed Onsemi as his stock pick at this year’s Sohn Hearts & Minds conference, labelling it the ‘hidden hero’ of the path to decarbonisation.
Berkshire Hathaway vice chairman Charlie Munger, a longtime partner of Warren Buffett, has made his first appearance at the sixth annual Sohn conference in Australia on Friday.
Berkshire Hathaway’s veteran 97-year-old investor Charlie Mungert warns that he views today’s markets as wildly overvalued in places.
Fresh from picking last year’s 180 per cent gainer Nasdaq-listed Bill.com and other big winners such as DocuSign three years ago, Babak Poushanchi is back at Sohn in 2021 with another stock pick. This year the Cota Capital founder and tech-focused investor has named Seattle-based tax software business Avalara as his top pick.
Regal’s Phil King says he’s the only Australian hedge fund manager brave enough or silly enough to return to Sohn Hearts & Minds to pitch a short stock during one of the biggest bull markets of all time.
Griffin expects the car market will be 50 per cent electric by 2030. He likes Onsemi in particular because of its management, and the fact it is being priced as an industrial semiconductor producer.
Joyce Meng of Fact Capital says investors should take advantage of growing skincare spends.
Eley Griffiths small-cap portfolio manager David Allingham has picked Ian Macoun’s multi-boutique funds management group Pinnacle Investment Management as his top stock pick for the Sohn Conference 2021.
Moderna will know in just over a week how effective its COVID-19 vaccine is against the omicron strain, according to the company’s co-founder Robert Langer, who presented at the sixth annnual Sohn Hearts and Minds Conference.
Charlie Munger, the 97-year-old investor and polymath who has been the trusted sidekick of Warren Buffett for decades shared his thoughts on markets, investing and geopolitics in a wide-ranging interview broadcast as part of the Sohn Hearts & Minds Investment Conference.
From e-signatures to last-mile logistics and facials, the annual conference showed that waves of disruption continue to break in different ways across different sectors
Investment legend Charlie Munger says the current climate on global markets is crazier than the dot-com bubble two decades ago, as he savaged the boom in cryptocurrencies as insane and backed China’s ban on the digital assets.
Regal Funds Management’s Phil King says it’s a tough market for short sellers but it didn’t stop him from nominating a prominent one at Sohn Hearts and Minds today: FlightCentre.
Moderna’s co-founder expects the biotech’s vaccine will be at least somewhat effective against the Omicron variant, but says his company can quickly pump out variant-specific boosters for new strains when needed.
Moderna co-founder Robert Langer has suggested the vaccine maker will know within days if its mRNA Covid-19 vaccine is effective against the new variant, Omicron, as he predicted future mutations and the likelihood of the virus becoming “something life flu” that will require regular vaccine boosters.
Eleanor Swanson of Firetrail Investments sat down with Equity Mates Media ahead of this year's conference. Eleanor shares the story of her first investment, breaks down the small cap landscape and shares some of the best companies that she's come across during her time in the markets.
Fund Manager Mark Nelson of Caledonia to interview Berkshire Hathaway's Charlie Munger at the sixth annual Sohn Hearts and Minds Conference.
For all that heavyweight finance names Michael Walsh, David Paradice, Matthew Grounds and Gary Weiss have in common professionally, one thing they can’t seem to find consensus on is music.
Babak Poushanchi, one of the legends of the Sohn Hearts & Minds conference, has opened up about his approach to riding the disruptive technology boom.
Conference Manager Joyce Meng's FACT Capital is proof that the existing Wall Street model could be wildly improved upon.
Cota Capital’s Babak Poushanchi emerged the top picker from the 2020 Sohn Hearts & Minds Conference, with his pick, bill.com, share price up more than 200 per cent.
Yen Liow of Aravt Global sat down with Equity Mates Media ahead of this year's conference. Yen shares the story of his first investment, Aravt's investment philosophy, his thoughts on the future of the payments industry and why he's excited to be a part of the Hearts & Minds family.
Returning Conference Manager Beeneet Kothari talks 'quick commerce', a topic at the heart of his stock pick for the 2021 Sohn Hearts & Minds Conference.
Hearts and Minds Investments Limited (ASX:HM1)'s Chief Investment Officer Rory Lucas and founding Hearts & Minds supporter Phil King of Regal Funds Management recently spoke with the hosts of You're In Good Company, an Equity Mates Media podcast.
Returning Conference Manager Nick Griffin of Munro Partners attempts to capitalise on the climate change thematic that it has declared as the biggest investment opportunity since the internet.
New Conference Manager Eleanor Swanson was instrumental in convincing the investment team at Firetrail Investments to buy into AfterPay.
As a rising star within Firetrail Investment Management, Eleanor Swanson was instrumental in getting the firm to back Afterpay when it was trading at just $20, winning over the senior investment managers.
Eley Griffiths Group portfolio manager David Allingham says the Sohn Hearts and Minds Conference is the Australian investment management industry’s answer to the Woodstock Festival.
Returning Conference Manager Qiao Ma is planning to tip a Hong Kong-based consumer brand player when she fronts the annual Sohn Hearts & Minds conference next month.
Returning Conference Manager Beeneet Kothari sat down with Equity Mates to discuss his first investment, views on China and Cryptocurrency, and why he loves being involved in the Sohn Hearts & Minds Conference.
The payments sector has entered a golden era, says Avart Global’s Yen Liow, who hails from Melbourne.
Moderna co-founder Robert Langer says vaccine development for a range of diseases – not just Covid-19 – will be one of the biggest trends among biotechnology in coming years.
Professor Robert Langer, the billionaire co-founder of vaccine maker Moderna says that early investors in the biotech startup should share the credit for the development of the company’s coronavirus vaccine.
The powerful technology that has enabled mRNA vaccines to save millions of lives during the coronavirus pandemic has much broader potential, according Bob Langer, one of the co-founders of Moderna.
Beeneet Kothari admits it’s been a ‘bloodbath’ for Chinese tech stocks this year, but there are two good reasons he thinks the sentiment will shift.
Charlie Munger, Warren Buffett's trusted man, to headline Sohn Hearts & Minds 2021 Conference.
Charlie Munger, who will headline this year’s Sohn Hearts & Minds Conference, places one quality above all else: patience.
Warren Buffett’s right-hand man Charlie Munger is the headline act at Sohn Hearts and Minds this year and the 97-year-old investment legend is expected to offer forthright views on global financial markets which are now at a critical juncture.
Legendary investor Charlie Munger to headline Sohn Hearts & Minds 2021 conference.