| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Farrer Wealth maintains a concentrated portfolio approach with top five positions now comprising nearly 70% of assets, reflecting increased conviction in core holdings amid market volatility. The manager has become less forgiving of loss-making positions, cutting underperformers like Basic-Fit and Howden Joinery while adding Franco-Nevada as a gold royalty play. Key holdings include Sea Limited benefiting from continued e-commerce growth in Southeast Asia, eDreams ODIGEO capitalizing on resilient leisure travel demand, Evolution maintaining leadership in live casino gaming, Google trading at a discount to tech peers despite strong cloud growth, and Apollo positioned for private credit and annuity growth. The portfolio faces headwinds from tariff uncertainty under the Trump administration, though the manager emphasizes that market dislocations can change rapidly. Risk management includes tactical use of cash, hedges, and gold exposure to smooth volatility. Despite ongoing underperformance since inception, the manager expresses confidence in current positioning and aims for strong relative returns, viewing current market conditions as creating attractive opportunities not seen since 2022.
Concentrated portfolio of 12-20 high-conviction positions focused on businesses expected to outperform benchmarks over time through bottom-up research and deep fundamental analysis, with current top five positions representing nearly 70% of the portfolio.
Despite continued underperformance, the manager is pleased by the current quality and setup of the portfolio. While the macro situation remains highly uncertain, core holdings and some new additions should perform nicely over the next several quarters. The manager aims to deliver strong relative returns this calendar year.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Mar 31 2025 | 2025 Q1 | APO, BFIT.AS, EDRE.MC, EVO.ST, FNV.TO, GOOGL, HWDN.L, SE | Concentration, gaming, gold, private credit, tariffs, technology, Travel | FNV.TO | Concentrated portfolio with top five positions at 70% weight, reflecting high conviction in Sea Limited's e-commerce dominance, eDreams' travel recovery, Evolution's gaming leadership, Google's cloud growth, and Apollo's private credit expansion. Added Franco-Nevada gold royalty position for portfolio diversification. Despite tariff uncertainty and macro headwinds, manager maintains optimistic outlook on core holdings and expects strong relative performance ahead. |
| Dec 31 2024 | 2024 Q4 | ADYEN.AS, APO, GLBE, GOOGL, SE, SHOP | E-Commerce, global, growth, payments, value | GLBE | Farrer Wealth reached an inflection point, cutting underperformers while winners like Apollo (+32%) and eDreams (+28%) delivered. After reviewing 3.5 years of subpar returns, the manager is adopting a less patient approach, shutting down tactical strategies, and focusing on payments and e-commerce logistics through new position Global-e. |
| Sep 30 2024 | 2024 Q3 | ADYEN.AS, ASAI3.SA, CMG, COST, IAC, PLNT, SE, WMT | digital transformation, E-Commerce, emerging markets, growth, payments, value |
SE ASAI3.SA |
Farrer Wealth's concentrated global equity strategy delivered 5.25% USD returns with Sea Limited driving performance through renewed growth and reduced competition. Brazilian retailer Assaí disappointed amid rate hikes but thesis remains intact. Portfolio trades cheaper than benchmarks while growing 2.5x faster, positioning for value realization as manager senses turning point ahead. |
| Jun 30 2024 | 2024 Q2 | EDR.MC, EVO.ST, GOOGL, HWDN.L, NASDAQ:IAC, PAGS, SE | Buybacks, concentrated, global, long-term, Transformation, underperformance, value | - | Concentrated value portfolio has severely underperformed over three years due to transformation stories not working in volatile markets and missing Mag 7 rally. Manager sees 100% upside to fair value with limited downside given cheap valuations and strong fundamentals. Six of top seven holdings conducting buybacks. Maintains long-term conviction despite poor timing on some exits. |
| Mar 31 2024 | 2024 Q1 | APO, BFIT.AS, BX, DBRG, EVO.ST, GOOGL, HWDN.L, MSFT, NVDA, TSM | AI, Asset Management, Predictable, private credit, Recovery, value | - | Farrer Wealth underperformed in Q3 due to missing AI rallies but successfully rotated from Blackstone to Apollo Global Management. The portfolio focuses on predictable cash flow businesses, particularly asset managers. Despite slow recovery from 2022 losses, strong company fundamentals and 90% upside potential against 2025 targets support the long-term value thesis. |
| Dec 31 2023 | 2023 Q4 | ADYEN.AS, BX, GOOGL, IAC, SE, VZIO | consumer, global, Rate Cuts, small caps, technology, value | VZIO | Farrer Wealth outperformed this quarter but remains significantly behind since inception. Portfolio trades at 50% of fair value with 98% upside potential. Expected rate cuts should benefit small- and mid-cap focused strategy. Multiple catalysts materializing with eDreams and Adyen performing well. Manager sees opportune deployment moment given embedded value and favorable macro setup. |
| Sep 30 2023 | 2023 Q3 | ADYEY, BFIT.AS, DBRG, EDRM.L, EVO.ST, IAC, SE, SPOT, TASK | Alternative Assets, Buybacks, Data centers, E-Commerce, gaming, payments, value |
EVO.ST IAC ASAI3.SA DBRG |
Farrer Wealth's portfolio declined 11.29% despite strong underlying fundamentals across core holdings like Evolution and IAC. Manager added to Sea and Adyen on weakness while initiating Digital Bridge position. Portfolio now trades at significant discount with multiple catalysts expected including online gambling legalization, TikTok competition reduction, and share buyback programs across key positions. |
| Jun 30 2023 | 2023 Q2 | ATOS, GOOGL, HDB, HWDN.L, IAC, SBKFF | Bottom-up, global, growth, Quality, value | HWDN.L | Farrer Wealth's concentrated global equity strategy underperformed in Q4 FY2023 but showed strong momentum in June. The manager added high-quality UK kitchen supplier Howden Joinery at attractive valuations while trimming HDFC Bank. With improving macro conditions and portfolio companies showing strong fundamentals, the manager is deploying cash and expressing optimism for future performance. |
| Mar 31 2023 | 2023 Q1 | ASAI3.SA, EDRE.L, EVO.ST, GOOGL, SE, TASK | Asia, BPO, Brazil, E-Commerce, gaming, growth, small caps, Travel | - | Strong quarter with 13.75% returns as key holdings proved their business models. eDreams subscription program reached profitability, Sea Limited achieved surprise earnings turnaround, and Evolution maintained 30%+ growth. Portfolio focuses on small-cap transformational stories with unique insights. Reduced cash to deploy into weakness while hedging macro risks. Optimistic outlook despite banking stress and rate concerns. |
| Dec 31 2022 | 2022 Q4 | BX, SBIN IN | - | - | |
| Sep 30 2022 | 2022 Q3 | META, TASK | - | - | |
| Jun 30 2022 | 2022 Q2 | DIBS, DIS, HDB, SPOT | - | - | |
| Mar 31 2022 | 2022 Q1 | AMZN, ATTOF, BFIT NA, GOOG, META, PAR, SE, VZIO, XYZ | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q1 |
E-commerceSea Limited continues to grow each of its three business lines at double-digit rates, with Shopee and Sea Money growing market share in the region despite macro weakness in Indonesia. The company has no exposure to potential tariffs as it does not export to America. |
Sea Limited Shopee Digital Payments Southeast Asia Market Share |
TraveleDreams ODIGEO is performing well and set to hit targets of 7.25MM subscribers and €180MM in Cash EBITDA by March 2025. Travel, especially leisure travel, tends not to be impacted by macro concerns and with Europe cutting interest rates, leisure travelers should continue to enjoy several holidays. |
Online Travel Leisure Travel Subscription Model Europe Interest Rates | |
GamingEvolution maintains its unassailed position as the leader in live casino, delivering low teen growth and equivalent normalized EPS growth in 2025. The company produces over 50% net profit margins and over 30% returns on capital while trading at less than 12x forward P/E. |
Live Casino Online Gaming US Market Latin America Brazil | |
CloudGoogle's Cloud business is growing at 31% while Other businesses (subscriptions, Play Store, hardware) are growing at 16%. This rapid growth is expected to continue in 2025 despite slowdown in advertising revenue from weak macro environment. |
Google Cloud Digital Advertising Subscriptions Play Store Hardware | |
Private CreditApollo's real growth engine is driven by annuity sales, and in a world where interest rates are cut and macro uncertainty remains, retirees will look for guaranteed income. This coupled with Apollo's origination platform for private credit should drive both fee-related earnings and spread-related earnings. |
Annuities Guaranteed Income Fee Income Spread Income Retirement | |
Gold RoyaltiesFranco-Nevada is a Canadian gold royalty and streaming company that owns a piece of whatever comes out of mines via streaming or royalty contracts. The company has leveraged exposure to gold prices with minimal operational risk, lean balance sheet, and 65% operating margins. |
Gold Streaming Royalty Contracts Commodity Exposure Cobre Panama Gold Price | |
| 2024 Q4 |
E-commerceCross-border e-commerce is a rapidly growing segment, growing at almost double the pace of domestic e-commerce. The market is set to hit almost eight trillion in GMV by 2030 growing at a CAGR of 30.5%. Global-e is positioned as the leading end-to-end ecommerce logistics service helping brands sell cross-border. |
Cross-border Logistics GMV Shopify Global-e |
PaymentsPayments is a fascinating space with high competition and what looks like a race to the bottom with regards to take-rates. However, several payment businesses are carving out niches and the race to the bottom benefits players who can capture large volumes with low-cost to serve. The portfolio has added two new payments companies. |
Take-rates Volumes Competition Niche Processing | |
| 2024 Q3 |
E-commerceManager invests in offline-to-online transitions where businesses eliminate physical presence costs while scaling globally. Sea Limited's e-commerce arm Shopee faces benign competitive environment going into 2025. Digital transformation supercharges growth as seen in advertising, travel, and gambling industries. |
Digital transformation Shopee Online platforms Global scaling Cost reduction |
PaymentsPortfolio includes payment processors as toll takers that earn small percentages from transactions. These businesses benefit from operating leverage where additional transaction volume contributes more directly to profits once scale is reached. |
Transaction processing Operating leverage Toll takers Payment systems Scale benefits | |
ResilienceManager focuses on offline stalwarts that survived e-commerce disruption, COVID lockdowns, and weak consumer spending. Companies like Costco, Walmart, Planet Fitness, and Chipotle emerged as market leaders with scale advantages making competition difficult. |
Market leaders Disruption survivors Scale advantages Battle tested Competitive moats | |
| 2024 Q2 |
E-commerceSea Limited dominates Southeast Asian e-commerce and has grown revenues 140% since initial investment. The company has achieved profitability in Southeast Asia while building its financial services arm. Despite competition from TikTok Shop, Sea has cemented its market position. |
Southeast Asia Profitability Competition Growth Digital |
TraveleDreams has successfully launched a subscription program called Prime that has grown subscribers 10x since the pandemic. The program helps escape Google's traffic tax and has increased cash EBITDA margins by 400 basis points compared to 2019 levels. |
Subscription Online Travel Europe Margins Direct | |
GamblingEvolution operates in the live casino space with 71% EBITDA margins and dominates market share. The company benefits from the shift from offline to online gambling and from unregulated to regulated markets. Revenue diversification across regions limits single-country risk. |
Live Casino Regulation Margins Online Market Share | |
BuybacksSix of the top seven portfolio positions are conducting share buybacks, emphasizing the cheapness of the portfolio. Companies like eDreams are using tender offers to provide liquidity, while others use buybacks to enhance shareholder returns alongside dividend payments. |
Share Repurchases Capital Allocation Valuation Liquidity Returns | |
ValueThe portfolio trades at attractive valuations with near 100% upside to fair value. Holdings like IAC trade at 3x free cash flow multiples, while the overall portfolio shows significant undervaluation despite strong underlying business performance. |
Undervaluation Fair Value Multiples Upside Cheapness | |
| 2024 Q1 |
Private CreditApollo Global Management represents a differentiated approach to private credit through its retirement services business model. The company benefits from steady capital inflows through annuity premiums, providing more predictable AUM growth compared to traditional fundraising cycles. Apollo's origination platform across 16 businesses manages $130 billion in credit verticals, positioning it well in the expanding private credit market as banks face tighter regulatory requirements. |
Apollo Annuities Credit Origination Banking |
Alternative Asset ManagersThe portfolio has increased exposure to asset managers like Blackstone, Apollo, and Digital Bridge due to their predictable cash flow streams. Management fees provide steady revenue once assets are locked in for a decade or more. The manager views this predictability as attractive and expects to continue adding similar business models to the portfolio. |
Blackstone Apollo Predictable Management Fees | |
AIAI-fueled rallies have been challenging to compete with, particularly missing gains from Nvidia, TSMC, and Microsoft. However, the portfolio maintains some AI exposure through holdings in Alphabet and Digital Bridge. The manager acknowledges the difficulty of competing with AI momentum but maintains selective exposure rather than chasing the trend. |
Nvidia TSMC Microsoft Alphabet Rally | |
| 2023 Q4 |
Small CapsPortfolio skews toward mid- and small-cap space which has underperformed large caps. As interest rates are cut, small- and mid-caps tend to do better due to more floating-rate debt and increased risk appetite for smaller companies. |
Russell 2000 Underperformance Rate Cuts Floating Rate Risk Appetite |
ValuePortfolio trades at approximately 50% of fair value on weighted-average basis with significant 98% upside remaining. Focus on businesses growing market share in growing markets at attractive valuations. |
Fair Value Upside Discount Valuation Market Share | |
RatesCentral banks have signaled end to rate hiking cycle and will likely start cutting rates in 2024. This should benefit portfolio as several larger positions have debt on their books and rate cuts typically favor small- and mid-caps. |
Rate Cuts Central Banks Debt Monetary Policy Cycle | |
| 2023 Q3 |
GamingEvolution posted strong revenue growth of 28.2% and EBITDA margins over 70%, but faces challenges with RNG business declining 4% and North American growth slowdown. The pathway to US online gambling legalization is clear with only 6 states currently legal versus 37 with sports betting. Evolution trades at reasonable 18x forward P/E given its financial profile. |
Online gambling RNG North America Legalization Margins |
E-commerceSea experienced 46% drawdown but competition threat decreased with TikTok Shop ban in Indonesia. Shopee expected to gain significant market share over next quarters. Despite near-term earnings volatility, risk/reward at current price is highly attractive with 10x 2025 PE multiple. |
Southeast Asia Competition TikTok Market share Profitability | |
Data CentersDigital Bridge is a fast-growing alternative asset manager focused on digital infrastructure including data centers, fiber networks, and cell towers. Data center capex likely to hit $1.3 trillion annually by end of year to support AI boom. Company guided to $45bn FEEUM by 2025 with distributable earnings of $170MM. |
Digital infrastructure AI boom FEEUM Alternative assets 5G | |
PaymentsAdyen saw 63% drawdown after revenue growth slowed to 23% and EBITDA margins dropped to 43% due to hiring spree and North American competition from PayPal's Braintree. Management's hiring strategy during market downturn appears strategically sound for long-term positioning despite short-term margin pressure. |
Payment processing North America Competition Margins Hiring | |
BuybacksIAC continues smart capital allocation through stock buybacks at both IAC and Angi levels during cheap valuations. Company trades at 8x expected 2023 Adj. EBITDA with 9% FCF yield. eDreams expected to start share buybacks in Q1 next calendar year as key catalyst. |
Capital allocation Valuation Share repurchases FCF yield Catalysts | |
| 2023 Q2 |
ValueThe manager emphasizes buying great businesses at great prices, highlighting Howden Joinery trading at less than 10X trailing EBIT multiple despite strong fundamentals. The portfolio focuses on companies with strong economics trading at attractive valuations compared to growth rates. |
Valuation Multiple Discount Price Economics |
QualityFocus on businesses with strong market positions, high margins, and consistent returns. Howden Joinery exemplifies this with 60%+ gross margins, 20%+ EBITDA margins, 30%+ returns on equity, and growing market share in a fragmented industry. |
Margins Returns Market Share Fundamentals Economics | |
| 2023 Q1 |
E-commerceSea Limited's e-commerce platform Shopee maintains market share in Southeast Asia and Brazil despite cost-cutting measures. The total addressable market for e-commerce in Southeast Asia shows double-digit growth well into 2025 according to Temasek and Bain data. |
Southeast Asia Brazil Shopee Digital TAM |
Online TraveleDreams Odigeo's Prime subscription program has grown to over 4.2 million members, up from 300K in Q1 2020. The company posted 5% EBITDA margin and near break-even operating profit, proving the subscription model's viability for online travel agencies. |
Subscription OTA Europe Prime Travel | |
GamingEvolution continues rapid expansion in North America and Asia, with Asia now its biggest market. Sea Limited's Garena division faces challenges replacing Free Fire revenue with new game releases, requiring multiple smaller hits to compensate for the slowdown. |
Live Casino North America Asia Free Fire Mobile | |
Small CapsThe portfolio favors small and mid-caps with weighted-average revenue under $4 billion excluding Alphabet. Smaller companies have higher base-rates for sustained double-digit growth and more potential for mispriced opportunities due to fewer analysts covering them. |
Growth Mispricing Coverage Revenue Base-rates |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Sep 1, 2023 | Fund Letters | Farrer 36 Asset Management | ASAI3.SA | Sendas Distribuidora S.A. | Consumer Staples | Hypermarkets & Super Centers | Bull | B3 | balance sheet, Brazilian Retail, Cash-and-carry, De-risked, Interest rates, Returns on Capital, same-store sales, Wholesale | Login |
| Sep 1, 2023 | Fund Letters | Farrer 36 Asset Management | IAC | IAC/InterActiveCorp | Communication Services | Interactive Media & Services | Bull | NASDAQ | capital allocation, digital media, FCF yield, Home Services, Publishing, Share Buybacks, turnaround, Turo IPO | Login |
| Sep 1, 2023 | Fund Letters | Farrer 36 Asset Management | EVO.ST | Evolution AB | Consumer Discretionary | Casinos & Gaming | Bull | Nasdaq Stockholm | EBITDA margins, Gaming, Live Dealer, Online Casino, Regulatory Expansion, RNG, TAM expansion, US market | Login |
| Sep 1, 2023 | Fund Letters | Farrer 36 Asset Management | DBRG | DigitalBridge Group Inc | Real Estate | Specialized REITs | Bull | NYSE | 5G, AI, Alternative Asset Manager, asset management, Cell Towers, data centers, digital infrastructure, FEEUM Growth, Fiber networks | Login |
| Mar 1, 2025 | Fund Letters | Farrer 36 Asset Management | FNV.TO | Franco-Nevada Corporation | Materials | Gold | Bull | Toronto Stock Exchange | Canada, commodity, Equity, Gold, inflation hedge, leverage, Mining, Precious Metals, Royalty, Streaming | Login |
| Dec 1, 2024 | Fund Letters | Farrer 36 Asset Management | GLBE | Global-e Online Ltd. | Information Technology | Internet & Direct Marketing Retail | Bull | NASDAQ | Cross-Border, e-commerce, growth, Israel, Logistics, payment processing, SaaS, Shopify, technology | Login |
| Sep 30, 2024 | Fund Letters | Farrer 36 Asset Management | SE | Sea Limited | Communication Services | Interactive Media & Services | Bull | NYSE | Digital Entertainment, e-commerce, Fintech, Gaming, growth, platform, Southeast Asia, turnaround | Login |
| Sep 30, 2024 | Fund Letters | Farrer 36 Asset Management | ASAI3.SA | Assaí Atacadista | Consumer Staples | Food & Staples Retailing | Bull | B3 | Brazil, Cash-and-carry, consumer staples, deleveraging, Emerging markets, market share, retail, Value | Login |
| Dec 31, 2023 | Fund Letters | Farrer 36 Asset Management | VZIO | Vizio Inc | Consumer Discretionary | Consumer Electronics | Bear | NYSE | advertising platform, capital allocation, Connected tv, consumer electronics, Hardware Margins, operating system, Platform business, TV Manufacturing | Login |
| Jun 30, 2023 | Fund Letters | Farrer 36 Asset Management | HWDN.L | Howden Joinery Group Plc | Consumer Discretionary | Home Improvement Retail | Bull | London Stock Exchange | Depot Network, france, high margins, international expansion, Kitchen Refurbishment, Market Share Leader, Pricing power, Trade-Only Supplier, UK, Value | Login |
| TICKER | COMMENTARY |
|---|---|
| SE | Sea continues to grow each of its three business lines at double-digit rates, with no impact from potential tariffs (Sea does not export to America nor rely on its consumers). So far, we have not seen any impact from the macro weakness in Indonesia, with Shopee and Sea Money growing market share in the region. |
| EDRE.MC | eDreams has been performing wonderfully and is set to hit its self-imposed targets of 7.25MM subscribers and €180MM in Cash EBITDA by March 2025. The product has also been rapidly improving - in my last two bookings using their Prime subscription service, I saved S$370 compared to a subscription fee of just S$70. Travel, especially leisure travel, tends not to be impacted by macro concerns and with Europe cutting interest rates, the leisure traveller should continue to enjoy several holidays this year. |
| EVO.ST | Evolution's stock price action might make you think the company is heading for bankruptcy. However, this company should still deliver low teen growth and equivalent normalized EPS growth in 2025. Evolution still produces over 50% net profit margins and over 30% returns on capital - and is trading at less than 12x forward P/E. This year we are likely to see continued growth in the US market as well as new growth from Latin America, as countries like Brazil launched regulated operations at the start of 2025. The company continues its unassailed position as the leader in live casino, and nothing I have seen recently has changed that opinion. |
| GOOGL | Google continues to trade at a 30% discount to the rest of the Mag 6 (removing Tesla) and has growth on par with the rest of the pack (not including Nvidia). Despite the slowdown in advertising revenue (which will be impacted by a weak macro environment), its other core businesses: Cloud and Other (subscriptions, Play Store, hardware) are growing at 31% and 16% respectively, and we expect this rapid growth to continue in 2025. There is a risk here considering cases against Google ruling that it is both a search and digital advertising monopoly. However, these cases can take years to resolve on appeal and therefore I do not believe there will be a significant near-term impact on earnings. |
| APO | While a weak economy would slow down IPO and M&A, the real growth engine behind Apollo's business is driven by annuity sales. In a world where interest rates are cut and macro uncertainty remains, retirees and the like will look for guaranteed income. This coupled with Apollo's origination platform for private credit should drive both fee-related earnings (FRE) and spread-related earnings (SRE) in 2025, both of which underpin Apollo's earnings growth. |
| FNV.TO | Franco-Nevada is a Canadian gold royalty and streaming company. The company does not own any mines but owns a piece of whatever comes out of the mine via streaming or royalty contracts. Franco is not involved in the operation of the mine thus does not suffer from 'additional' costs if things don't go to plan. Franco has a lean balance sheet with no debt and US$1.4bn in cash. Franco has a minimal cost structure allowing it to boast 65% operating margins. The company only has 40 employees and with a market cap US$32billion, that's US$882 million in market cap per employee. Franco has an incredible track record in producing returns to shareholders with 18 consecutive years in annual dividend increases, and since its listing in 2007 has far outstripped the performance of gold on both a capital gains and total return level. |
| BFIT.AS | Basic-Fit's management continued to disappoint on both failing to meet guidance and significantly cutting its growth plans (from 250+ new clubs a year to 100). Further, we think that the company has overestimated how long it would take clubs launched during covid to recover and thus, have gotten a bit ahead of itself in terms of the amount of debt it has on its balance sheet. It appears to me now that the company will have to raise equity to pay down its debt, a bulk of which is now due in 2027. |
| HWDN.L | Our investment in Howden Joinery did well both based on the financial performance of the company as well as the impact on our portfolio. However, the industry that Howdens is in (kitchens) is facing a trough. That said, Howdens has done a great job of gaining market share given that its revenues were flat this year while competitors were down single to high teens. Given that our thesis 1) rerating of multiple and 2) market share gains had played out and given the growth profile going forward, I decided to use the cash from the investment elsewhere. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
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| No industry data available | |||
