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Zalando Investment Thesis: The Fashion Platform of the Future

September 10, 2020 in Equities, Europe, Ideas, Letters, Wide Moat

This article is excerpted from a letter by Pieter Hundersmarck, fund manager at Flagship Asset Management, based in Cape Town, South Africa.

Pieter will present his thesis on Zalando at European Investing Summit 2020.

Zalando (www.zalando.com) is the number one online apparel & footwear retailer in Europe with c.10% online market share. It is a focused, pure-play online retailer which offers a one-stop fashion destination, including shoes, apparel and accessories, from over 2,000 global brands. Zalando’s website attracts more than 4.2 billion visits per annum and as of Q1 2020 it had nearly 32 million customers in 17 European countries.

Zalando was founded in fall 2008, just days before the start of the financial crisis. In the early days, the small 7-man team worked from a shared apartment in Berlin which became a warehouse and office. The three founders’ private cell phone numbers were the customer hotlines, and they took all the packages to the post office themselves. By offering free delivery and up to 100-day right of return, Zalando set new standards in online retail and grew quickly.

Today, Zalando is the European online leader, generating €6.5 billion in revenue and employing over 14,000 people. It is still headed by founders Robert Gentz, David Schneider and Rubin Ritter. Customer service has since been moved to a dedicated team, as has package delivery.

Rather than set its sights on becoming a large online retailer, Zalando’s vision is to become the starting point for fashion related decision-making, sourcing, goods and services. This means doing more than just buying and reselling clothes: it means being the platform through which you find inspiration, compare and contrast, search, engage and shop. The analogy is akin to the role that Spotify and Netflix play in the consumption of music and visual content respectively.

Zalando’s vision is to be a shopping platform, on which selling its clothes is the primary service supported by brands that operate their own ‘shop within a shop’ on the platform. It further seeks to provide data, marketing and order fulfilment support to these brands. In this sense its vision is akin to being an “online shopping mall” with added delivery and intel services to the shop owners, rather than, for example, to be a Zara or an H&M.

Why do we like it?

Regular readers will know that we invest in businesses that exhibit high quality. In general, we look for businesses that have the following attributes.

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September 4, 2020 in Twitter

Episode 7: Starbucks | Today vs. 1999 | Blind Valuation Exercise

September 4, 2020 in Audio, Diary, Equities, Interviews, Podcast, This Week in Intelligent Investing

We are out with Episode 7 of This Week in Intelligent Investing, featuring Elliot Turner of RGA Investment Advisors, Phil Ordway of Anabatic Investment Partners, and Chris Bloomstran of Semper Augustus.

Enjoy the conversation!

download audio recording

In this episode, John hosts a discussion of:

  • The long-term investment merits of Starbucks, with a look at capital allocation, governance, the China opportunity, store economics, and aspects related to portfolio management; led by Chris Bloomstran
  • How today’s stock market may or may not parallel the market of 1999, with an examination of sector leadership, market structure, relative valuation, and investor psychology; led by Elliot Turner [referenced tweet, referenced book]
  • A “blind valuation” exercise, with analysis of two unnamed companies’ key historical financial metrics, resulting in discussion of potential equity valuation based on the numbers alone, i.e., leaving aside qualitative considerations; led by Phil Ordway [financials used in this exercise]

Follow Up

Would you like to follow up on this conversation?

Engage on Twitter with Chris, Elliot, and Phil.

Connect on LinkedIn with Chris, Elliot, and Phil.

This Week in Intelligent Investing is available on Apple Podcasts, Google Podcasts, Podbean, Spotify, Stitcher, TuneIn, and YouTube.

If you missed any past episodes, listen to them here.

About the Participants

Elliot Turner is a co-founder and Managing Partner, CIO at RGA Investment Advisors, LLC. RGA Investment Advisors runs a long-term, low turnover, growth at a reasonable price investment strategy seeking out global opportunities. Elliot focuses on discovering and analyzing long-term, high quality investment opportunities and strategic portfolio management. Prior to joining RGA, Elliot managed portfolios at at AustinWeston Asset Management LLC, Chimera Securities and T3 Capital. Elliot holds the Chartered Financial Analyst (CFA) designation as well as a Juris Doctor from Brooklyn Law School.. He also holds a Bachelor of Arts degree from Emory University where he double majored in Political Science and Philosophy.

Philip Ordway is Managing Principal and Portfolio Manager of Anabatic Fund, L.P. Previously, Philip was a partner at Chicago Fundamental Investment Partners (CFIP). At CFIP, which he joined in 2007, Philip was responsible for investments across the capital structure in various industries. Prior to joining CFIP, Philip was an analyst in structured corporate finance with Citigroup Global Markets, Inc. from 2002 to 2005. Philip earned his B.S. in Education & Social Policy and Economics from Northwestern University in 2002 and his M.B.A. from the Kellogg School of Management at Northwestern University in 2007, where he now serves as an Adjunct Professor in the Finance Department.

Christopher P. Bloomstran, CFA , is the President and Chief Investment Officer of Semper Augustus Investments Group LLC. Chris has more than 25 years of investment experience with a value-driven approach to fundamental equity and industry research. At Semper Augustus, Chris directs all aspects of the firm’s research and portfolio management effort. Prior to forming Semper Augustus in 1998 – in the midst of the stock market and technology bubble – Chris was a Vice President and Portfolio Manager at UMB Investment Advisors. While at UMB Investment Advisors, Chris managed the Trust Investment offices in St. Louis and Denver. Among his investment duties at the firm, he managed the Scout Balanced Fund from the fund’s inception in 1995 until 1998, when he left to start Semper Augustus. Chris received his Bachelor of Science in Business Administration with an emphasis in Finance from the University of Colorado at Boulder, where he also played football. He earned his Chartered Financial Analyst (CFA) designation in 1994. Chris is a member of the CFA Society of St. Louis and of the CFA Institute. He has served on the Board of Directors of the CFA Society of St. Louis since 2002, where he was elected to sequential terms as Vice President from 2005 to 2006, President from 2006 to 2007 and Immediate Past President from 2007 to 2009. Chris has judged the Global Finals and the Americas Finals several times for CFA Institute’s University Global Investment Challenge. Chris served for a number of years as a member of the Bretton Woods Committee in Washington DC, an institution championing and raising awareness of the International Monetary Fund, the World Bank and the World Trade Organization. He has also served on various not-for profit boards in St. Louis. His resides in St. Louis with his wife and two children.

The content of this podcast is not an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this podcast. The podcast participants and their affiliates may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated on this podcast. [dkpdf-remove]
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The Tesla Effect: A Research Report of Tsai Capital Corporation

September 3, 2020 in Equities, Ideas, Jockey Stocks, Transportation

This report is authored by Christopher Tsai, president and chief investment officer of Tsai Capital Corporation, based in New York City.

Editor’s note: As with all member research shared on this website, MOI Global does not necessarily agree or disagree with the research or the conclusions thereof.

Introduction

Tesla is a misunderstood, quality compounder with significant and underappreciated competitive advantages. We see several parallels between Tesla, Apple, and Amazon around a decade ago when Amazon had roughly the same amount of revenue as Tesla has today.

We invested in Tesla for the long-term because we think the company is well positioned for growth within the consumer technology and mobility space.

There are a number of “big ideas” that are driving Tesla’s success and helping to rapidly build intrinsic value. Here are five taken from math, physics and psychology.

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Disclaimer: This article has been provided solely for information purposes and does not constitute investment advice from Tsai Capital Corporation (“Tsai”). All facts and statistics are from sources believed reliable, but are not guaranteed as to accuracy. Any forward-looking statements contained herein represent solely the opinions of Tsai and should not be construed as any guarantee of future results. Accounts managed by Tsai can and may lose money on any investment. Any opinions provided by Tsai relating to the entities discussed herein may change without notice. Tsai and its affiliates, employees, and clients may have recently established or disposed of, or may be establishing or disposing of, positions in securities mentioned in this report. Since portfolio managers make individual investment decisions in the accounts under supervision, transactions may be inconsistent with research reports. This research report is provided solely as an informational tool through which existing clients and investors may gain additional insight into Tsai Capital’s analytical processes. Nothing in this report should be construed as representing the performance of any investment held in any account managed by Tsai Capital over any timeframe. Further, to the extent that any account holding this investment may have experienced positive performance by holding this investment during any timeframe, other investments purchased by the adviser and held during similar and/or other timeframes may have experienced materially less favorable results and/or may have lost value.

The content of this website is not an offer to sell or the solicitation of an offer to buy any security. The content is distributed for informational purposes only and should not be construed as investment advice or a recommendation to sell or buy any security or other investment, or undertake any investment strategy. There are no warranties, expressed or implied, as to the accuracy, completeness, or results obtained from any information set forth on this website. BeyondProxy’s officers, directors, employees, and/or contributing authors may have positions in and may, from time to time, make purchases or sales of the securities or other investments discussed or evaluated herein.
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