Elliot Turner of RGA Investment Advisors presented his in-depth investment theses on PayPal Holdings (US: PYPL) and Roku (US: ROKU) at Best Ideas 2019.

Thesis Summaries:

PayPal Holdings and Roku both benefit from improving unit economics and large, growing total addressable markets. Each company benefits from an open-ecosystem that favors customer choice and smooth user experience. 

PayPal suffers from an over-emphasis on take rate and too little appreciation for the virtuous cycle flowing around increasing user engagement. Improving unit economics at PayPal will drive higher out-year margins supporting a DCF-driven price target upwards of $120 per share.

Since Roku’s IPO, too many analysts have viewed the company as a hardware company and have failed to appreciate the business model evolution to an advertising platform. At a price around 3x 2020 platform sales and 2020 expected growth upwards of 40% y/y with a long runway of operating leverage, the company offers investors rapid growth at a reasonable price.

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About the instructor:

Elliot Turner is a co-founder and managing director 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.