A new year is upon us, but we still have some unfinished business from 2021: we wanted to tell you about the latest changes to the Spaceship Voyager portfolios.
We bought some stocks — which you can read about here — and sold some stocks, including Poshmark, Softbank, Berkshire Hathaway, Zillow Group, and Schrodinger. Let’s take a closer look.
Sold: Poshmark
From the Spaceship Earth Portfolio
Poshmark is a leading social marketplace where users can buy and sell new and secondhand clothes, shoes, accessories, and homewares.
Since we bought Poshmark in the first quarter of 2021, the company has delivered lower growth than we expected, while costs have risen, partly due to increased competition in the resale space. We overestimated the growth of the entire resale industry balanced with the number of players in the very competitive US market. While we could be more patient to see the results from their international expansion strategy, we have become less confident in management’s ability to execute, especially in what we believe is a very competitive industry.
While we are selling Poshmark, we remain invested in the resale ecommerce trend, as we are invested in Mercari, one of Poshmark’s key competitors in the US.
Sold: Softbank
From the Spaceship Universe Portfolio
Softbank is a Japanese investment holding company with a big bold vision thanks to its focus on investing in technology startups over more established companies.
It does this mainly through the Vision Fund.
However, the Vision Fund has a mixed investment track record over the last few years, not least because of its investment in WeWork, which tried to go public and failed spectacularly, souring the reputation of Softbank in the meantime.
Of course, it hasn’t all been bad news for Softbank. Its largest investment outside the Vision Fund is in Alibaba.
Despite that, we believe its investment edge is less compelling these days. As more and more up-and-coming companies go public through SPACs (special purpose acquisition company), we can gain direct access to the store of companies we might like, instead of investing via Softbank and its Vision Fund. That’s why we have decided to sell out of Softbank at this time.
Sold: Berkshire Hathaway
From the Spaceship Universe Portfolio
You may well know Berkshire Hathaway as the conglomerate founded by prominent investor Warren Buffett — or maybe because of its impressive track record.
Despite its fame, we’ve had Berkshire Hathaway on our watchlist for a while, mostly due to management and trend uncertainty.
Because Warren Buffet and his sidekick, vice chairman Charlie Munger, are both in their 90s, our attention has turned to the company’s future investment strategy. Its new fund managers are investing in IPOs (which the company never used to do) and technology.
While this actually fits well with our own investment strategy, we believe there has been a lack of visibility over internal fund manager returns, and given the increased number of IPOs and opportunities, we decided to sell out of Berkshire Hathaway at this time.
Sold: Zillow Group
From the Spaceship Universe Portfolio
Zillow is the leading digital real estate marketplace in the USA — it has more than 200 million unique monthly users. Just think of it like Domain or RealEstate.com.au.
In 2018, Zillow added a service called iBuying to its suite. This allowed it to use algorithms and data to buy houses and on-sell them. This helped solve the timing problem of whether customers should sell first and then buy a property or find a property first and then sell. Given the time lag in the buying and selling process, iBuying could provide price certainty. (The i in iBuying stands for instant.) We believed Zillow would have a pricing edge given the traffic to its site, and while early results were promising, the volatility in the housing market due to COVID-19 and related material and labour shortages has resulted in Zillow taking higher risks on pricing than expected, swinging from underpayment to overpayment of housing purchases.
As such, the company decided to exit this division. While we think the company has made the right decision for its business, it changes our investment thesis, reducing the addressable opportunity, thus we’re exiting too.
Sold: Schrodinger
From the Spaceship Universe Portfolio and the Spaceship Earth Portfolio
Schrodinger is a life sciences software platform that assists in drug discovery.
Historically, healthcare companies have been slow to adopt technology, but we thought Schrodinger had an unique opportunity due to the coronavirus pandemic. With lockdown orders, we saw increased adoption of software for testing as the world went digital.
However, momentum slowed in 2021, and Schrodinger also substantially increased its expenses.
We also had concerns about the commerciality of the company. Schrodinger only went public in 2020, and was a private company for a number of decades, funded by family office investors who we believe were less interested in financial returns. With all that in mind, we decided to sell out.
Spaceship Origin Portfolio
For customers in the Spaceship Origin Portfolio, things are a little different.
The Spaceship Origin Portfolio is made up of around 100 of some of the largest ASX listed companies by market capitalisation, and around 100 of some of the largest global companies by market capitalisation.
If a company moves in or out of the Spaceship Origin Portfolio, it will be because its market capitalisation has changed, not because we have made the decision to buy or sell it.
A quick note
In March and April 2021, our newsletters indicated that we were looking to buy or had bought Orsted for the Spaceship Earth Portfolio. We wanted to let you know due to exchange issues, we did not end up buying any Orsted stock, therefore it was never part of the Spaceship Earth Portfolio.
The Spaceship Earth Portfolio invests in Mercari and Alibaba at the time of writing.
The Spaceship Universe Portfolio invests in Alibaba at the time of writing.
The Spaceship Origin Portfolio invests in Softbank, Alibaba, and Berkshire Hathaway at the time of writing.
Important! We’re sharing with you our thoughts on the companies in which Spaceship Voyager invests for your informational purposes only. We think it’s important (and interesting!) to let you know what’s happening with Spaceship Voyager’s investments. However, we are not making recommendations to buy or sell holdings in a specific company. Past performance isn’t a reliable indicator or guarantee of future performance.
