Jason Del Vicario, portfolio manager at Hillside Wealth Management | iA Private Wealth

FOCUS: North American and global growth stocks 

MARKET OUTLOOK:

Our thoughts never waver regardless of the macro backdrop; if anything, we favour challenging economic periods as this is when deals are most readily available. We seek to buy high-quality companies at favourable prices. Our key defining factor of a “high quality” business is one that consistently generates strong returns on invested capital. We run a concentrated portfolio of 27 global businesses that meet our strict quality criteria. Our top 10 positions represent 74 per cent of our equity weighting. We view multiple currency exposure as a strength (no hedging). We think and behave with a long-term mindset. When one’s investment period is decades and not months or weeks, short-term factors beyond our control, such as interest rates, inflation and geopolitics, become irrelevant, as we assume we’ll encounter all sorts of macro regimes over time. We own a collection of businesses that we feel can compound shareholder wealth strongly over decades.

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TOP PICKS:

FeverTree Drinks (FEVR LON)

We have owned FEVR since September 2022 and recently added to our position (February 2024) at a price of 10 pounds. FEVR represents 3.5 per cent of our equity weight. Fever-Tree was created and now dominates the premium mixer category. It is a founder-run/owned business with no debt that struggled through the pandemic. Glass and shipping prices shot through the roof which served to dramatically reduce margins and profitability. All the while top-line growth has continued to march along nicely. We feel the issues are short-term in nature and have been happy to acquire shares at what we feel are reasonable prices. The jury is still out on whether the company is able to get back to pre-pandemic profitability levels. If it can, we likely have a multibagger on our hands, if it can’t, it may be slightly overvalued at current levels.  A solid risk-reward prospect.

Kakaku.com (2371 TYO)

Kakaku has three main business lines: Japan’s largest price comparison website (Kakaku.com), Japan’s largest restaurant review and booking site (Tabelog.com) and an emerging jobs classified business (Kuyjin Box). These are asset-light ventures that benefit from one or two-sided network effects. Growth has slowed of late and the price of shares has dropped to levels where we think investors should be able to earn an outsized return going forward. We most recently added to our position in October 2023 at around 1400 yen. Kakaku is a medium conviction position for us; it started as a five per cent weight and has since grown to represent 6.5 per cent of our equity weight.

Evolution AB (EVO STO)

Evolution Gaming is the world’s largest casino. Evolution provides the backbone for land and online-based casino operators’ online casino presence. The company is founder-run/owned, has no debt and sports some of the highest margins of any business we have encountered. It is a relatively new company and thus a low conviction assignment which means it started at a three per cent weighting. It has since grown to 4.5 per cent and our eighth largest position. We feel the company should be able to continue to drive strong shareholder returns for years to come and a current PE ratio of 25 represents good value for the patient long-term investor. We have held since 2020 and most recently added to our position in September 2023 at 1,100 SEK. 

PAST PICKS: FEBRUARY 8, 2023

Premier Anti-Aging (4934 TYO) 

• Then: 1423.00 JPY
• Now: 882.00 JPY
• Return: -38%
• Total Return: -38%

Kaspi.kz (KSPI LON)

• Then: 77.70 GBP
• Now: 102.00 GBP
• Return: 31%
• Total Return: 41%

Plus500 (PLUS LON)

• Then: 1934.00 GBP
• Now: 1807.00 GBP
• Return: -6%
• Total Return: -1%

Total Return Average: 1%