A few weeks back, we wrote to you about the stocks we sold out of the Spaceship Universe Portfolio. (Twice, in fact! Here and here.) Many of you responded to ask if we would be buying any new stocks to replace them, and now we have.
Let’s take a look at the two stocks we’ve bought: Australian Ethical and Starbucks.
Australian Ethical is considered one of the pioneers of ethical and sustainable investing in Australia. Founded back in 1986, the company has grown to 21 products across three areas: pensions, superannuation, and managed funds.
They have an in-house investment team managing their products and screening the investments they make within their ethical framework, which at its core is about asking what’s best for its three pillars: planet, people, and animals.
Currently, the company manages $3.87 billion for more than 45,000 customers.
We like Australian Ethical for a couple of reasons.
We believe consumers have become more conscious of ethical investing in recent years, and might like to put their money where their mouth is by utilising a company such as Australian Ethical. This is evidenced somewhat by the fact Australian Ethical added 13% funded super customers between 31 December 2018 and 31 December 2019.
We also believe Australian Ethical is valued the way a traditional funds management business typically is, without factoring in the value a super business can bring.
We felt because of its super business, Australian Ethical should trade at more of a premium than it does, so for us it was a stock worth buying.
While we have a tendency to scoff at Starbucks coffee here in Australia, there’s no doubt the company is hugely successful in other parts of the world.
In America, Starbucks has a hefty 40% (or so) share of the coffee shop market, leading Dunkin’ Donuts, which has around a 26% share.
China is another market where Starbucks is excelling. The company has actually been in the country since 1999, but coffee consumption has been picking up speed in China in recent years. In fact, this is where Starbucks now gets around 11% of its overall revenue.
These are two interesting markets to us, but it’s also about the volume; Starbucks has more than 31,000 stores in around 80 markets, welcomes more than 100 million customer interactions each week, and enables more than 1 billion digital customer interactions a year.
But what about coronavirus, I hear you say.
We actually believe Starbucks might come out of this crisis stronger.
Right now, about 60% of the company’s American stores have drive-thru capability, which means they might not be as impacted as other coffee shops.
Plus, Starbucks has long had a strong digital presence; in China, for instance, mobile orders account for about 15% of revenue. And given 90% of their China stores have reopened in the wake of the crisis, Starbucks is getting a front row seat into the lasting impacts it might face.
With all this in mind, we were happy to snap up a venti Starbucks with extra milk.
You might be wondering why we have only bought two companies recently, even though we sold more than that. Due to the current stock market volatility and ongoing coronavirus crisis, we wanted to focus on existing stocks in the Spaceship Universe Portfolio.
So, we bought more of the mid-sized companies and added extra money to other companies in the portfolio including Tesla and Afterpay. This gives us more exposure to the companies in the Spaceship Universe Portfolio we are confident continue to live up to our Where the World Is Going criteria, while we continue to research additional companies for the portfolio.
If you have any thoughts, I’d love to hear from you.
The Spaceship Universe Portfolio invests in Australian Ethical and Starbucks 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.