- October 17, 2020
- Posted by: Bastion team
- Category: Markets
Zevenbergen Capital Investments
- Nancy Zevenbergen — founder of Zevenbergen Capital Investments, which has about $5 billion in assets — has a knack for investing early in companies that see extraordinary growth.
- She detailed for Business Insider her market-beating approach to investing, and shared four stocks she thinks could be the next market leaders.
- Visit Business Insider’s homepage for more stories.
One could argue there is no one better at identifying growth potential in young firms than Nancy Zevenbergen.
It’s what gets her up in the morning.
“What gets me going everyday? Who are the next ones for the next decade? You’ve got these tech titans, the FAANMGs, who are doing great. But who are the next titans?” she said to Business Insider on Tuesday.
The numbers don’t lie: her performance put her in the top 1% of comparable investors over the past one-, three-, and five-year periods, according to Bloomberg data.
Chalk that up to the fact that she was an early investor in companies like Apple, Microsoft, and Amazon.
But how does Zevenbergen do it? How does she know, well ahead of the crowd, that a firm will see massive growth?
We spoke with Zevenbergen, the founder of Zevenbergen Capital Investments — which has about $5 billion in assets under management — about what she looks for in companies she chooses to invest in.
She said while numbers like sales forecasts matter, she puts the most emphasis on whether or not a company is founder-run.
“I would much rather buy a company and go to a desert island for five years knowing that a founder was leading it, because their vision and their passion would drive the company through ups and downs,” Zevenbergen said.
She also said she doesn’t pay as much attention to valuation at the time of a firm’s IPO as others, and said that high initial valuations don’t matter if she believes a company will double in growth in a decade’s time.
Further, she said her firm’s willingness to look to the future has set them apart. She cited an anecdote about how the bank she was employed at handled Microsoft’s IPO as a turning point in her career — when she realized many in finance were slow to adapt to changing technology.
“[My] bank’s trust department participated in the Microsoft IPO and we sold it the same day because it went up $0.25,” Zevenbergen said. “And what I realized is that the generation that I was learning the business in was not comfortable with new technologies, and Microsoft was the new technology at the time.”
She added: “It kind of formed my belief because as an investor: I’m not trying to make a day trade, I’m saying I’m going to put my money with someone or something that can grow ahead of everything else in this world.”
To help identify which new technologies are shaping society, Zevenbergen said she and her team talk with young people about their lifestyles.
“Asking young people, ‘How are you living today? How are you doing things?'” she said. “So ask young people the questions, and then say, ‘What impact does that have’ or ‘Who are the people providing the service in order to live that way?'”
With all of that established, we asked Zevenbergen which companies she’s investing in now that she believes could be market leaders someday. She highlighted four that she thinks are poised for high longer-term growth.
4 stocks Zevenbergen thinks could be market leaders in 10 years
Zevenbergen counts herself among those that believe the world will not fully return to normal after the pandemic.
One beneficiary of the new reality is virtual healthcare company Teladoc Health (TDOC), she said.
“Telemedicine was being pushed because of lowering costs for large employers. But then COVID hit and it wasn’t an option, it was the only way you really could,” Zevenbergen said. “So do I see that continuing to grow, or do I think that will roll back when COVID goes away? I don’t think we’re ever going back the other way.”
She added: “Would Teledoc potentially be Facebook 10 years from now? Definitely.”
Second, Zevenbergen pointed to automaker Tesla (TSLA), with its controversial founder Elon Musk, as a company whose growth she thinks will continue to explode, despite its already sky-high valuation.
“We were early on that — our cost basis is like $24. Elon Musk — founder-led, visionary, delivers on his promises, maybe not in a timely fashion, but definitely delivers — and he’s doing the right thing by dropping prices of the cars on a regular basis and trying to get the cost down whether it’s through batteries, or manufacturing, or painting, or distribution,” she said.
She continued: “But Tesla’s more than just a car company, it truly is an alternate energy company. Their solar panels, their charging network, which no one else has…I think that’s an asset that no one even talks about that Tesla has. Will Tesla be a much larger company five years from now? Absolutely.”
“[You have] transactional businesses that are chewing into a JPMorgan and the big transactional banks who didn’t want some of the smaller businesses or individuals anyway,” she said. “But I think within the world of finance what your definition of finance is is going to change dramatically, and big banks are going to lose market share to transactional-oriented folks like a Square and a PayPal.”
She added: “Could Square be JPMorgan 10 years from now? Sure.”
Bastion Balance Seoul, Korea.