Mint Payments

Mint Payments (MNW) was our first ten-bagger’ over the period 2011-13. The company initially caught our eye in mid 2011 as Mint Wireless and in a weak market had a small market capitalisation of less than $10Mn. The founder and CEO’s family company had skin in the game and were quietly and patiently developing a bank grade mobile payments system in the UK and Australia. It was in an emerging industry fostering alliances and signing new customers such as Cadbury-Schweppes in Australia and Easy Jet in Europe, but still not generating meaningful revenues or earnings. This was very much a venture capital style deal that would normally played out in the private space but the CEO wanted to broaden the shareholder base beyond it’s closely held group of investors. A holding was established over a some months at around 2 cents per share. Catalysts and some positive news flow began appearing late 2012 with the announcement of final bank accreditations for it’s chip and PIN mobile payments offering. Initially, the stock rose 4 times in value, then to over 15 times (day traders got on board no doubt) and then settled down around the 15-20 cents range for some time, or an 8 to 10 times increase. We took some profits at various stages and continued to maintain a small ‘free carried’ holding for a time. Mint has been a publicly traded first mover start up in this niche market with the company adapting it’s technology and broadened its product offering in a growing and changing market. Payments has become very competitive space, MNW has numerous partnerships and alliances in place and it will be interesting to see how this will eventually materialise. Earnings, merger or takeover perhaps?

Bellamys Organic

Bellamys (BAL) listed in the ASX in 2014. While agriculture related businesses seem appealing on the surface, they have for the most part been unattractive investments, in part due to the cyclical nature of the industry. What we liked about Bellamys was that it operates as an organic certification and marketing system and was not directly engaged in the production of the raw ingredients, therefore not directly exposed reliant on commodity pricing and economic challenges of farming. At the time of listing it was profitable and sporting high profit margins and returns on equity, even as a small company with a market value of ~$130Mn. It has a range of organic infant milk products which in addition to its established local distribution channels also started to benefit from the ‘clean green’ trend in Asia, with Chinese buying being the main catalyst. From an entry price of $1.42 in Sept 2014 the stock achieve ten-bagger status (ie. increase in value of 10 times) by the end of 2015. With such a rise in a relatively short time period part of the holding was sold at $7.50 and was still trading in the $10-12 range in early 2016. It achieved a +$1Bn market cap and entered the ASX200, further stabilising its investor base. Update Dec 2016: Another part sale of the holding at $12, partly on Chinese regulatory concerns, leaving a 'free carried' 25% of original holding. In December, following a profit warning and ongoing uncertainty in China the stock was sold at $6.85, a 43% fall in one day. Update Mar 2018: Following a management shake up and increased Chinese regulatory certainty and accreditation the stock recover to over $20, residual holding was sold based on valuation. Moral of the story: take profits when a growth stock doubles or there is a short-term 'excess' unrealized gain. Leave some money on the table, ride the houses money, so to speak.

Vocus Communications

Relatively speaking a little less explosive than some the other highlighted investments, but one that became a proven success for early investors. First started buying shares in 2011 at an average price of $1.40 when the company was a micro cap with a market capitalisation of ~$100Mn. VOC.AX grew from a small telco specialist service provider offering fibre optic networks, data centre and other niche services to become a bona fide mid cap full service telco valued at over $4.5Bn following a series of acquisitions and merger with M2 Communications. In early 2016 the shares traded as high as $9 and the company still appeared to have good growth ahead it did enter a difficult period as result of industry wide competitive pressures and the NBN, combined with internal challenges dealing with digesting its portfolio of recently acquired and merged businesses. Update: shares were sold at various stages along the way and finally exited early 2018 citing challenging industry backdrop and uncertainty. Shares traded at around $3 mid 2018.

Mothercare

This was a small investment in 2011 in a company looking to consolidate the baby care retail market with an affiliation with Mothercare (UK). The company was not yet profitable and in aggregation mode. This was private equity style deal that was playing out in the public market with backing of some smart money - the retail savvy Myer family and a noted boutique fund manager. The company went into administration in 2012. It provided a few lessons in that while it is re-assuring to invest alongside the smart money, sometimes even the smart money gets it wrong.

dkjhfwf wjo

NT Beverages Group (Akuna Springs Water Bottling Plant)

This was a seed investment made mid-2015 to build a full service bottling plant to manufacture retail packaged water. High quality water is sourced at Acacia Hills from an acquifer 50Km south of Darwin. The $15Mn development project was due for commissioning and commercialisation in by early 2017. The company has a clearly addressable market with a dominant position in the Northern Territory and access to markets in the south and west of Australia and islands. Despite a few teething problems and delays in plant commissioning the plant the company is expected to be cash generative and pay a healthy dividend to its early investors. This was aided by a major investment from the NT Infrastructure Development Fund to complete plant upgrades to meet expected demand. Forecasts underpinned by the company’s premium branded Akuna Blue label move into the Chinese and other sizeable markets in Asia. Akuna Springs also plays into the much talked about Asian ‘clean-green’ food theme. NTB is the only bottling plant for 3,500km with carbonation capability.

Vocation

A small investment was made in this education company as a leading play and consolidator in the growing education services sector in Australia. Similar to the previous experience with Mothercare it showed the risks involved in executing an industry 'roll up' or aggregation strategy, the perils of financial leverage and the effects of a loss of confidence when emerging companies falter. It also provided evidence that having well known, experienced investors and board members, whilst useful, is no guarantee of success. In the case of Vocation, chairman Peter Dawkins was a former federal education minister and treasurer. The young entrepreneur's bright coloured socks may have been another sign (although not initially noticed). Another risk to note here is to be wary of any business that is reliant on government funding and regulation. 

Opportunity = Crisis + Danger

Insync is a high performing future-focused global equity funds manager that invests in a concentrated portfolio of highly profitable and innovative companies best positioned to benefit from global megatrends. Insync funds are rapidly gaining recognition due to consistent returns over a period of 10 years through both rising and falling markets. The superior investment performance has been achieved by a highly regarded senior investment team who have developed a proprietary algorithm, risk management system and screening process that captures all the key data points on companies and global megatrends. Validation of this process is reflected in the fund’s performance figures. Despite being a small fund flying under the radar the Insync Funds Management business has built a strong foundation and pathway to grow its funds through securing institutional mandates both in Australia and globally. FUM increased by 60% over the 6 months to December 2019 and achieved a ‘Superior’ fund rating from research house SQM Research. UPDATE: Insync won Money Management’s Emerging Manager of 2020. Completed capital raising December 2020 to assist position itself to achieve its next growth milestone. https://www.insyncfm.com.au/

Afterpay (APT.AX) is a fintech company operating in the ‘buy now, pay later’ market offering a modern day version of the traditional lay-by purchase method – in effect a reverse lay-by system of particular appeal to millennials who wish to better manage their finances and avoid credit.
Shares first purchased late 2016 at $2.80 and went on to double at which point part profits were taken. It continued to be held following a strategic investment made by U.S. venture capital firm Matrix Partners in Jan. 2018 coinciding with entry into the U.S. market. With strong revenue growth on the back of strong merchant and consumer acceptance part profits were again taken at ~$12. Stock was subsequently purchased again following a re-assessment highlighted by a ramp up in activity in the U.S. and UK markets based on strong merchant engagement and low customer acquisition costs. Despite the rise in share price to over $20 the investment case was further strengthened on news that the Afterpay was being made available beyond online into brick and mortar stores.
Whilst the company was not immediately profitable during this growth phase, forecast revenue growth backed by strong execution justified forward PE valuations, underpinned by forecast earnings growth (ie. favourable PEG ratio). This measure was regularly monitored along with the company’s external operating environment.
APT is a classic example of a Peter Lynch style investment, where one could have easily tried out the product at a very early stage and noticed broader commentary surrounding millennial’s behaviour and changing attitudes towards money and credit.
MINT PAYMENTS
Afterpay is a more consumer-oriented play, different to that of our 2011/12 success Mint Payments (MNW) which started as an technology enabler in the merchant’s space. This was Longvue’s first ‘ten-bagger’ investment (another reference to Peter Lynch) MNW was an early niche play which operated in what became a very crowded and competitive mobile payments space. Worthy of a mention as the same investing disciplines apply including the taking of profits in an constantly evolving and disruptive technology environment.

ASN CEMENT LTD

ASN is an unlisted Singapore public company developing a state-of-the-art cement/clinker plant in Malaysia which will be one of the lowest cost, environmentally friendly high tech cement/clinker plants in the world. The company has attained full licensing, regulatory approvals, land acquisition and a major EPC and O&M contractor. ASN is ‘shovel ready’ and is in advanced discussions and due diligence phase to reach financial close by early 2020. The company is expected to commence producing cement clinker and bagged cement for local and international markets by 2024.

UPDATE: ASN is expected to secure funding for the construction of the plant during the course of 2022/23.

Lake Resources (LKE) aim has been to disrupt the global lithium-ion sector with its technology partner Lilac Solutions unique and highly efficient, 'clean', low cost and scalable technology on lithium brine. It has been focused on delivering high purity lithium via sustainable clean extraction technology at its flagship Kachi lithium carbonate project, one amongst 5 projects in total (4 brine; 1 hard rock), all 100%-owned within Argentina’s “Lithium Triangle” which is responsible for ~40% of global lithium output. LKE has been unlocking value via continued site development with its partnerships. US Lilac Solutions, LKE’s technology partner at Kachi, backed by Bill-Gates-led fund, Breakthrough Energy Ventures, MIT's Engine fund plus other notables including Jack Ma/Michael Bloomberg/Jeff Bezos. (These facts are not an exercise in ‘name dropping’ but vindication of the interest and demand in the sector and specifically in the value proposition in applying direct extraction technology to the Lithium space to produce a high quality ‘clean’ product). Lilac’s ion-exchange water treatment beads eliminate salt-lake need for large evaporation ponds used in conventional brine operations, allowing water to return to source while producing faster, scalable & sustainable high-purity 99.9% lithium. This is deemed suitable for the latest batteries used in electric vehicles (EV). Samples from Lilac’s lithium chloride pilot plant was evaluated by potential off-take partners and tested in batteries by Novonix labs (another Longvue portfolio investment (NVX.ASX). Although not a reason as an investment case (or ‘Pavlov’s dog’ theory at play) we did previously have success with Orocobre (ORE.ASX) which we invested in at IPO @ $0.20 in 2007 which went on to become a very successful investment. An additional point of distinction for a commodity style play like is the use of innovative technology. We bought into LKE at ~$0.08/sh (late 2020) and although selling psrt of the windfall to cover the initial purchase we decided to continue adding to portfolios at $0.30-33/sh as U.S. institutional funds invested in Feb. 2021. We felt these strategic investments underpinned the LKE share price. The company soon after announced a plan to double the production at Kachi and received approvable from the UK and Canadian credit insurance agencies to fund the projects. On that basis we were comfortable in adding to our exposure at $0.50-60/sh and to take advantage of the company ‘s announcement mid 2021 of a Bonus share offer for existing shares exercisable at $0.35/sh (Oct’2021 and $0.75/sh (Jun’2022). As of Nov’2021 LKE was trading in the $0.90-1.00 range. Longvue continues to hold LKE leading into 2022 and is firmly held across portfolios. UPDATE: we continued to stay invested in Lake as a great story turns into reality with a very focused and committed management team.

Partnership between AAG Partners and agri asset manager CFM. Capitalising on the soon to be completed cotton infrastructure in the Northern Territory. AAGP has secured a prime development opportunity to convert a Northern Territory grazing property into 6000 hectares of approved and highly valuable farming land.

DREAMSPACE

Dreamspace is a highly-scalable prop-tech venture which has grown to become Australia’s leading home design platform with over 5,000 home renovation and new build designs completed, these with an associated project construction value over $1 billion. Targeting 3 year targeted 10 X growth in revenues in the medium term, mostly from the Australian market. Undertaking Series A funding in 2021/22 with a view to completing platform development, developing strategic partnerships in Australia and entry into US market. Update: Dreamspace was formerly known as Superdraft in Australia to better reflect the consumer facing part of its platform.