Motley Fool Partnership Portfolio UK Service Information Pack › ... · 16 hours ago · Pro portfolio in 2011. He then joined the Partnership Portfolio UK team at its launch in

Motley Fool Partnership Portfolio UK

Service Information Pack

The Partnership Portfolio UK is one of The Motley Fool UK’s special investing strategy, specifically designed to hunt down some of the world’s most ambitious, determined, and visionary founder-leaders.

Launched back in March 2019, The Partnership Portfolio UK aims to help investors gain instant exposure to what we think are some of the market’s most explosive and perhaps least-followed founder-led stocks.

The service currently contains the research behind a full 22 high-potential founder led ‘buy’ recommendations. 12 from the US market, and 10 from the UK.

Each share has been selected in accordance with Motley Fool Co-Founder Tom Gardner’s rigorous ‘X-Factor’ investing system for evaluating founder CEOs and their businesses.

What Is The Partnership Portfolio UK?

The chart on the right shows the results of a 2018 Motley Fool study, which pinpointed that investing in founder-led companies is a key differentiator for some of the best performing recommendations in The Motley Fool US’s history.1

As you can see, when it comes to founder-led stocks and non-founder-led stocks, The Motley Fool US has crushed the S&P 500’s overall return in both categories.

However, investors have achieved the best historical returns – by far – simply by following our recommendations of companies still run by their founders.

Why Should I Consider Investing In Founder-led Stocks?

1. Returns calculated from a Motley Fool study into 1,586 recommendations across Motley Fool US ideas services over a 15-year period from 08/03/02 to 31/12/17. Of these shares, 473 had the original founder as CEO

at the time of recommendation. As of the close of trading on 31/03/18, these 473 recommendations had an average return of 196.27%. The remaining 1,113 shares had an average return of 94.93%. Over the same

period, the S&P 500 had an average return of 61.18%. All returns are calculated using a time-weighted rate of return (TTWR) methodology that includes dividends reinvested and excludes trading costs.

196%

FOUNDER-LED

COMPANIES

61%

S&P 500

95%

OTHER

COMPANIES

See footnote 1 for full details

The Motley Fool’s bets on the market’s most dynamic founder-CEOs have yielded some of the most impressive returns we have EVER seen in our US services!

The Partnership Portfolio UK’s ‘X-Factor’ Formula

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As CEO of The Motley Fool, Tom Gardner has the unique opportunity of being able to meet and interact with other business leaders. He has recorded interviews with some of the most influential names in business, such as Howard Schultz of Starbucks, and Reed Hastings of Netflix.

But just because a founder-leader says the right things in an one-to-one conversation doesn’t guarantee his or her company will be a big winner.

This is why Tom’s system for evaluating founder-led companies contains several more crucial steps.

Meaning it focuses on founder-led companies with…

» Rock-solid brands (like reed hasting has done with netflix)...

» Exceptional competitive advantages (like jeff bezos has done with amazon)…

» Long-term-focused, shareholder-friendly management (like warrenbuffett has done with berkshire hathaway)...

» An ability to create products and services that feed consumer demand(like tobias lutke has done with shopify)...

» A plan for long-term expansion (like mark zuckerberg has donewith facebook)...

And to better focus his and this team’s analysis in trying to find these ‘X-Factor’ opportunities, he developed the following criteria, presented in order of importance:


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‘X-Factor’ Formula #1:

Market Size And Opportunity

» We look for a founder who has a passion for theirindustry and something to prove.

» The founder communicates a vision for a largetotal addressable market opportunity and aneagerness to grab it.

» We are looking for companies that useinnovation to disrupt and creatively destruct thestatus quo.

Who did this well?

Reed Hastings created Netflix (NASDAQ: NFLX) as a lazier

alternative to Blockbuster, mailing videos and DVDs directly to

consumers’ homes.

But, in 2007, Hastings disrupted Netflix itself, pivoting the

company to the revolutionary concept of streaming movies

directly from your computer.

Plenty of analysts questioned the move back then, but Netflix

now boasts more than 182 million streaming customers and

fewer than 2.2 million DVD-by-mail customers.


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Founder Characteristics

» To put it simply, inside The Partnership Portfolio UKwe’re searching for companies where the founderand insiders own at least 5% of the stock, withappropriate levels of voting control.

» What’s more, we try to find founders who wethink hold a long-term view, have supportfrom shareholders, plenty of leadership tenureahead, and potentially even a succession planalready in place.

» We believe that this strategy component couldhelp point us to leaders who are rewarded inways so that they win when we win, and losewhen we lose.

Who did this well?

Mark Zuckerberg of Facebook (NASDAQ: FB) maintained high

levels of ownership while growing his company, before donating

99% of his holdings to his charity, the Chan Zuckerberg Initiative.

Zuckerberg’s cash compensation was just $1 last year, and

including all other forms of compensation, Facebook boasts

a 37-to-1 ratio of the total CEO compensation to the median

compensation of all other employees.

At 34, and likely with an extended tenure ahead, Zuckerberg

continues to communicate a long-term view.


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X-Factor Formula #3:

Financial Performance

The Partnership Portfolio UK analysts look at three main aspects of a company’s financials for signs that it might have what it takes for potentially exceptional success in the years — and decades — ahead:

» Sales growth, ideally greater than 15%, or at least moving steadily in that direction.

» Large market opportunity with excellent room for growth.

» Access to capital from internal or external sources, with plenty of potential reinvestment opportunities to sustain high growth rates.

Who did this well?

Jeff Bezos of Amazon.com (NASDAQ: AMZN) has led the

company through rapid growth with exceptional financial

performance. Amazon’s compounded annual sales growth has

exceeded 20% for more than 10 years.

Over the past decade, the economics of the business have

continued to improve, with the gross margin climbing from

23% to 37%.

As Bezos looks to expand Amazon into new offerings, the

company’s $30 billion in cash and short-term equivalents

means access to capital won’t be an issue.


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Culture & People

» Our analysts look for companies that havestandout cultures, measured by aspects such ascompany accolades, high ratings, and reviews inpublic forums.

» We believe a passionate workforce with lowstaff turnover often drives better performancein any industry.

» We also hunt for who we think are high-quality, diverse board members with strongnetworks, who can guide these growth-stagecompanies. Diverse management teams canoften outperform those where all members arealike, and we applaud companies committed toboard diversity.

Who did this well?

James Sinegal of Costco (NASDAQ: COST) built the type of

exceptional corporate culture we look for.

He helped shape innovative Costco policies including

promoting from within, paying well above industry-standard

wages with full health and dental benefits, pension scheme

options, and liberal holiday time; and allowing management

teams to be internally accessible.

Costco’s “Do the right thing” slogan benefits customers and

suppliers, through fair pricing initiatives, high levels of service,

and a commitment to quality. These choices have led the

company to produce a steady (but low) 2% net income margin

for much of the retail behemoth’s history. And while some

analysts may critique this aspect, we commend it.


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Company Size

» Simply put, our goal inside The Partnership Portfolio UK is to try and help our membersachieve potentially exceptional returns, notjust simply beat the market.

» And considering this demand, we believe it’s bestto ideally seek companies with market caps of$25 billion or less (about £19.2 billion).

Who did this well?

Under the guidance of founder, former CEO, and executive

chairman James Jianzhang Liang, Trip.com (formerly Ctrip.com)

(NASDAQ: CTRP) grew from an under-$500 million company at

its IPO in 2003 to nearly $15 billion today.

Returns on this scale have been made possible by Trip.com’s

small starting size relative to the massive Chinese travel market

opportunity — and the company’s ability to adapt to capture

more of that market over time.

Tom Gardner

Tom Gardner founded The Motley Fool with his brother David in 1993. He

now serves as its co-chairman and CEO.

In 2014 and 2015, employment website Glassdoor ranked The Motley

Fool as the No. 1 place to work in the U.S. for companies with between

250 and 1,000 employees.

Tom also serves as the lead advisor on the US service Motley Fool One

— our all-access service — and manages the US Everlasting Portfolio,

committed to holding every investment for more than five years. Tom is a

graduate of Brown University.

Meet The Team Behind The Partnership Portfolio UK

Nathan ParmeleeNathan Parmelee is an advisor on our Partnership Portfolio UK, Blast Off UK

2020, Share Advisor and Motely Fool Pro services.

Having written for our US website since 2004, Nathan is one of the most

accomplished investors at The Motley Fool. He served as the Lead Advisor for

Motley Fool US’ Global Gains service, before taking over the UK’s Motley Fool

Pro portfolio in 2011. He then joined the Partnership Portfolio UK team at its

launch in 2019.

Before coming to the Fool, Nathan worked for a well-regarded industrial and

financial services company, where he learned the intricacies of corporate

acquisitions. His previous life allowed him to see the world — including a

three-year stint in Japan.

His true passion was investing however, and after impressing fellow investors

in the Motley Fool community with his research, he was invited to write

for The Motley Fool by our founder Tom Gardner — setting in motion an

investing career that has seen Nathan recommend shares from across the

globe for more than a decade.

Nathan’s investing interests include consumer goods, industrials,

agriculture, and special situations.


Mark Rogers

Mark Rogers is the Chief Investment Advisor of Motley Fool UK.

Business and investing have been in Mark’s blood for as long as he can

remember — Mark grew up around a family business in the North of

England, and got his break in investing in the late 1990s, when his family’s

firm was bought out. A few years later he began investing with his portion

of the proceeds, and has never looked back.

Mark brought his love for investing to The Motley Fool in 2013, serving as

an Advisor specialising in growth investments for Motley Fool Share Advisor,

and then launched Motley Fool Hidden Winners in 2015.

As the Head of The Motley Fool’s UK Investing Team, Mark approaches the

stock market with the same old-fashioned business instincts and values

that he honed on the factory floor. He specialises in unearthing top-quality

under-the-radar investments in the small-cap market, and holds the CFA

UK Level 4 Certificate in Investment Management.


How Can I join The Partnership Portfolio UK?

Doors open Friday, 26th June!

In order to celebrate the release of two brand-new recommendations, we have decidedto reopen our doors – allowing brand-new members to join and learn the names of these

ultra high-potential, founder-led stocks – while it's still early!

Watch your inbox at 9:00am on Friday, 26th June, for your priority invitation to join usat our lowest ever entry price!

• The prices of all shares, and the income from them, can fall as well as rise.

• You run an extra risk of losing money when you buy shares in certain smaller companies including

“penny shares”.

• There is a big difference between the buying price and the selling price of these shares. If you have to

sell them immediately, you may get back much less than you paid for them. The price may change

quickly, it may go down as well as up and you may not get back the full amount invested. It may be

difficult to sell or realise the investment.

• You should not speculate using money you cannot afford to lose, or rely on dividend income for non-

discretionary living expenses.

• This service includes recommendations of securities listed on overseas stock exchanges. Investors

may incur extra dealing charges, administrative costs or withholding taxes when dealing in these

securities and should check with their stockbroker before dealing. Many UK stockbroking platforms

levy an ‘FX charge’ when dealing in securities in other currencies, and this can be a multiple of the

standard dealing cost. This can mean the price needs to move much further in your favour before

you will be able to realise a profit. You should also be aware that dividends may be paid in US

dollars or in other currencies, and that these could also attract additional charges. If this is the first

time you have dealt in US-listed stocks, your broker will probably ask you to complete a W-8BEN

form as a formality. Additionally, some brokers may also ask you to complete a NR301 form if this is

the first time you have dealt Canadian-listed stocks. Completing these forms establishes your foreign

ownership and prevents double taxation. Bear in mind the time difference as well when dealing

on North American markets - you will generally be served best by issuing dealing orders when the

relevant market is open.

• There are additional risks in investing on overseas stock exchanges. Companies listed on stock

exchanges other than the London Stock Exchange may be subject to different accounting and

reporting standards, and your regulatory protection may not be the same. You should seek

professional advice if you need a more detailed assessment of these risks.

• Changes in exchange rates may have a significant and materially adverse effect on the value of the

value or price of these investments in sterling terms. You could lose money in sterling even if the

stock price rises in dollar terms, although this could also work in your favour.

• Performance statistics are calculated on a like-for-like basis with regard to currencies, so US dollar

investments or Canadian dollar investments will be considered purely in their own currencies

without any adjustment for changes in exchange rates. These may not accurately reflect real returns

for a sterling-based UK investor.

• We have taken all reasonable care to ensure that all statements of fact and opinion contained in this

publication are fair and accurate in all material aspects.

• Investors should seek appropriate professional advice from their stockbroker or other adviser if any

points are unclear.

• This service gives general advice only, and the investments mentioned may not necessarily be suitable

for any individual. You must consider your own circumstances and make your own decisions.

Risk Warning

The Partnership Portfolio UK is a Motley Fool product:

For all queries please email [email protected]. Alternatively you can call us on 0207 462 4300 Mon-Fri (except for public holidays). Authorised by The McHattie Group, St Brandon’s House, 29 Great George Street, Bristol, BS1 5QT.Telephone: 0117 407 0225. Email: [email protected]. The McHattie Group is authorised and regulated by the Financial Conduct Authority and offers restricted advice on certain types of investment only.

©1998-2020 The Motley Fool Limited. Registered Office: 5 New Street Square, London EC4A 3TW. Registered in England & Wales.Company No: 3736872. VAT Number: 188035783. The Motley Fool and the Jester logo are registered trademarks of The Motley Fool Holdings, Inc.

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Motley Fool Partnership Portfolio UK Service Information Pack › ... · 16 hours ago · Pro portfolio in 2011. He then joined the Partnership Portfolio UK team at its launch in