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Ask A Fund Manager
The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part 1 of our interview, Spaceship portfolio manager Jason Sedawie explained how he aims to double his clients' money every 5 years. Now in part 2, he tells us which stock purchase he's most proud of and how he's constantly reminded of the one that got away.
Overrated and underrated shares
MF: What's your most underrated stock at the moment?
JS: I think an underrated stock here in Australia is Life360 Inc (ASX: 360). I feel like it's going to get more well known here.
It's a leading family and safety service. It's listed in Australia but headquartered in San Francisco, and it has 25 million members worldwide in over 140 countries. They've got Randy Zuckerberg on board as a director.
They're just entering the S&P/ASX 300 (ASX: XKO) next week. I think they've done really well, considering the economies have been closed. I think that one's sort of been underrated here in Australia.
MF: It will also benefit from people being able to physically move around a bit more?
JS: Yes, well, I thought there might have been a bit more churn in this company. Everyone's been home, so you don't need to know if your family members are safe or not. I think when the economy does open, I think this will be a really good way to get exposure to it.
MF: When did you buy in?
JS: Towards the end of 2019, maybe – so we've had it for a little while.
MF: What do you think is the most overrated stock at the moment?
JS: One stock we did sell recently was Sonic Healthcare Limited (ASX: SHL). Yeah, so they're a leader in diagnostic tools and lab services, which benefited from COVID testing. [But] I don't think that's really a sustainable trend going forward.
So we sold the stock. I wouldn't say it's overrated, but they've just had a really good benefit with the price of those tests as well.
Looking back
MF: Which stock are you most proud of from a past purchase?
JS: Yeah, probably the proudest one is Tesla Inc (NASDAQ: TSLA), just because climate change has been such a large problem. Just being able to support Elon's mission through its ups and downs early on to accelerate the world's transition into sustainable energy – and the first step is electric vehicles.
And notice they don't say electric vehicles and no emissions – but that's the first step, electric vehicles. We've held that since inception, and I think it's done such a great job, just moving the whole industry forward to electric vehicles. Not just Tesla, but getting everyone going. I just think it's been such a big service for everybody, so I'm glad we've been able to hold onto it.
MF: You've held it since the fund's inception! You would have done pretty well out of it.
JS: [The share price] went nowhere for the first 18 months, and now last year, it's gone up.
MF: Is there a move that you regret from the past? For example, a missed opportunity or buying a stock at the wrong timing or price.
JS: I have to say [missing out on] Zoom Video Communications Inc (NASDAQ: ZM).
Yeah, it's always what you don't buy that hurts you because they can be the potential multi-baggers. Whenever I'm on a Zoom call or Google Meet, I just get reminded of that company.
MF: To be fair, was it on your radar before COVID came?
JS: Not really. We did know about it, but it wasn't something we were really excited about because everyone used Microsoft Teams, Google Hangouts. We say Zoom, but they run along with these other services. So I still have concerns about the moat and the competition, but I just think management, how [well] they executed.
They were a business service that schools and consumers just all of a sudden knew. So they went from 10 million daily meeting participants to 300 million a couple of months later. Just how they scaled and executed and pivoted – I just have a lot of respect.
But I'm still worried about the moat of that company.
