Recap of last year:

• Really tough market for growth stocks - especially those that weren’t Apple, Microsoft, etc.
• A lot of cross-currents like covid, supply chain issues, inflation, etc.
• Other side of the market was strong.
• If you were a cyclical, or a bank, it was a great year for you.
• Mark actually held a lot of these throughout the year, but the losses he took in the beginning of the year outweighed the good stories.
• In the beginning of the year, Mark held a lot of the growth names and lost a ton of money.
• Didn’t lose anyone money at the end of the year - came out almost flat.
• It was definitely his worst year ever.
• Mark’s style is not just growth. He also owns cyclicals, energy, value.
• This makes his fund very different than some of the “go-go growth” funds out there.
• If we compare Mark with someone like Cathie Wood/ ARK Innovation, there are lots of differences - Mark will go where the change is happening, whereas products like ARKK will always strictly be tech/growth funds.
• Mark has never worked as hard as he has in the last 18 months, but performance hasn’t shown that - but as the markets become clearer in terms of direction, Mark’s fund will do well.
• There has not been any clarity in terms of market direction.

 

Looking forward:

• If the Fed raises rates and valuation comes down, then Mark is able to shift the entire portfolio in another direction.
• Historically, he has been able to move from one theme to another based on what’s getting better.
• Always thinking of those two tails - and investing in what’s getting better.
• We have covid here/there/everywhere.
• In many ways, this is a valuation-driven market.
• The easiest variable to understand right now is valuation.
• Valuation has worked well recently given that we don’t have any visibility.
• Thinks that clarity is going to come soon.
• Now that covid has become more mild, what happens to the market?
• He thinks we finally start to see reopening trades work - but it’s going to come slower, given government restrictions, etc.
• Thinks Covid is going away.
• Certain parts of the market will do well - like energy (it’s not well owned, not well liked, ESG folks won’t own it, and it will take a long time for alternative engineering to become mainstream, so probably energy prices stay structurally high until we figure this ESG thing out).
• Oil is a bad industry getting better - is it going to be sexy? No. Is it going to be a good sector? Yes. It’s really good for Canada over the short-term.
• Thinks that resources in general are bad - as in “ESG bad”.
• We will require a lot of resources to move from old energy to alternative energy.
• Resources are structurally very appealing - not saying make them 50% of your portfolio, but thematically - they look really good,
• Continue to like things that no one else wants to own.
• We have seen a complete destruction of everything “growth”.
• Lots of great tech companies that are transforming the world - every day - were sold off given a fear that the Fed is going to hike rates.
• A little while down the road, everyone’s going to realize that these growth names work well over the long-term, are changing the world, and that they are going to make way more money than banks.
• A lot of transformative growth names have been completely sold off.
• We have priced in an incredible amount of tightening in the last 6 weeks.
• Basically dollar cost averaging into his favourite stocks as they sell off - no one can time the market, so at least it gradually gets him in at a good price.
• The market is giving you some really good stocks - are they cheap? No - but they are great long term names.
• Not making any macro calls - wants to own great companies that are going to continue to grow over the long-term.
• Likes resource names.
• Likes the metaverse.
• Would much rather be hosting calls like this in a Roblox auditorium where he can see everyone and have an interactive experience.
• A lot of people don’t believe the metaverse exists - people think it’s a game - it’s not a game… It’s a place where you can go and do things.
• As more people use and adopt the metaverse, it will get better.

 

Underperformance last year:

• The benchmark has the mega-caps.
• It was not a good year for the mid-cap space, which is where Mark was.
• If Apple, Google etc. double again this year - he would be shocked.
• Canada had a great year last year - but not for growth - and that’s where Mark was for a lot of it.
• Thinks inflation is an issue.
• Thinks rates will go up, but not as fast as we are pricing them in.

 

Renewables:

• Still likes renewables.

• They have corrected, but there is a lot of long-term growth opportunity.
• It’s priced like it’s broken but there’s lots of room to run moving forward.

 

Web3/ Web 3/ Web 3.0:

• Remains a very difficult part of the market to invest in as a public equity investor.
• Think crypto, blockchain, etc.
• Even on the private side - these companies are small.
• It’s very important, but it’s still small.
• This will transform the way we do finance.
• Met with BlockBuy before this - Mark is meeting a ton of crypto companies.
• We have hired 2 analysts over the past few months who focus exclusively on crypto.
• We do a lot of research, meetings, and spend a lot of time here.
• Hasn’t found any home runs, but will continue to look into it.
• Right now - you can basically buy CoinBase and the miners - and that’s it.
• Owns some privates - but there is not a clear winner yet.
• There is no Nvidia of crypto yet.

 

Top 10:

• Still liking these holdings.

 

Payments:

• This space got really bubbly.
• The only one he owns is Square.
• There were too many of them.
• They all came public at the same time.
• Had a meeting with a new payment company going public every day - this was a bad sign - they all make the money the same way, etc.
• Blockchain - NFTs are interesting.
• The only way to bring your “stuff” from one place to another, is through an NFT.
• Still a tricky space, but Mark is all over it.

 

What’s the most misunderstood theme?:

• Crypto is not understood - it will add a lot of alpha, but not understood yet.
• Thinks that the energy thesis is misunderstood.
• Energy is not material - in the States, no one really cares about it.
• Until very recently, no one would be at energy conferences.
• Still massively under-owned.
• If we have Covid go away, the easiest way to play it is energy.
• You don’t need to worry about the issues that come with other sectors.
• Energy is the least well-known thesis.
• In Canada, everyone knows energy is working.
• Mark owns some terrible companies -but they are getting better.

 

Gold or bitcoin?:

• Bitcoin.
• Will never say gold is dead - but it’s a lot easier to do stuff with bitcoin than with gold.
• Gold won’t be as relevant moving forward.

 

Disruption or innovation?:

• Innovation is more long-lasting.
• Continuous innovation is required.
• Disruption comes from innovation.
• If we think of Tobi and Shopify - he just keeps on thinking how the company can innovate to make their customer’s lives better/ easier/ more efficient.
• If the consumer of the good is happier every year, then that’s a buy.
• Costco - a great stock - everybody loves Costco - people get happier every year.
• With Amazon - he thinks that they are getting close to the end of what they can do well - so this is what makes him a bit more cautious on Amazon.
• There are better ways to buy Cloud than buried within a huge retailer.

 

Cybersecurity:

• Changes so quickly.
• Hard to say “this is what I want to own”.
• Owns Snowflake - but this is more of a data stock, not security.
• Security - things change, protocols change, there is always something that needs to be fixed.
• Mark invests in security all of the time, but it will never be a big bet.

 

Fidelity advantage:

• Wishes he could share his calendar so we could see what a week looks like.
• On Monday - every ½ hour, Mark had between 8-10 meetings.
• 100 potential meetings on 1 day.
• Tuesday was the exact same.
• The sheer information that we have at Fidelity is unbelievable .
• It’s not like we are meeting with a low-tier manager - we are meeting with CEOs, founders.
• We have an incredibly deep research bench.
• Mark can’t make all of the meetings, but has access to all of the information via his analysts and notes that are provided from every meeting.
• We know more than almost anyone else.
• Combine this data/ knowledge with skill, and this is the key to outperformance.

 

Wells Fargo:

• Great diversifier from the rest of the portfolio.
• The fact that he has made as much money as he has here - shows us that it’s a weird market.
• Not worried about reputational risk anymore.
• They brought in new management, they are cleaning it up, they have a plan and they are executing.
• They have a simple plan that will let them play offence.
• In boring industries like banking - you want stocks that will pay you twice.

 

IPOs:

• Market has been a bit of a disaster.
• A lot of IPOs not working.
• But a lot of them are very on-trend and will work.
• So you need to sift through them and find the winners.

 

EV:

• Rivian or Tesla? Tesla is a better company, but Rivian is cheaper and there could be more room for upside.
• More room for new competitors in EV as well.
• Components or EV? Auto-suppliers in general is a bad business.
• Owns resource companies that provide some of the materials required for EV.
• In general, the car business is a bad business.
• Doesn’t want to spend a ton of time/money in this space.