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It’s not just about value or growth for Holon’s Behncke – Holon’s Photon Fund featured in the AFR

Published 12 Apr 2021

Heath Behncke, our Managing Director and Portfolio Manager and the Holon Photon Fund were profiled by William McInnes, The Australian Financial Review in the feature “It’s not just about value or growth for Holon’s Behncke”, 12th April, 2021.  Below is an extract, the full article can be accessed here.

Holon’s Heath Behncke does not like to follow when it comes to investing innovation.

A staunch believer in the global digitalisation trend that is going to fundamentally change how many businesses operate, Behncke is keen to be at the forefront of that shift.

Holon’s flagship Photon Global Innovation Fund is dominated by stocks exposed to the global digitalisation trend. Alibaba, Amazon and MicroStrategy are the top three holdings in the portfolio.

“We’re in the game of predicting where things go and so if you can calculate the probabilities more effectively, you’re going to generate better returns and that’s what the focus should be,” Behncke says.

“It’s not value, it’s not growth, it’s understanding where the world is heading.”

And with the opportunity to invest in any company across the globe, the Photon fund’s 16-stock portfolio includes positions in Xero, Afterpay and Megaport.

. . . . . . . . . . . . . . 

Backing category leaders

Behncke says one of the keys to his performance is investing in companies where the barrier to entry for incumbents is high:

“The key driving factor is trying to maximise the probability of high returns so the higher quality the earnings, the better it is for us.

“Businesses like Alibaba and Tencent are in our portfolio and the network connectivity they have is at a certain point that is pretty hard to break, and you need to do something terribly wrong to break it.

“For many of our companies, you wonder where the competition is going to come from and it’s hard to identify.”

. . . . . . . . . . . . . . 

Behncke says most investment managers, particularly value-oriented ones, are struggling with what technology can actually enable.

“I think the key is they’re not evolving their investment process,” he says.

“The pace at which these companies are growing is hard for people to comprehend. And when you look down the pathway, there’s more and more of this coming and we’re only at the beginning of this.

“Cloud technology and mobile technology is driving some of the biggest conversations we’re seeing today.”

 

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