Many people first met BG because of the institution's investment in Tesla. Since 2013, they have built positions at a cost of less than US$40. They have been with them for 7 years and have become Tesla's second largest external shareholder, making a profit of more than US$20 bill

Qingcheng Female Hero | Literature

Yellow Shirt Female Hero | Edited

Finance and Business Heroes | Produced

Picture source: Beyond Meat (Beyond Meat) official website

As the weather vane for global growth stock investment, BG has new goals.

In recent years, Baillie Gifford, a century-old investment institution in the UK, has become famous in the global growth stock investment field. Unlike Wall Street hedge funds, BG adopts a long-only investment strategy, does not care much about comparing performance benchmarks, and pursues long-termism. Therefore, it is also regarded as the "light of retail investors" by a large number of global individual investors.

The first time many people know BG is the institution's investment in Tesla . It has been building positions at a cost of less than US$40 since 2013. It has been running for 7 years and once became Tesla's second largest external shareholder, with a profit of over US$20 billion.

In 2017, BG contacted the unknown biopharmaceutical company Modena Moderna (MRNA) . After a significant increase in holdings this year, the stock has now replaced Tesla and become BG's first heavyweight stock. Modena's return this year has reached 275%, making a huge contribution to the performance of BG's funds.

. What is the next trend that BG pays attention to?

After checking the second quarter report of BG Fund and holdings of , the heroine found that BG is investing in plant meat .

Starting from the second quarter of last year, for the "first stock of plant meat" - Beyond Meat (BYND), BG has launched the "buy, buy, buy" mode. By the end of the second quarter of this year, it has become the company's largest institutional shareholder, with a shareholding ratio of up to 13.3%.

Last September, BG's Long term global Growth Fund (LTGG) disclosed in a report that the newly opened positions and the four only "star" stocks that hope to create extraordinary investment returns in the future, one of which is Beyond Meat that produces plant meat.

BG pointed out that

The gradual transformation of human consumption from animal meat to plant meat may be a long-term trend, with the main purpose being to deal with global climate change. Beyond Meat, a world-leading producer of plant-based meat products, will benefit from this trend.

Some friends may ask, aren’t the target customers of Plant meat not those vegetarians? How much room for growth can there be in the future? What is the relationship between plant meat and responding to climate change?

Research has proved that the livestock industry emits greenhouse gas , accounting for 15% of the global total, exceeding the total emissions of all vehicles. Compared with carbon dioxide , the greenhouse effect of methane and nitric oxide is more significant, and the animal husbandry industry is the largest emitter of the latter two gases. The largest source of methane in the world is the "exhaust emissions" of cattle and sheep, which are ruminated by and animals, through intestinal fermentation. Animal Husbandry is also a resource-intensive industry, producing one kilogram of beef requires about 15,000 litres of water and 7 kilograms of grain, and it takes up a lot of land.

While the concept of "green travel, low-carbon and environmental protection" is deeply rooted in people's hearts, the threats brought by animal husbandry to global climate change have not yet attracted enough attention. The large-scale use of new energy vehicles will reduce the emissions of transportation vehicles, but global meat consumption is still increasing day by day. Especially in the process of consumption upgrading, China's increase in intake of animal protein such as steak has exacerbated this trend.

BG pointed out that has become increasingly urgent to deal with global warming, and the time to subvert the livestock industry is ripe from the perspective of greenhouse gas emissions alone.

Although the plant meat industry is still in a relatively starting stage, Beyond Meat, founded in 2009, has already occupied a first-mover advantage: It not only has a certain brand awareness, but its founder Ethan Brown has clear long-term goals and leads the company to efficiently execute business strategies.

"His goal is not to make alternative meat for vegetarians, but to copy meat for meat eaters, so the chance is very high."

BG believes that the focus of Beyond Meat's long-term strategy is that compared with traditional animal meat products, the meat alternatives it manufactures need to reach a comparable or better level in terms of cost, sensory experience and health. Once it reaches a considerable level, an irreversible driving force can be formed, completely changing consumers' preference for animal meat products. This is also the company's biggest risk. If it cannot match real meat in terms of price, taste and nutrition, this consumption change will not be based on the basis of happening.

Currently, the scale of processed meat market in the United States, Europe, China and Brazil is 210 billion, 230 billion, 90 billion and 11 billion US dollars, respectively.

From a decade-long perspective, even if these markets have not grown, Beyond Meat can earn more than $15 billion in sales revenue as long as it can occupy 3% of the market share, and this number is less than $1 billion today. Even if the company has a profit margin of less than 15%, it will have a high confidence in achieving a 5x return in the future.

However, the star of tomorrow in BG's eyes is not currently popular in the market.

htmlOn August 13, Beyond Meat's closing price was US$121.24, and it has still recorded a decline this year. According to estimates by Whalewisdom.com, BG's holding cost of the stock is $146.60 per share, which currently seems to be a "in vain".

html After trading on August 5, Beyond Meat released its second quarter financial report for 2021: operating income was US$150 million, a year-on-year increase of 31.8%; gross profit was US$47.4 million, and gross profit margin reached 31.7%, but a net loss of US$19.7 million, far exceeding US$10 million in the same period last year. After the financial report was released, Beyond Meat fell 4.6% after the session.

Beyond Meat's business currently mainly includes two parts: catering and retail. The U.S. is the largest market, accounting for two-thirds of its total revenue, with three-quarters of its sales coming from the contribution of its retail business.

Currently, the company is vigorously developing overseas markets such as Europe and China. Overseas revenue in the second quarter increased by 187% year-on-year, and its share of total revenue also increased from 15% to 32%. However, investment in overseas markets, such as increasing production lines, marketing and R&D investment, and hiring employees, has also greatly increased the company's three-fee expenses, resulting in an expansion of losses.

The market usually has high expectations for growth stocks, and Wall Street analysts responded more pessimistically in the face of mixed financial reports. Barron's magazine pointed out, "Overall, Beyond has lost Wall Street's favor. Only 20% of analysts covering this stock gave a "buy" rating."

However, BG has always selected investment targets with a long-term perspective.

The second quarter report of the LTGG fund, a subsidiary of the company, reads:

"We realize that the evolution of consumer models and attitudes is getting faster and faster, and the amplitude is getting bigger and bigger."

Two fund managers and partners with more than 20 years of investment experience, Mark Urquhart and Tom Slater, told investors: "It is the young members of the team who helped us open the BeyondMeat. The real scale of the opportunity is the imagination space. "

" investment in this company firmly establishes the assumption that the inefficient medium between the sun and the stomach will be removed. Some on the team see no reason that Beyond Meat's chances can't end up exceeding the $500 billion worth of the traditional protein market."

In previous push, the female hero once introduced that when choosing an investment target, BG will test the investment logic through ten questions. for Beyond Meat, the answer to this soul's ten questions is as follows:

• ) Can the company's revenue double in five years?

1. With the largest processing meat market, US$500 billion in consumption Compared with the fees, the company's forecast revenue is less than US$1 billion.

• ) What will the entire industry and company in ten years?

In terms of food experience, cost and nutrition, compared with animal protein Beyond Meat's products will be more popular.

• ) What is the competitive advantage of this company?

scale comes from its first-mover advantage, rapid growth and brand advantages.

• ) What is the difference in the company's corporate culture? Is it highly adaptable?

  The founder is not only ambitious and clear in goals, but also pragmatic and knows how to adapt and adapt. Faced with the impact of the new crown pandemic, the company's transformation to retail industry shows his business strategy Adaptability.

  • ) Do customers like this company? Does the company have social contributions?

  Answer is yes. Can cope with climate change, protect animals and improve our health at the same time.

  • ) Is the return worth it?

  This is a food manufacturer, not a software company. Gross profit margin and operation Leverage is OK.

  • h Will profits rise in the future?

  profits will increase significantly. As the leverage of R&D increases significantly, marketing becomes more efficient, and more production will be carried out internally.

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  ) How does the company make capital allocation and where does it use money?

  capital allocation is efficient! In the past, it was used for research and development, but now it is used to improve manufacturing and production capacity.

  ) Its value can be more valuable than now 5 times longer?

can. Plant-based properties will occupy an important share in the mass meat market in the next ten years, and the current share is still very small (less than 2%).

• 0) What market does the company have not expected or understood? Value?

final market size.

Source:

BG website

Beyond Meat’s Sales Beat Expectations. TheStock Is Down.

The female hero’s words

# This issue push is written at the request of readers. The theme is chosen by the heroine and does not constitute investment advice. BG's imagination of the future can bring inspiration to investors, but you must be cautious in copying homework. You must first be responsible for your own money when investing.

More reports on BG:

Scottish How to invest in bigwigs BG? (with China's heavy holdings)

Invest in Tesla to make a profit of more than 20 billion US dollars. Fund managers are learning it. How can Baillie Gifford invest in the future with long-termism?