Value Investing in my Circle of Competence, Hurdle Rate

Hurdle Rate

Value Investing in my Circle of Competence

The name “Hurdle rate” was inspired by none other than Mark Leonard of Constellation Software, and their prolific use of a fixed hurdle (discount) rate for their investments. Had you invested into Constellation Software at the time of their IPO as an Australian Investor you would of seen your investment multiply by >100x or (>35% CAGR), an enviable record (Updated March 2023).

Equity Bottom-Up

<ul><li>Selfwealth is an ASX-listed online broker Selfwealth is ironically the domestic broker the trust uses with me having used it for over 6 years with great satisfaction.</li><li>Comparing ASX pricing of Selfwealth to some of its primary competitors it is worthwhile to note that the cheapest broker I could find is Superhero which just this month introduced $2 brokerage fees on ASX trades up to $20,000 as it engages in a price war with Stake.</li><li>Selfwealth at a price of $9.50 might seem monumental in comparison, but I would say that Selfwealth has a $9.50 regardless of trade size, making trades &gt;$95,000 cheaper than both Stake and Superhero.</li></ul>

Selfwealth is an ASX-listed online broker Selfwealth is ironically the domestic broker the trust uses with me having used it for over 6 years with great satisfaction.Comparing ASX pricing of Selfwealth to some of its primary competitors it is worthwhile to note that the cheapest broker I could find is Superhero which just this month introduced $2 brokerage fees on ASX trades up to $20,000 as it engages in a price war with Stake.Selfwealth at a price of $9.50 might seem monumental in comparison, but I would say that Selfwealth has a $9.50 regardless of trade size, making trades &gt;$95,000 cheaper than both Stake and Superhero.

Director, RaaS Advisory, Research as a Service (RaaS)

Research as a Service (RaaS)

Director, RaaS Advisory

Insightful Financial Models and Research Analysis

Connect to the right investors through smart and insightful financial models and research analysis.

<h2>SelfWealth Ltd</h2>
<h3>The Millennials’ Trading Choice?</h3>
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<p>SelfWealth (SWF) was established in 2012 and listed in November 2017. The group offers a range of services to investors and advisers including flat fee brokerage in Australia and the US, portfolio and trading analysis based on community trends. SWF attracts both sophisticated investors and younger investors who may not have existing relationships with large financial institutions and other first-time investors. The platform allows investors to benchmark portfolios and trades against SelfWealth community positions and absolute measures highlighting popular investment choices and comparing risk levels. SWF launched an ETF (ASX:SELF) in Nov 2019 which is now capitalised at $108m. The group undertook a $11.7m placement and share purchase plan in July to fund further investment in broadening the product offer requiring further Marketing and IT investment. In FY21 SWF served 100k active direct investors, 62 AFSL licensees and 130 financial advisers with the number of trades in the year up 147% to 1,630,180 and an annual operating cashflow surplus of $1.1m. The board appointed a new CEO, Cath Whitaker, in March 2021 with Robert Edgley stepping back to non- executive Chairman (Anthony Ward, the founder stepped down in May 2020).</p>
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<p><strong>Business model</strong><br>SWF generates revenues from trading commissions and fees associated with managing client money via ETF and other platforms. SWF’s success is contingent on growth in funds held under the SWF CHESS HIN and to increase those client’s propensity to trade via education and providing social feedback regarding popular and widely held positions. Additional services provided are beginning to attract subscription fees and these (E.g., US market access) may become an important part of the revenue model. Increased penetration of the Financial Adviser segment may also drive revenues. The group launched iOS and Android Apps in FY21 along with the launch of US trading for Australian clients.</p>
<p><strong>Moving toward profitability while challenging incumbents</strong><br>In FY21 SWF overhauled systems and processes improving robustness and delivering efficiencies which assisted in improving gross margin from 33.4% to 41.4%. Growth was strong with Revenue up 135%, take-up of the US trading product by 29% of Active Traders in the first six months and an increase in Equities Under Administration (via HIN) from $2.5bn to $6.0bn. The company added capability, expanding the Product and IT teams in preparation for further growth. SWF remains focused on diversifying revenue streams by offering a broad product portfolio to retail investors.</p>
<p><strong>Challenging in an increasingly crowded Fintech market</strong><br>SWF is still at an early stage of development relative to similar firms such as Netwealth (ASX:NWL) and Hub24 (ASX:HUB). A more comparable peer in terms of market capitalisation could be Raiz Invest (ASX:RZI). SWF has focused directly on retail investors, particularly those new to share markets. Individual’s flexibility relative to institutions is driving a relatively fast take-up of the SWF offer with SWF ranked fourth in trading market share.</p>
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SelfWealth Ltd
The Millennials’ Trading Choice?





SelfWealth (SWF) was established in 2012 and listed in November 2017. The group offers a range of services to investors and advisers including flat fee brokerage in Australia and the US, portfolio and trading analysis based on community trends. SWF attracts both sophisticated investors and younger investors who may not have existing relationships with large financial institutions and other first-time investors. The platform allows investors to benchmark portfolios and trades against SelfWealth community positions and absolute measures highlighting popular investment choices and comparing risk levels. SWF launched an ETF (ASX:SELF) in Nov 2019 which is now capitalised at $108m. The group undertook a $11.7m placement and share purchase plan in July to fund further investment in broadening the product offer requiring further Marketing and IT investment. In FY21 SWF served 100k active direct investors, 62 AFSL licensees and 130 financial advisers with the number of trades in the year up 147% to 1,630,180 and an annual operating cashflow surplus of $1.1m. The board appointed a new CEO, Cath Whitaker, in March 2021 with Robert Edgley stepping back to non- executive Chairman (Anthony Ward, the founder stepped down in May 2020).





Business model SWF generates revenues from trading commissions and fees associated with managing client money via ETF and other platforms. SWF’s success is contingent on growth in funds held under the SWF CHESS HIN and to increase those client’s propensity to trade via education and providing social feedback regarding popular and widely held positions. Additional services provided are beginning to attract subscription fees and these (E.g., US market access) may become an important part of the revenue model. Increased penetration of the Financial Adviser segment may also drive revenues. The group launched iOS and Android Apps in FY21 along with the launch of US trading for Australian clients.
Moving toward profitability while challenging incumbents In FY21 SWF overhauled systems and processes improving robustness and delivering efficiencies which assisted in improving gross margin from 33.4% to 41.4%. Growth was strong with Revenue up 135%, take-up of the US trading product by 29% of Active Traders in the first six months and an increase in Equities Under Administration (via HIN) from $2.5bn to $6.0bn. The company added capability, expanding the Product and IT teams in preparation for further growth. SWF remains focused on diversifying revenue streams by offering a broad product portfolio to retail investors.
Challenging in an increasingly crowded Fintech market SWF is still at an early stage of development relative to similar firms such as Netwealth (ASX:NWL) and Hub24 (ASX:HUB). A more comparable peer in terms of market capitalisation could be Raiz Invest (ASX:RZI). SWF has focused directly on retail investors, particularly those new to share markets. Individual’s flexibility relative to institutions is driving a relatively fast take-up of the SWF offer with SWF ranked fourth in trading market share.









SelfWealth Ltd: The Millennials’ Trading Choice?

Australia

K2 Asset Management Holdings Ltd is an Australian based fund holding company. The Company through its subsidiary manages mutual funds.

Advanced Share Registry Limited provides share registry services. The Company provides registry services to listed and unlisted clients on a state and national basis.

Keybridge Capital Ltd is an investor in structured finance transactions including leasing, infrastructure, property and fixed income.

Strategic Elements Ltd. invests into Australian companies across the rare earths and rare metals mining, processing and materials development sectors. The Company's primary strategy is to be an early investor into small and medium Australian companies and assist them with capital, technical expertise and alliances with industry players.

Fatfish Internet Group Limited invests in start-up companies. The Company, through its subsidiaries, focuses on mobile and social media startups and growth-stage internet businesses.

NSX Limited is the ultimate parent company of the Stock Exchange of Newcastle Limited (SENL).  SENL is an Australian Markets Licensee allowing the operation of a market in the trading of securities.  The primary focus of NSX is to enable the creation of secondary markets in securities, by owning an Australian Market Licensee which has operating rules.

Mariner Corp Ltd. is a global fund and asset management company. The Company is active across various markets, including funds management, property investment and development, capital and equity markets and energy and infrastructure.

Orion Equities Limited is an investment company incorporated in Australia. The Fund aims to provide a high rate of return, deliver a regular franked dividends, and preserve capital, whilst operating within acceptable risk parameters. The Fund seeks investments in which it can expect to exert a degree of influence, including board representation or through an active role along side management.

Auctus Investment Group Limited operates as an investment manager. The Company invests into companies and platforms operating in growth sectors with strong tailwinds and significant potential to scale. Auctus Investment Group serves customers in Australia.

Prime Financial Group Limited is a diversified financial services and advisory company. The Company provides financial advice, funds management, corporate advisory and finance.

China Innovation Investment Limited is an investment holdings company. The Company invests in listed and unlisted companies in Hong Kong and China.

PT Panca Global Securities Tbk provides securities trading and investment management services.

Value Convergence Holdings Limited operates securities brokerage, commodities trading, and corporate finance businesses under the VC CFN and VC CEF brand names via traditional means and the Internet.

Sunwah Kingsway Capital Holdings Limited operates as a holding company. The Company, through its subsidiaries, provides equity and derivatives brokering, equity capital markets fund raising, corporate finance, and asset management services. Sunwah Kingsway Capital Holdings serves customers in Hong Kong and China.

Astmax Company, Ltd. is a holding company. The Company is an asset management firm which primarily invests in the commodities market. The Company also provides investment advisory services in the securities market and trades precious metals and oil mainly for their own account.

Core Economy Investment Group Limited operates as an investment company. The Company engages principally in investment and trading of listed and unlisted equity securities. Core Economy Investment Group focuses on Hong Kong market.

Cinda International Holdings Ltd. acquires, manages and disposes of non-performing assets; and offers gold and silver spot trading services.  The Company acquires non-performing assets in local and foreign currencies; collects debts; leases, transfers and restructures assets; sponsors stock listings; and underwrites bonds and stocks.

Sun Capital Management Corp. forms and operates investment associations that invest in real estate related securities and funds. The Company provides research services for real estate properties as well as asset management and consulting services to investors.

NCL Research and Financial Services Limited engages in the trading of textiles products in India. The Company is involved in the trading of finished fabrics and invests in shares and securities.

NCL Research & Financial Servi (NCLRF IN)

ECM Libra Financial Group Bhd. is an investment holding company. Through its subsidiaries, the Company provides services such as corporate finance, investment advisory, fund management, stock broking, options and futures broking, unit trust and asset management.

SelfWealth Limited provides investment management services. The Company offers online trading, wealth management, financial advisory, and other investment services. SelfWealth serves customers in Australia.

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SelfWealth Ltd (SWF AU)

Selfwealth (ASX:SWF)

Selfwealth is an ASX-listed online broker Selfwealth is ironically the domestic broker the trust uses with me having used it for over 6 years with...

Hurdle Rate

SelfWealth Ltd: The Millennials’ Trading Choice?

SelfWealth Ltd The Millennials’ Trading Choice? SelfWealth (SWF) was established in 2012 and listed in November 2017. The group offers a range...

Research as a Service (RaaS)

Price Gauge

52-week Range

Market Cap (USDm)

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