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Jun 2021: Alibaba – Deferred Gratification

June 13, 2021

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Alibaba – Deferred Gratification

Jun 2021 ($210)

 

We have spent a fair amount of time listening and reading up on the background and business that is Alibaba and some of its newest competitors such as PDD. We conclude that today investors are being offered a colossus of a businesses at a wonderful price. How wonderful? Well taking a variety of guesses (for they can be little more) as to the value of Ant, Cloud and the Seed/start-up businesses we think the core Alibaba business might well be trading at below 10x EV/EBITA. When we consider that this part of the business is still growing at 17%pa and is by far the slowest growing part of the company it perhaps puts the valuation of the group into context.

In search of perspective

Those looking for a deep dive on Alibaba can stop reading now. This is a piece about perspective, little more.

Alibaba interests us due to the juxtaposition it now finds itself in. It is a business that is still growing very fast and still dominates many of the most important fast growing online Chinese markets, yet it is also a re-investor, innovator and controlled by its founder (well, until very recently at least). That it has been more recently in the cross hairs of Chinese politicians is clearly well known and an often-repeated fact by commentators. We believe this risk to be now more than discounted in the share price. We sometimes simplify our approach as looking for great companies when they are priced like bad ones. Taking the plunge to purchase such companies at a time when others are telling you they are ‘bad’ can feel psychologically difficult. In the case of Alibaba, we have to accept it does not just feel bad for there may be also risks we cannot foresee or control. But what we are looking for however in this job is mispriced bets, and that is what we think we have found. We cannot guarantee its outcome, but we see the odds as very good vs the price we are being asked to pay vs the growth we are being offered.

Fig.1: What we look for

 Source: Holland Advisors

Shameless Cloners

Upfront we should state that we are shameless cloners. Whilst looking over someone else’s shoulder was something we might not have been proud to do in our younger lives we found new utility in it courtesy of Mr Munger (who else) when we heard him answer a Berkshire AGM question some 15 years back.

Questioner: “What are the 3 most important things an investor should do Charlie?’

Munger: “Look at Spin Outs, invest in cannibals and watch what the smart people are buying”.

Whilst this last point is not the source of all our ideas, it is the source of some. The key word in that sentence is ‘source’. Jumping forward to spring 2021 the cleverest man on the planet[1] makes his first investment for 10 years…

This person invests a lot of money (c.20% of Daily Journal’s $200m equity portfolio) in one single stock, Alibaba. This person of course is Charlie Munger once again, a long time China bull and close watcher. What happened next, we think is interesting, very interesting as a great many people then immediately fell foul of the psychological traps Charlie has been talking and writing about for the last 40 years! By that we mean they will quickly set about explaining why HE was wrong to make such a purchase and THEY are right. I.e. because of X, Y, Z… immediately looking for re-enforcement bias of why their own preconceived views on why ‘China is risky’ and ‘China policy intervention now makes it unforecastable and therefore un-investable’ and all that jazz etc..

Our thought process is somewhat different. And in truth it goes along the same lines it always does whenever we do a little cloning from someone super smart. Here’s what it sounds like inside our heads:

“This person is real, real smart, much smarter than us. We have followed them and admired their decisions over many years and they have thought long and hard about this. They know all the information that is out there and they have chosen to invest in this. We wonder why?”

That’s it, nothing more. Disappointing, isn’t it? Then we start reading and listening to podcasts and the like and going down all sorts of blind alleys and learning about Jack Ma etc. and we just keep turning the pages.

Supporting materials

At the end of this piece, you will find a link to lots and lots of articles, podcasts and videos which we would recommend listening to that give a really good insight into Alibaba. The ‘Crocodile on the Yangtze’ and the Colossus ones are particularly good.

What follows is not a deep analysis of each business line but a just our views on the risk/reward we assess post the reading and listening we have done. Attached to this email is a summary of supporting documents. These include.

  • Our own simple sum of the parts spreadsheet which whilst crude makes important adjustments to the earnings power of this core business and the resulting value we think is on offer
  • Also attached are presentation packs and transcripts of a recent earnings call with our notations
  • Investors should also listen and look closely at last year’s analyst day where a lot of good insight into the business was given
Enough preamble – What do we think?

Alibaba current competitive position is simply huge. The breath of it is simple staggering. It makes Amazon look small and almost weak by comparison. That this market position is in one of the biggest global markets that is still set to grow nominally at strong rates for many years to come should not be overlooked (we doubt Munger has!). Yes, the company has new competitors emerging all the time (e.g. Pinduoduo) and this factor leads to a suggestion that its market position can be somehow lost, but it also shows just how good all these competitors are including the one that started it all and that in many cases still leads: Alibaba. Alibaba has many Phil Fisher type tendencies in that it is constantly growing and investing in new legs of growth for the future (Cloud being an excellent example, but there are many more). As we will allude to later seeing the strength of wider Chinese players and the Phil Fisher/Re-investment growth models in a wider context rather than just looking at Alibaba might be an important conclusion for investors

Importantly, Alibaba (and PDD) are perfect fits for our Scale Economics Shared model. Indeed, when we started to look at the company post Munger’s purchase this is what struck us most strongly. We look at lots of ideas that might come from other smart investors but for a great many of them we don’t make it past the first few hours, because we see nothing we can relate to. Here the opposite was the case. It was not that they were unknown to us, the model was fast growing yes, and in a different language and geography yes, which creates barriers. But actually, it is VERY familiar. I.e., these (for we have looked at both BABA and PDD) are businesses possessing a powerful scale economics shared business model. As we made these reflections another memory popped into our heads. It was from another Berkshire AGM a few years back when Warren and Charlie were asked what they wish they had done differently. They quickly answered: ‘we wished we had looked further afield’.

In that vein we reflect

For some years now we have studiously looked at local EDLP models of say JDW or Next that might grow at sales at 5% pa if they work hard and intrinsic value at 13% if they allocate well. But what if we could find businesses ‘further afield’ trading for similar prices that are growing at three times that rate. Yes, we know they come with greater risks and might be harder to analyse in some ways, but the runways for growth could be far far greater…? Superficially these feel like what we are looking at. Indeed, on reading that PDD’s markup is a remarkable 0% vs Costco famous 14% – we think that is something to marvel at. Might it not make PDD a future powerhouse far further than its current China base.? For today, we keep our discussion only on $BABA but PDD certainly fits our mould alright!

Re-investment

Those wanting to entertain the idea that Alibaba is a scale re-investment business as we are claiming should take a look at the attached transcript. It is of the recent year end results. Note the highlights we have made on it. It is interesting we think the sheer scale of growth the company is reporting on the one hand and then the comments the company is making about re-investing the coming years profits on the other. What was VERY notable we thought was the share price reaction on the day of this meeting. The shares fell. If Amazon say 4 years ago had made these exact same comments post reporting strong profits and then also talked about re-investment for future growth would its shares have risen or fallen? We ask you to reflect on that for a moment? Four years ago, once its scale model was proven? They would have risen we suggest and done so because by then its investors understood the title of this note-deferred gratification. Ten years ago, maybe not, but four year ago they understood its power fully.

The fall in $BABA both in recent months and on that day this April, we think is perhaps an example of the different mentality that exists amongst the blend of investors in its (Alibaba) shares and those that exist in say Amazon or Costco. And this is what lies behind Charlie’s purchase

Charlie’s arbitrage

In short, some Chinese investors, we suggest, are not yet as skilled as some of their better business leaders are in deferred gratification. And this is the arbitrage Charlie is trying to take advantage of. Chinese investors on average (we know this statement generalises and apologise for this fact) are traders at heart with a speculative mentality. We know that this borders on condescension for country we have visited only twice, but we hear the sentiment repeated by more than a few of the most highly respected local Chinese investors (Zhang Lei at HillHouse Capital is the best example). By contrast it has taken a very long time for only a small number of experienced western investors to truly understand the deferred gratification concept that lead to the accepted dominance of businesses like Costco and Amazon and the success of those that believed in them. That emerging markets are behind in understanding this, in perfectly normal.

If we have any sort of edge in this area it is not local knowledge or hard work, but only perhaps an ability to spot a powerful mental/business model we have seen before. We think we recognise this in $BABA and $PDD. $BABA we are prepared to highlight at this stage due to:

  • Its engrained position in so many markets ala Walmart of old
  • Its Phil Fisher ‘grow new growth legs’ strategy
  • It’s replay of the Amazon Cloud playbook,
  • That the value is obvious and pretty much in plain sight.
  • Oh! and that Charlie is pointing it out to us.

PDD we might come back to another day.

Valuing Baba

We have now spent more than a little time in front of $BABA accounts and presentations and have been interested to see the level of value uncovered in this company, the closer we have looked. We have tried to show this in both our highlights on their recent short presentation pack and in our own valuation spreadsheets in the attachments.

What this section tries to show is just a simplification of this giant business that has cash, equity investments, fast growing (but currently loss making) investments and a hugely profitable capital light high margin cash cow core businesses. The short conclusion of what is below is that by putting what we think are low-balled/prudent values on the non-cash generative businesses, we end up with a rump value for the main Alibaba ecommerce business that is c. 9-10 EV/EBITA unlevered. As we said it in our introduction for a Core division that is still growing 17% pa and is the slowest growing division, we think that is one hell of an entry price into a powerhouse of company

Fig.2 shows our representation of new EBITA disclosure of the business and the scale of reinvestment (or losses). All charts (and assumptions) are viewable in the accompanying spreadsheet.

Fig.2: New Alibaba EBITA and Cost disclosure [2]

 Source: Holland Advisors, Alibaba

  • As Per Fig.2, Baba’s new disclosure of ‘core commerce’ EBITA (what would have been RMB194,512 previously) now also breaks-out what it calls ‘New Initiatives’ EBITA from that profit line. “New Initiatives” is a catch-all term for its immature business losses and, frankly, new price reinvestment in Grocery/Hypermarket/Logistics and International as per the footnote below.Importantly, excluding these reinvestments, the Core Marketplace Commerce business (i.e. the original Alibaba.com, Taobao and Tmall cash cow businesses) had EBITA of RMB229,134 (highlighted in pink above) in the last 12 months to March 2021.

Now looking further down the P&L at Net income, we suggest some adjustments in a bid to get to an adjusted group P/E. This is shown in Fig.3. The principle adjustments that we make are to add back 50% of the“seed” business losses (calculated above in Fig.2 and highlighted in grey) and only 50% of the stock based comp. The implied adjusted Net Income suggests a 19.2x P/E multiple (for a business that has compounded group EBITA at 29% 2016-21). Again, this 19x P/E includes half the losses of the Seed businesses and assumes that Cloud makes no profit.

Fig.3: Holland Net Income Adjustments

 Source: Holland Advisors, Alibaba

Finally, we try discern what valuation multiple the Core Marketplace Commerce earnings (again, the RMB229,134 EBITA referenced in pink above) might be trading-on by stripping out the non-core businesses valuation from the Market Cap.

We do this in Fig.4 by looking at the four key non-core business units on the Balance Sheet (New Retail, Cloud, Ant Financial and Group Cash). The result is very interesting.

Fig.4: Holland estimate of non-core segment valuation

 Source: Holland Advisors, Alibaba

  • Were we to give what we believe are reasonable valuations for New Retail (seed) business (say $25bn) + Cloud (say 5x sales, a $55bn valuation) + Ant Financial stake (say at half its purported 2020 pre-IPO valuation (the $150bn we use) which would imply a c.22x P/E for the Ant business) + Cash, these four buckets together would aggregate c.RMB1,049bn (US$163.9bn) as shown above. In other words, about 29% of the Group market capitalisationIn turn, such a non-core valuation would imply a rump value for the core (i.e., main ‘Marketplace Core-Commerce’ business) of RMB2,594bn (or RMB2,269bn ex-cash) also as shown above.

Comparing this to the reported (‘core Marketplace’) EBITA of RMB229bn gives a rump EV/EBITA of just 9.9x.

  • For a “core Marketplace” business that is most recently growing at 17% pa (as per Fig.2) and at group level where profits compounded at 29% over the last 5 years, has an unmatched market share position derived from scale and sharing of that scale with customer, in the largest and fast-growing online market in the world – we think that a remarkable valuation.

The main reason for the difference between the conclusion of our valuation above and in the attached supporting documents is a) due to adjustments P/L losses from ecommerce businesses that are yet to be profitable and b) other P/L charges.

A word from a colleague

Part way through our readings on Alibaba, we did wonder whether we might be overstating the company’s ‘exceptionalism’ as an innovator. We don’t mean to take away from Jack Ma’s formidable innovation in the early days as a Chinese internet pioneer and exceptional manager. Ma faced down eBay and grew the business into the dominant e-commerce platform of the entire country.

Rather, we wonder if what we see in Alibaba is actually a country-wide phenomenon in China where Alibaba took its first-mover advantage and leveraged it to perfection. As we look today at PDD, Shein and the myriad of other massive digital-native Chinese businesses – the scale and pace of technology led change is hard to overstate.

As the western world moved from dial-up to broadband to high speed mobile over two decades, China just leapfrogged it all and effectively went straight to mobile. It also went straight to e-commerce (leapfrogging shopping malls too!). The internet has been a great deflationary force for the world, a remover of commerce friction. China offered indigenous entrepreneurs unprecedented scale and much friction opportunity to grease with their mobile-first platforms. Combined with this gigantic captive market (where the established western players were not allowed to enter or compete) was a Chinese culture that was open to change and innovation and dead-set on lifting themselves out of low income. The combination is truly explosive.

In the same vein, and for balance we ought to also note that other Chinese platform companies are engaging in similar SES strategies (especially Pinduouo). ‘China tech’ en masse looks to be in the midst of a formidable capital cycle. For example, slide 92 of the following link[3] is a reminder that the all the big platforms, not just Alibaba, are investing heavily this year “to defend and expand their reach” in China.

Alibaba is a phenomenal company but there is an argument, perhaps, for a Templeton approach of using a select basket of such stocks to participate in the continuation of a trend that looks still to have a long runway of growth ahead of it.

A few analogies

The obvious analogy we would make is between Alibaba and Amazon (+ eBay + PayPal, + Stripe, etc.). If Alibaba is just looked at on straight P/E ex cash valuation the company trades on c.19.2x, but this multiple takes no account for the value of the Ant/Alipay business, nor does it adjust for the value that might accrue to businesses that today are loss-making. (Hence our work above). There are many parts that have value but the most obvious jewel in Baba’s crown is its Cloud computing business, with 43% Chinese market share. Our very rough segment valuation assumes that (at 5x sales) it is worth $55bn, yet today, it is at just the tipping point of scale and profitability that Amazon cloud business (AWS) was at in 2016. Munger and a few other US investors can clearly see this analogy, as can Alibaba, hence they are not in rush to maximise the profitability of this division just yet.

A less obvious analogy is perhaps that of Walmart. When doing our reverse engineering of Berkshire’s investments over the years, the purchase of Walmart interested us. Buffett and Munger had watched patiently as Sam Walton had grown and compounded capital well for decades, but they only invested when they felt it passed a threshold of valuation that gave them a starting point, they could be comfortable with. Soon after looking into Munger’s Alibaba purchase, we felt this was a repeat of the Walmart patience story. For all the excitable chat about Ant Financial and Jack Ma we think, that is all Munger is doing. He is balancing off the scale of the opportunity on front of him in $BABA, ie the huge growth runway it has and the huge market power it has. He is then saying what price am I having to pay for all this? Right now, the price looks a fair/great trade-off for what you get for it. That is what good odds are.

Some Reflections

The other day we found ourselves reflecting on the investment prospect that is Alibaba rather more holistically. That is to say against country risk, political risk and where it sits is a world of uncertainty, but opportunity too. We found ourselves noting what it was that turned the tide of sentiment towards the company.

Was it Jack Ma’s Speech or the government crackdown on Ant Financial that resulted in its pulled IPO? The following article is a fairly representative mainstream article[4] (from Forbes) on this point.

Clearly these types of articles give a different and important insight that we need to take on board. Has value been taken away from Ant group and Baba since last summer? Yes of course, but is that fact also discounted in the share price too? Is Jack Ma’s power being neutered somewhat? Yes. But is he also showing great signs of contrition? Also, yes. We never said this was easy.

Looked at another way – Different or wrong?

Maybe a capital light financial service business that in ten years had grown to be the size of JP Morgan with a small amount of capital should have just been allowed to keep growing without any checks or balances? Would that have been a good thing? Have we seen that type of thing before elsewhere in the world, and if so how did it turn out..?!

There is always a danger that you look at a foreign country through too much of your own eyes and assume that a different way of doing business is a wrong way of doing business. The same being said in the case of regulation. Whilst investors in a 2019 capital-light Ant Financial will no doubt feel aggrieved at the requirements made of it going forwards, these policies are not necessarily anti-Alibaba or anti-Jack Ma any more than they are anti-capitalist. However, we concede they do represent a different way of doing business than many in the West are maybe used to. One where the state will step in early if it feels a situation might get out of control, or indeed an individual has. Surely even those of us who are pro free markets and ardent Ayn Rand fans have seen enough of what has happened in financial markets in the last ten years to see that there could be some wisdom in these sorts of actions if taken at face value. I.e. a little early shoring up of fast growing financial services companies might not always be a bad thing.

Crucially It also does not stop them being good companies into the future. We note for example that Alipay is the main sponsor of the Euro2021 Football tournament! However, we in the West have no experience of this (ie early regulation) as we have never seen it before as we only ever see ‘after the event’ type regulation. (Northern Rock, Lehman) Maybe, just maybe Ant Financial comes back much bigger and much stronger X years from now? Maybe, just maybe Alibaba, a long-standing Chinese company that has not just been founded by a ex US Harvard student in time might be looked on a little more favourably by the Nation state it has sat alongside for many decades now.

That the company and Jack Ma have been contrite ceding to China’s wishes once they realised, they crossed ‘the line’ we think important. We accept this is a different place to invest, but that is different to it being an impossible place to invest. All risks after all are there to be priced, ask Ajit Jain. That said, it is probably not somewhere for Michael O’Leary to run a company!

In short

We are not naïve and we enter into this type of investment with our eyes wide open. We see the risks, but we see the opportunity too. What is important is to be objective and in order to do that you have to think and occasionally reflect as we just have above. You also have to consider that you are maybe paying in many cases PEG’s of 2x for large US predictable growth companies (i.e. PE of 25x for growth of say 10-12%, if you are lucky). In the case of Alibaba you might be paying a PEG of 0.5x (12x for growth of 20% pa). That is one hell of a risk reward pay off. Only a few years (even months) ago investors were only focused on the growth potential of this business. Seemingly now they can only see its risks. That change of heart set against secular growth appeals to us greatly.

Resources

We read and listened to a lot of great podcasts. Whilst not in perfect order of importance certainly the first 4 or 5 were key to our understanding. Have fun!

Put us down as fans of Alibaba. We are also just blown away every time we come across another company doing great things in scale online in China. Just in the last 3 months we looked at Pinduoduo and Shein – we suspect they won’t be the last.

Best wishes

Andrew Hollingworth & Mark Power

The Directors and employees of Holland Advisors may have a beneficial interest in some of the companies mentioned in this report via holdings in a fund that they also act as managers to.

Disclaimer

This document does not constitute investment research as it has not been prepared in accordance with UK legal requirements designed to promote the independence of investment research. Therefore even if it contains a research recommendation it should be treated as a marketing communication and as such will be fair, clear and not misleading in line with Financial Conduct Authority rules. Holland Advisors is authorised and regulated by the Financial Conduct Authority. This presentation was prepared for institutional investors and high net worth experienced investors who understand the risks involved with the investment being discussed within this document. If you are reading this document on the Holland Advisors website you do so accepting that it is not a recommendation to buy or sell any security nor an inducement to invest in any fund manged by Holland Advisors. The information on this website is intended for professional and institutional investors only. Retail Investors should not rely or act on any information provided on this website. This communication should not be distributed to anyone other than the intended recipients and should not be relied upon by retail clients (as defined by Financial Conduct Authority). This communication is being supplied to you solely for your information and may not be reproduced, re-distributed or passed to any other person or published in whole or in part for any purpose. This communication is provided for information purposes only and should not be regarded as an offer or solicitation to buy or sell any security or other financial instrument. Any opinions cited in this communication are subject to change without notice. This communication is not a personal recommendation to you. Holland Advisors takes all reasonable care to ensure that the information is accurate and complete; however no warranty, representation, or undertaking is given that it is free from inaccuracies or omissions. This communication is based on and contains current public information, data, opinions, estimates and projections obtained from sources we believe to be reliable. Past performance is not necessarily a guide to future performance. The content of this communication may have been disclosed to the issuer(s) prior to dissemination in order to verify its factual accuracy. Investments in general involve some degree of risk therefore investors should be aware that the value of any investment may rise and fall and you may get back less than you invested. Value and income may be adversely affected by exchange rates, interest rates and other factors. The investment discussed in this communication may not be eligible for sale in some states or countries and may not be suitable for all investors. If you are unsure about the suitability of this investment given your financial objectives, resources and risk appetite, please contact your financial advisor before taking any further action. This document is for informational purposes only and should not be regarded as an offer or solicitation to buy the securities or other instruments mentioned in it. Holland Advisors and/or its officers, directors and employees may have or take positions in securities or derivatives mentioned in this document (or in any related investment) and may from time to time dispose of any such securities (or instrument). Holland Advisors manage conflicts of interest in regard to this communication internally via their compliance procedures.

  1. We are prepared to back up that statement sourcing pg.200 of William Green’s great recent book Richer Wiser, Happier. “Pabrai chuckles at the memory of hearing Munger appear onstage alongside a Nobel winning scientist who was ‘Caltech biggest brain’. That guy looked like a shrimp who didn’t know shit. You could see the contrast dumbass on one side, real brain on the other.” ↑
  2. “The New Initiative businesses, which now include our New Retail businesses, Local Consumer Services, Lazada, Taobao Deals, Cainiao Network and others, represent strategic areas where we are executing to capture incremental opportunities.” – Alibaba FY21 results statement ↑
  3. https://e46b0d6a-0ebf-4fe8-92ca-0d0f7dae4fd1.filesusr.com/ugd/7a471b_af073b5c77c144768bfe094c542ccb06.pdf ↑
  4. https://www.forbes.com/sites/georgecalhoun/2021/06/07/the-sad-end-of-jack-ma-inc/?sh=174c2f9f123a ↑
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HOLLAND ADVISORS (LONDON) LTD, ITS DIRECTORS OR OFFICERS DISCLAIM ALL REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED, INCLUDING BY WAY OF EXAMPLE BUT NOT LIMITATION AS TO RELIABILITY, COMPLETENESS, FITNESS FOR PURPOSE OR ACCURACY OF THE INFORMATION ON THIS WEBSITE OR ON ANY THIRD PARTY WEBSITE LINKED TO THIS WEBSITE. IN ADDITION, WE DO NOT REPRESENT OR WARRANT THAT THIS WEBSITE OR THE SERVERS THAT MAKE THE WEBSITE AVAILABLE WILL BE UNINTERRUPTED, ERROR FREE, OR FREE FROM INFECTION, VIRUSES, WORMS OR ANY OTHER HARMFUL CODE WHICH MAY HAVE CONTAMINATING OR DESTRUCTIVE PROPERTIES. YOU ARE FULLY RESPONSIBLE FOR ENSURING PROTECTIVE STEPS TO BE TAKEN SUCH AS VIRUS CHECKING. The Information is assembled from material prepared by Holland Advisors (London Ltd) or its agents but may not include Information made known to Holland Advisors (London) Ltd officers (or agents) subsequent to the date of publication of the Information indicated on the Website. If you use the Information, you do so at your own risk. Please recognise that the previous performance of securities or other instruments does not guarantee or predict future performance. 7. Exclusion of liability TO THE FULLEST EXTENT PERMITTED BY LAW, HOLLAND ADVISORS (LONDON) LTD ACCEPT NO LIABILITY TO YOU OR ANY THIRD PARTY FOR ANY LOSSES OR DAMAGES, INCLUDING, WITHOUT LIMITATION, DIRECT OR INDIRECT DAMAGES, CONSEQUENTIAL OR SPECIAL DAMAGES, LOSS OF USE, DATA OR PROFITS, COSTS OR EXPENSES INCURRED OR SUFFERED BY YOU OR THIRD PARTY, WHETHER IN CONTRACT OR DUE TO NEGLIGENCE OR OTHER TORTIOUS ACTION, ARISING OUT OF OR IN CONNECTION WITH THE ACCESS TO, USE OF, RELIANCE ON, OR PERFORMANCE OF THIS WEBSITE OR ANY INFORMATION CONTAINED ON THIS WEBSITE, WHETHER DUE TO INACCURACY, ERROR, OMISSION OR ANY OTHER CAUSE AND WHETHER ON THE PART OF US, OUR SERVANTS, AGENTS OR ANY OTHER PERSON. NOTHING IN THE TERMS OF USE EXCLUDES, RESTRICTS OR MODIFIES ANY CONDITION, WARRANTY OR LIABILITY WHICH MAY AT ANY TIME BE IMPLIED BY STATUTE OR ANY OTHER APPLICABLE LAW WHERE TO DO SO IS ILLEGAL OR WOULD RENDER ANY PROVISION OF AN AGREEMENT VOID. 8. Third Party Websites We may provide, on our Website, links to websites operated by third parties as a convenience to you. If you use these other sites, you will leave this Website. If you decide to visit any linked site, you do so at your own risk and it is your responsibility to take all protective measures to guard against viruses or other destructive elements. Holland Advisors (London) Ltd makes no representations, warranties or guarantees of any kind about any of the content of any other website which you may access by hypertext link through this Website. When you access any other website by means of a link from this Website, you should understand that your access to that other website is independent of Holland Advisors (London) Ltd and Holland Advisors (London) Ltd has no control over the content of the website, nor does Holland Advisors (London) Ltd in any way endorse or approve the content of that website. In no event will Holland Advisors (London) Ltd in any way be liable to you or any other person(s) or organisation(s) for loss or damage (whether direct, indirect, consequential, special or other) for any use of any site linked to it by means of hypertext or otherwise. 9. Indemnity You agree to indemnify Holland Advisors (London) Ltd and its officers from and against any claim brought by third parties against Holland Advisors (London) Ltd and its officers as a consequence of your breach of the Terms of Use. Furthermore, if your use of this Website results in the need for servicing, repair or correction of equipment, software or data, you assume all costs thereof. 10. Intellectual Property Rights and Licence The copyright, trade mark or any other intellectual property rights in the Website and the Information are owned by or licensed to Holland Advisors (London) Ltd. You may download or print out a hard copy of individual pages and/or sections of this Website provided you do not remove any copyright or other proprietary notices. Any downloading or other copying from this Website will not transfer title to any software or material to you. You may not reproduce (in whole or in part), transmit (by electronic means or otherwise), modify, link to or use for any public or commercial purpose this Website without the prior written permission of Holland Advisors (London) Ltd. Any rights not expressly granted in the Terms of Use are reserved. 11. Operation of the Website You should be aware that the internet, being an open network, is not secure. If you choose to send any electronic communications by means of this Website, you do so at your own risk. Holland Advisors (London) Ltd cannot guarantee that such communications will not be intercepted or changed or that they will reach the intended recipient safely. 12. Privacy Any personal data relating to you will be collected, used and recorded by us in accordance with current data protection legislation, the Terms of Use and our Privacy Policy. You must read our Privacy Policy as it forms part of the Terms of Use. 13. Governing law The Terms of Use are governed by the laws of England and Wales and the courts of England and Wales will have exclusive jurisdiction over any disputes arising under them. 14. Waiver If you breach the Terms of Use and we take no action, we will still be entitled to use our rights and remedies in any other situation where you breach the Terms of Use. 15. Our details This website is owned and operated by Holland Advisors London Ltd. You can contact us at: Holland Advisors London Ltd, The Granary, 1 Waverley Lane, Farnham, Surrey, GU9 8BB. Updated and effective as of  31st March 2024
Disclaimer
Please read the following conditions of use of this website. This website is directed at high net worth experienced investors and institutional investors who understand the risks involved with the investments being promoted and it should not be relied upon by retail clients (as defined by Financial Conduct Authority). The information on this website is issued by Holland Advisors (London) Limited (hereafter referred to as “Holland Advisors”), a limited liability company (7431314) incorporated in England and Wales, which is authorised and regulated by the Financial Conduct Authority (FRN: 538932). This website is for information purposes only and does not constitute an offer or solicitation to buy or sell securities, funds or any other financial instrument. The information is directed inside the United Kingdom and is not directed at any persons in jurisdictions where it would be against local law or regulation.  In particular, information on this site is not directed at any person, partnership or corporation being resident in the United States of America. Holland Advisors disclaims all responsibility if you access or download any information in breach of any law or regulation of the country in which you reside. Information on this site The information provided does not constitute advice. Holland Advisors believes that the sources of the information in this website are reliable. However it cannot and does not guarantee, either expressly or implicitly, and accepts no liability for, the accuracy, validity, timeliness or completeness of any information or data (whether prepared by it or by any third party) for any particular purpose or use or that the information or data will be free from error. Holland Advisors does not undertake any responsibility for any reliance which is placed by any person on any statements or opinions which are expressed herein. Neither Holland Advisors nor any of its directors, officers or employees will be liable or have any responsibility of any kind for any loss or damage that any person may incur resulting from the use of this information. This does not exclude or restrict any duty of liability that Holland Advisors has to its customers under the regulatory system in the United Kingdom. All Information may be changed or amended without prior notice although Holland Advisors does not undertake to update this site regularly. Marketing Communications Documents on this site do not constitute investment research as they have not been prepared in accordance with UK legal requirements designed to promote the independence of investment research. Therefore, even if they contain research recommendations they should be treated as marketing communications and as such will be fair, clear and not misleading in line with Financial Conduct Authority rules. These communications are not personal recommendations to you and any opinions cited are subject to change without notice. Holland Advisors takes all reasonable care to ensure that the information on this site is accurate and complete; however no warranty, representation, or undertaking is given that it is free from inaccuracies or omissions. Documents on this site are based on, and contain, current public information, data, opinions, estimates and projections obtained from sources we believe to be reliable. Past performance is not necessarily a guide to future performance. The content of these documents may have been disclosed to the issuer(s) prior to dissemination in order to verify their factual accuracy. Investments in general involve some degree of risk, therefore Prospective Investors should be aware that the value of any investment may rise and fall and you may get back less than you invested. Value and income may be adversely affected by exchange rates, interest rates and other factors. The investments discussed on this website may not be eligible for sale in some states or countries and may not be suitable for all investors. If you are unsure about the suitability of an investment given your financial objectives, resources and risk appetite, please contact your financial advisor before taking any further action. Holland Advisors and/or its officers, directors and employees may have or take positions in securities, funds or derivatives mentioned on this site (or in any related investment) and may from time to time dispose of any such securities (or instrument). Holland Advisors manages these potential conflicts of interest internally via its compliance procedures. Fund Information Parts of this site may refer to Funds managed or advised by Holland Advisors. These are not solicitations to invest and any potential investors should refer to the “Our Funds” section of the website in order to learn more about these Funds and find out how and where to obtain the relevant full legal documentation. Linked Websites This site may be linked to third party websites or contain information provided by third parties. Holland Advisors does not make any representation as to the accuracy or completeness of such websites or information, has not and will not review or update such websites or information, and cautions browsers that any use made of such websites or information is at their own risk. Holland Advisors does not accept any liability arising out of the information contained on any linked website or Information provided by a third party and the use of such sites and information is at your own risk. This does not exclude or restrict any duty or liability that Holland Advisors has to its customers under the regulatory system in the United Kingdom. Indemnity You agree to indemnify and defend Holland Advisors, its affiliates and licensors, and the officers, directors, employees, and agents of Holland Advisors and its affiliates and licensors, from and against any and all claims, liabilities, damages, losses, or expenses, including legal fees and costs, arising out of or in any way connected with your access to or use of this website and the Information. Use of Cookies If you agree to these terms and conditions a “cookie” might be placed on your computer. A cookie is a packet of information that does not identify individual users of a website, but allows the collection of website activity (such as the number of users who visit our website, the date and time of visits, the number of pages viewed, navigation patterns, what country and what systems users have used to access the site). We can use this information for statistical purposes, which allows us to analyse and improve our website. The cookie will expire automatically after 6 months or you can manually remove cookies in your browser settings. Copyright, Trademarks and Other Rights Copyright, trademarks, database rights, patents and all similar rights in this site and the information contained in it are owned by Holland Advisors or relevant third party providers. You may use the Information and reproduce it in hard copy for your personal reference only. The information contained herein and any supplemental documentation provided is confidential and should not be copied, reproduced or redistributed without the prior consent of Holland Advisors. Governing Law You agree that your use of this site and any dispute arising from this use is subject to English law and you submit to the jurisdiction of the Courts of England & Wales.
Privacy Notice
This is the privacy notice of Holland Advisors London Ltd our company number is 07431314. Our registered office is at The Halt, Smugglers Way, The Sands, Farnham, Surrey, GU10 1NB.
Introduction
This notice describes how we collect, store, transfer and use personal data. It tells you about your privacy rights and how the law protects you. In the context of the law and this notice, ‘personal data’ is information that clearly identifies you as an individual or which could be used to identify you if combined with other information. Acting in any way on personal data is referred to as ‘processing’. This notice applies to personal data collected through our website www.hollandadvisors.co.uk. Except as set out below, we do not share, or sell, or disclose to a third party, any information collected through our website.
Data Protection Officer
We have appointed a data protection officer (‘DPO’) who is responsible for ensuring that our privacy policy is followed. If you have any questions about how we process your personal data, including any requests to exercise your legal rights, please contact our DPO, Claire Brunt at  claire@hollandadvisors.co.uk.
Personal data we process
1. How we obtain personal data The information we process about you includes information:
  • you have directly provided to us
  • that we gather from third party databases and service providers
  • as a result of monitoring how you use our website or our services
2. Types of personal data we collect directly When you use our website, you may provide personal data by submission of data by our Sign Up or Contact Us forms. This can be categorised into the following groups:
  • personal identifiers, such as your first and last names
  • contact information, such as your email address and your telephone number for communication
  • records of communication between us including messages sent through our website, email messages and telephone conversations
  • marketing preferences that tell us what types of marketing you would like to receive
3. Types of personal data we collect from your use of our services By using our website and our services, we process:
  • technical information about the hardware and the software you use to access our website and use our services, including your Internet Protocol (IP) address, your browser type and version and your device’s operating system
  • usage information, including the frequency you use our services, the pages of our website that you visit, whether you receive messages from us and whether you reply to those messages
  • your preferences to receive marketing from us; how you wish to communicate with us; and responses and actions in relation to your use of our services.
4. Our use of aggregated information We may aggregate anonymous information such as statistical or demographic data for any purpose. Anonymous information is that which does not identify you as an individual. Aggregated information may be derived from your personal data but is not considered as such in law because it does not reveal your identity. For example, we may aggregate usage information to assess whether a feature of our website is useful. However, if we combine or connect aggregated information with your personal data so that it can identify you in any way, we treat the combined information as personal data, and it will be used in accordance with this privacy notice. 5. The bases on which we process information about you The law requires us to determine under which of six defined bases we process different categories of your personal data, and to notify you of the basis for each category. If a basis on which we process your personal data is no longer relevant then we shall immediately stop processing your data. If the basis changes then if required by law we shall notify you of the change and of any new basis under which we have determined that we can continue to process your information. 6. Information we process with your consent Through certain actions when there is no contractual relationship between us, such as when you browse our website or ask us to provide you more information about our business, you provide your consent to us to process information that may be personal data. Wherever possible, we aim to obtain your explicit consent to process this information, for example, we ask you to agree to our use of non-essential cookies when you access our website. We continue to process your information on this basis until you withdraw your consent or it can be reasonably assumed that your consent no longer exists. You may withdraw your consent at any time by instructing us  claire@hollandadvisors.co.uk. 7. Information we process for the purposes of legitimate interests We may process information on the basis there is a legitimate interest, either to you or to us, of doing so. Where we process your information on this basis, we do after having given careful consideration to:
  • whether the same objective could be achieved through other means
  • whether processing (or not processing) might cause you harm
  • whether you would expect us to process your data, and whether you would, in the round, consider it reasonable to do so
For example, we may process your data on this basis for the purposes of:
  • improving our services
  • record-keeping for the proper and necessary administration of our business
  • responding to unsolicited communication from you to which we believe you would expect a response
  • preventing fraudulent use of our services
  • exercising our legal rights, including to detect and prevent fraud and to protect our intellectual property
  • insuring against or obtaining professional advice that is required to manage business risk
  • protecting your interests where we believe we have a duty to do so
How and when we process your personal data
8. Your personal data is not shared We do not share or disclose to a third party, any information collected through our website.
Use of information we collect through automated systems
9. Cookies Cookies are small text files that are placed on your computer’s hard drive by your web browser when you visit a website that uses them. They allow information gathered on one web page to be stored until it is needed for use at a later date. They are commonly used to provide you with a personalised experience while you browse a website, for example, allowing your preferences to be remembered. They can also provide core functionality such as security, network management, and accessibility; record how you interact with the website so that the owner can understand how to improve the experience of other visitors. Some cookies may last for a defined period of time, such as one visit (known as a session), one day or until you close your browser. Others last indefinitely until you delete them. Your web browser should allow you to delete any cookie you choose. It should also allow you to prevent or limit their use. Your web browser may support a plug-in or add-on that helps you manage which cookies you wish to allow to operate. The law requires you to give explicit consent for use of any cookies that are not strictly necessary for the operation of a website. 10. Personal identifiers from your browsing activity Requests by your web browser to our servers for web pages and other content on our website are recorded. We record information such as your geographical location, your Internet service provider and your IP address. We also record information about the software you are using to browse our website, such as the type of computer or device and the screen resolution. We use this information in aggregate to assess the popularity of the webpages on our website and how we perform in providing content to you.
Other matters
11. Your rights The law requires us to tell you about your rights and our obligations to you in regard to the processing and control of your personal data. We do this now, by requesting that you read the information provided at  http://www.knowyourprivacyrights.org 12. Communicating with us When you contact us, whether by telephone, through our website or by email, we collect the data you have given to us in order to reply with the information you need. We record your request and our reply in order to increase the efficiency of our business. We may keep personally identifiable information associated with your message, such as your name and email address so as to be able to track our communications with you to provide a high quality service. 13. Complaining If you are not happy with our privacy policy, or if you have any complaint, then you should tell us. When we receive a complaint, we record the information you have given to us on the basis of consent. We use that information to resolve your complaint. 14. Retention period Except as otherwise mentioned in this privacy notice, we keep your personal data only for as long as required by us to provide you with the services you have requested. 15. Compliance with the law Our privacy policy complies with the law in the United Kingdom, specifically with the Data Protection Act 2018 (the ‘Act’) accordingly incorporating the EU General Data Protection Regulation (‘GDPR’) and the Privacy and Electronic Communications Regulations (‘PECR’). 16. Review of this privacy policy We shall update this privacy notice from time to time as necessary.

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