Podcast Interviews with NZS investors

Brett Larson returns to the Business Breakdowns podcast on Colossus to talk about Cognex.

Brett Larson joined the Business Breakdowns podcast to discuss HVAC giant Trane Technologies.

Jon Bathgate gave a talk to the CFA Society of Switzerland on the semiconductor value chain and related geopolitics. You can see the presentation here.

Brad Slingerlend interviewed on the What Got You There podcast.

Joe Furmanski discusses zero trust security and Cloudflare on Chit Chat Money. And, Part 2.

Jon Bathgate and Brinton Johns discuss Cadence Design Systems on Business Breakdowns.

Jon Bathgate and Brad Slingerlend discuss markets and investing on The Acquired Podcast.

Brinton Johns and Jon Bathgate discussed NZS Capital’s Complexity Investing process and the semiconductor industry on The Acquired Podcast.

Brinton Johns in conversation with Troy Asset Management: Adapting to a Complex World

Jon Bathgate and Blas Moros discuss the semiconductor industry and TSMC in this YouTube video.

Brinton Johns talks about our investment philosophy on MOI Global.

Jon Bathgate discusses semiconductors on MOI Global and the NZS investment philosophy on ChitChat Money.

Jon and Brinton on Motley Fool Live.

Brinton and Jon on Farnam Street’s The Knowledge Project.

Brad and Brinton on the Investing City podcast.

Brad and Brinton on The Stock Podcast.

NZS Capital partners with Mediolanum

Recently NZS Capital was awarded EUR 300M as a new manager on the Mediolanum Challenge Technology Fund. You can read more about it here.

Excerpt:

MIFL will also back NZS Capital’s Technology strategy, with a €300 million mandate. The firm has a unique philosophy known as Complex Investing which identifies companies that best adapt to unpredictable outcomes. NZS Capital, a Denver based investment boutique, is minority owned by Jupiter Asset Management which acts as the firm’s exclusive global distribution partner and introduced MIFL to the investment opportunity.

“Partnering with Mediolanum International Funds is a great step in our firm’s evolution. This Sub advisory mandate offers European clients access to a portfolio of companies that we believe is best equipped to handle the accelerating pace of change in the global economy. The focus on innovation and disruption is a long-term trend an investment perspective, and one that is especially relevant in today’s environment”. -Brinton Johns Co-Founder of NZS Capital

Op-ed: US Strategy for Semiconductor Manufacturing

A version of the op-ed below can be found on Marketwatch.

Brad Slingerlend also appeared on CNBC’s Squawk Alley to discuss the chip shortages and what the US can do about them.

For more on semiconductors, please see here.

It’s Time for US Tech Leaders to Bring Chipmaking Home

The US’s overdependence on Taiwan and South Korea for the manufacturer of critical leading-edge semiconductors is a threat to more than just automakers – it puts national security at risk. It’s time for leading US tech companies to pool their resources and build more chip fabrication capacity on home soil, say Brad Slingerlend and Jon Bathgate of NZS Capital.

By Brad Slingerlend and Jon Bathgate

Extreme shortages of graphic processor units (GPU) are an irritation, mainly for gamers and cryptocurrency miners. Audi, Volkswagen, Ford and Daimler idling auto plants because they can’t get semiconductors is more of a red flag. Relying exclusively on Taiwan for the production of critical chip components for key defense equipment such as the F-35 strike fighter is downright scary and utterly untenable from a national security standpoint.

No critical system or network you can think of -- defense, power, transport, finance, communications, health care -- can function without semiconductors, and our dependence on these components only deepens as the digitization of the global economy accelerates.

The most advanced semiconductors, which can cost as much as $500 million to design, are as fundamental to Tesla cars, iPhones and the cloud as the software that runs such platforms. Software may well be eating the world, but chips are the secret sauce, the engine driving digital transformation, and without them there could be no Information Age.

The problem is, while the US is the undisputed leader in the design of the advanced chips needed for the most demanding artificial intelligence, graphics, cloud computing and communications processes, companies including NVIDIA Corp., Advanced Micro Devices Inc., Apple Inc., Qualcomm Technologies Inc., Broadcom Inc., Alphabet Inc. and Amazon.com Inc. depend to a huge degree on Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC) and Samsung Electronics Co. to produce their most bleeding-edge chips.

As a result, with the exception of Micron Technology Inc. and Intel Corp., the US lags significantly in the manufacture and testing of the most complex chips.

Over the past 20 years or more, the heavyweights of US chip design have earned billions of dollars and have seen their market valuations propelled into the trillions of dollars in part by the transfer of semiconductor manufacturing to Asia while completely de-emphasizing investment in production on US soil. While outsourcing to TSMC, in particular, and to South Korea’s Samsung to a lesser degree made sense from a business standpoint – these chipmakers have unrivalled know-how – it has also ramped fragility in the critical chip supply chain to a dangerous degree.

During the manufacturing, testing and packaging process, about 70% of the world’s most advanced chips pass through Taiwan, which Beijing insists is part of a greater China. Tensions over the island’s sovereignty resurfaced in late January when the USS Theodore Roosevelt aircraft carrier strike force was ordered into Taiwanese waters after China flew 13 warplanes – including nuclear-capable bombers -- over its neighbor’s airspace.

The threat is so grave that it is becoming increasingly apparent that leading US chip designers need to work together urgently, and with the support of the federal government, to reduce our dependence on Taiwan-based contract chipmaking.

In short, Apple, Amazon, Google, NVIDIA, AMD, Broadcom, Qualcomm, Intel and others need to form and fund a joint venture to build advanced chip manufacturing capacity on US soil. It will take time and money as foundries are almost unimaginably complex and expensive.

TSMC in January raised its 2021 capital expenditure budget by 47% to a record $25-$28 billion as it seeks to add capacity after setting new marks for quarterly revenue and net income. Among its planned investments is a $12 billion foundry in Arizona, scheduled to open in 2024, while Samsung is mulling a $17 billion expansion of its advanced logic chipmaking plant in Austin, Texas.

But these initiatives won’t significantly impact US chipmaking’s shortcomings. The Arizona foundry will have an annual capacity of about 240,000 wafers, less than 2% of TSMC’s output of 12-13 million wafers, while the technology deployed at the fab will be several years behind what TSMC and Samsung will offer in Asia. So to make a meaningful difference, a US joint venture may need pooled resources in the order of about $100 billion, as well as government incentives such as tax breaks and visa waivers to attract highly skilled manufacturing engineers from TSMC and Samsung, which should be a part of the coalition.

The project could build upon centers of excellence in US chipmaking. Micron has plants in Utah, Idaho and Virginia, Intel makes chips in Oregon, Arizona and New Mexico, and Globalfoundries Inc. took advantage of benefits such as cheap power and state incentives to build an advanced fab in upstate New York.

Without such action, the US risks adding to the hazard. While the US accounts for more than half of global semiconductor equipment making, chip design software and fabless chip revenue, its share of total installed semiconductor manufacturing is just 12.5%, or about 3 million wafers per month, according to the Semiconductor Industry Association. And because US fabless chip companies now almost exclusively rely on Asian contractors for advanced processes, the US share of global capacity is forecast to drop to 10% by 2030, while Asia’s climbs to 83%.

The shift to Asia, coupled with Intel's well-chronicled manufacturing struggles, mean the US is now without truly leading-edge chip manufacturing onshore for the first time since the invention of the transistor. But the decline can be arrested by combining the skills and resources of the best US chip designers with those of the leading global contract manufacturers along with state and federal governments. To ensure that the US’s national strategic and economic interests aren’t further jeopardized by an over-reliance on an island nation in the South China Sea whose sovereignty is in dispute, it’s imperative that all stakeholders -- public and private -- come together and create a 10- to 20-year plan to build significant semiconductor manufacturing capacity on US soil.

Brad Slingerlend and Jon Bathgate are investors at Denver-based NZS Capital.

More semiconductor views from NZS Capital are available here.

NZS Capital Expands Team

NZS Capital Welcomes Two New Investors, Adds Board Member, Senior Advisor

March 11, 2020 11:00 AM Eastern Daylight Time

DENVER--(BUSINESS WIRE)--NZS Capital LLC today announced the addition of Jon Bathgate and Joe Furmanski to its investment team. Jim Goff also joins as Senior Advisor and Minesh Patel becomes a member of the board of NZS, representing the strategic partnership with Jupiter Asset Management.

Bathgate and Furmanski will invest alongside co-founders Brinton Johns and Brad Slingerlend, with a focus on long-term opportunities in innovative, adaptable companies that exhibit the key attributes of Non-Zero Sumness — creating win-win outcomes for customers, employees, the environment, and society.

Prior to joining NZS, Furmanski and Bathgate worked at Janus Henderson in Denver as analysts on the technology team, which was previously co-managed by Slingerlend and Johns. Bathgate joined Janus in 2008 and became co-lead of the technology sector team in 2017. Furmanski started at Janus in 2006 and covered IT infrastructure and telecoms from 2017.

“Besides their first-class analytical and investment skills, Joe and Jon exhibit the cultural and team ethics that epitomize NZS,’’ said Johns. “Jim Goff in large part is responsible for instilling these values in them — as well as Brad and myself — which is why we’re so delighted to tap into his know-how on building successful teams.”

Goff spent more than 26 years at Janus through 2014 in roles including analyst and portfolio manager. For 12 years from 2002 as Director of Research he was responsible for leading a team of analysts covering multiple equity sectors.

“Jim was instrumental in creating a team ethic with strong analysis at its core,” said Slingerlend. “A positive culture is a prerequisite for excellence so we, and by extension our clients, are certain to benefit from Jim’s expertise and strategic input.”

Further insight comes from Patel, Jupiter’s Head of Strategy and Corporate Development, who has been appointed to the board of NZS. Last month, Jupiter entered into a strategic relationship with NZS, acquiring a minority stake and becoming an exclusive distributor of NZS’s products.

Commenting on the relationship, Patel said: “The NZS mantra of win-win outcomes is very befitting — this is a mutually beneficial strategic partnership, as it gives NZS access to significant resources and support, while furthering Jupiter’s strategic priority to distribute its own investment capabilities in the U.S. market.”

About NZS Capitalhttps://www.nzscapital.com/about

About Jupiterhttps://www.jupiteram.com/corporate/about

This press release is solely for the use of the media and should not be relied upon by individual investors, financial advisers or institutional investors.

Contacts

Dex McLuskey, Context Content LLC
dmcluskey@contextcontentllc.com
720-251-4627

Adam Schor joins NZS Capital

NZS Capital Names Adam Schor as President

January 15, 2020 11:00 AM Eastern Standard Time DENVER--(BUSINESS WIRE)--NZS Capital, which invests in innovative growth businesses that maximize value for all stakeholders, today named Adam Schor as President.

Schor will oversee all non-investment operations including compliance, risk management and the distribution aspects of the company’s proposed strategic partnership with Jupiter Asset Management.

Co-founders Brad Slingerlend and Brinton Johns were portfolio managers on the Janus Henderson Global Technology strategy before starting NZS Capital in 2019, which invests in businesses that create value by maximizing outcomes for their investors, customers, employees, society and the global environment.

“It’s truly exciting to be a part of NZS Capital from the very beginning and to work with such visionary investors with a unique and proven philosophy and style,” Schor said.

Before joining NZS Capital, Schor worked for 11 years at Denver-based Janus Henderson, where he was Director of Global Equity Strategies. Prior to Janus Henderson, he spent 10 years at boutique investment firm Bee & Associates, where he was Chief Investment Officer. He has 28 years of experience in the investment industry.

“Adam has an outstanding track record dealing with both operational issues and institutional clients globally, which will provide major benefits for NZS Capital as we build an enduring investment culture for the decades to come,” Slingerlend said.

“Smart companies know where their skills deficits lie and hire to fill those gaps,” added Johns. “Having Adam in charge of operations gives Brad and me the confidence to focus all our energies on following our investment principles to deliver the outcomes our clients expect.”

Full Press Release

The Motley Fool highlights NZS Capital

The Motley Fool highlights NZS Capital’s Complexity Investing and ESG frameworks in this article.

“To read more about a new competitive advantage framework based on a company's ability to adapt and innovate, check out the white paper titled Complexity Investing that's taking the investing world by storm. In the paper, Johns and Slingerlend argue that investors need to rethink the allure of qualities like legacy moats, ultra-fast growth, and even pricing power and rather focus on a company's ability to innovate and adapt in the digital age, all while providing win-win situations for the company, its customers, and other constituents involved.”

NZS Capital, LLC - Launching Soon

We are excited to announce the formation of NZS Capital. We will be working with a select group of institutional clients to invest in the global technology sector with a special emphasis on our Complexity Investing and Non-Zero-Sum frameworks. We believe technology is creating a new digital operating system for the economy and humanity, and, consequently, should therefore be a structurally high exposure for investors relative to other sectors. Investors should not only be active in the tech sector, but it's increasingly detrimental to take a passive approach. The economy and the planet are going through an unprecedented, decades long period of change, and success will be marked by companies that create significant value, not just for investors, but for all possible constituents including employees, customers, society and the planet. It’s increasingly important for investors to align with companies and clients that appreciate the broadening obligations of fiduciary duty to include these constituents beyond shareholders alone. We will focus on building portfolios that express a combination of Resilience and Optionality to take advantage of the upside from innovation while managing the volatility of disruption. In the spirit of positive, Non-Zero-Sum outcomes, NZS Capital will strive to create value for our clients, employees, society, and the environment that far exceeds the value we create for our firm. We look forward to launching this year and partnering to achieve our client’s goals. For more information please contact us by email.

Brad Slingerlend

Brinton Johns