Each week, professional investors tell us where they'd invest. This week: Bertie Thomson & Mick Dillon of Brown Advisory Global Leaders.
The Brown Advisory Global LeadersFund invests in market-leading companies that deliver superior customer outcomes. We believe that investing in firms that combine these traits with strong leadership, and the generation of high and sustainable returns on invested capital, can result in outstanding shareholder returns. We search the world for companies that fit these criteria and buy when we believe they are undervalued.
Profitable firm with a robust moat
One such firm is CTS Eventim (Frankfurt: EVD), which has 85% of the ticketing market for live events in Germany and is a leading provider of live entertainment through its in-house promoters and events spaces. CTS's data (it has more than 25 million customer profiles), plus its network of external promoters, has given it a robust moat and made it the ticketing partner of choice in this winner-takes-all market.
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The business is shifting from offline retail outlets to online sales. CTS captures seven times the revenue per ticket from online sales compared with offline, and profit margins are around 65%, compared with just 15% for offline. Top-line growth also benefits from ticket-price inflation of 3%-5% a year. This, coupled with volume growth driven by continued gains in market share, makes for an attractive growth profile. CTS is also starting to explore the best ways to monetise its network, which we feel gives huge potential upside that is not yet reflected in the current valuation.
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