Don’t invest in it if they don’t call you crazy!

Don’t invest in it if they don’t call you crazy!
10 May 2019

Last week, a company producing vegan meat substitutes went public at a seemingly eye-watering valuation but soared a staggering 163% on its first day of trading. Beyond Meat (NYSE:BYND) brought the booming vegan food market into Wall Street's consciousness!

It reminded me of a couple of social media postings I wrote back in 2017.

I have long enjoyed a flexitarian diet, i.e., I am vegetarian most of the time and eat meat when circumstances require it or when my body makes me feel like it. That's why my personal radar screen noticed the (no pun intended) green shoots that formed in the vegan and vegetarian food market from the middle of this decade onwards.

On 17 June 2017 I posted on Facebook:

"I think the veggie/vegan market is widely under-estimated
and will experience explosive growth in the next few years."

Needless to say, it didn't take long before the trolling started.

"I'll stick to protein, thanks" was one of the more polite replies.

"I am being childishly amused" wrote another.

Yet others involved comments on cannibalism and aren't even fit for re-print.

Suffice to say, my thesis about the opportunities for companies that addressed the veggie/vegan food market wasn't taken seriously at all (except by one single user).

Fast forward two years and early investors in Beyond Meat have just made a small fortune. Never mind the investors who were lucky enough to get an allocation of shares from the IPO placement. The venture capitalists who backed this venture early on and at a fraction of the valuation that was now paid by public investors made an absolute killing!

Which is a good example why I always say, if your investment thesis isn't being ridiculed to a good degree, then you aren't trying hard enough being ahead of the crowd!

Always, always test your investment thesis by exposing it to others

I used to be a heavy user of Facebook (NYSE:FB). I only realised just how heavy once I downloaded my entire data ahead of deleting my profile at the end of last year.

Over the years, I had made no less than 8,000 postings. Throughout my Facebook membership, this worked out to an average of two postings each day, every day for roughly a decade. Though I've steered away from baby or cat photos, and instead tried to put more thoughtful stuff onto the platform.

I found Facebook extremely useful for testing ideas on a large and diverse audience:

  • Does anyone even care about a particular subject or does it get ignored? Even something as basic as that was in itself a useful piece of information.
  • What's the view of people who come from a very different end of the spectrum than myself? It's super important to get feedback from people who are outside of the bubbles that we all – to some extent – inhabit.
  • How far can you push the envelope with a controversial subject? Stock market investing is also about capturing the ever-changing Zeitgeist, which you can gauge by checking what gets pulses racing among social media communities.

My posts about the veggie/vegan food market were aimed at just that, i.e., getting feedback and seeing what the broad public believed at that time. What led to widespread agreement, and what was ridiculed?

Swen vegan

In my never-ending quest for investment ideas, I visited London's 2017 "TASTE" festival and came across one vegan food company that was open to investors.

Given the overall negativity of the feedback I got from my then very diverse set of Facebook friends around the world, convinced me that this was a sector worthy of investigating in more detail for its investment potential.

A combination of factors led me to dig deeper:

  • The growth rates were real, i.e., my view that this market was growing at leaps and bounds was objectively accurate, no matter how many people made fun about me, the middle-aged muesli eater.
  • Because the investing public had not yet caught onto it, valuations for investments in this sector were not inflated yet. I posted about it in the context of the fundraising of a vegan food company of which I had just met the founder. The valuation for its $1m funding round was, indeed, relatively reasonable if you believed in this sector's potential.
  • Eventually, the rapid annual growth rates were guaranteed to lead to a tipping point being reached. Which, I dare say, happened last week. Following the global media frenzy about Beyond Meat, EVERYONE is now aware of (and keen on) the investment potential of the veggie/vegan food sector.

As always, many are now asking how on earth they could have missed this trend for so long. Well…

And in case you wonder how I test investment ideas for their potential for my website, you have just been given a bit of an insight into the engine room of my research operation. Put it out there, see what feedback you get, and then draw some conclusions from that.

There is always someone who gets it right

As I mentioned above, ONE of my Facebook didn't participate in the vegan-bashing and instead asked: "Is there a share I can buy to profit from this?"

He was the lone voice of reason, and I hope that he did make some form of investment in this sector (I have yet to ask him).

Allplants Ltd., the company of which I spoke to the founder at the time, had just raised its $1m seed funding round. In the meantime, it went on to raise a $9.8m Series A round. Its earliest investors have reason to be very happy, and that's before the inevitable buy-out or IPO of the company has taken place. I knew this was inevitable from the moment I tried its products and spoke to its two founders.


Alexander Petrides, one of the two founders of Allplants, serving me a sample of his vegan products back in June 2017.

Public equity investments in this space have been scarce, which was one of the difficulties that most private investors who did look at the sector have faced so far. Who has got the time, the contacts and the know-how to make private market investments in early-stage companies? If you are like myself, you'll probably prefer investments through public markets, where you can buy and sell stocks on a daily basis.

It's for this very reason that I have set up! I can guarantee you (based on 25+ years of experience) that for ANY investment theme you can possibly think of, there will be a suitable, publicly-traded equity somewhere in the world. It may not be very liquid, and it may require an agile broker to trade the share for you. But I have yet to come across an investment idea for which I wasn't able to find a publicly-traded stock somewhere in the world.

After all, there are at least 50,000 publicly traded companies on this planet. Once you take smaller markets into account, I bet that the real figure is well in excess of 100,000 companies.

One of the aspects that looks for are trends that are already objectively measurable and powerful, but which the investing public has not yet started to appreciate. It's in these sectors that you can often position yourself to profit from an "upswing" once the strong underlying fundamentals lead to growing investor interest.

I actually do have a handful of such trends and sectors on my list. These are going to feed into the reporting in my Weekly Dispatches as well as the highly selective choice of companies which feature in my extensive research reports, available to Members of this website (basically, the 10 best investment ideas I have during any given year).

Watch out for similar opportunities that I'll alert you to

The veggie/vegan train has already left the station, but similar such opportunities can be found in the investment space at any given time.

I'll only be happy to be your guide for them, and let you benefit from the information I source through my extensive, global network.

One of my friends who saw me delete Facebook was worried that I was going to "leave the connected world".

Evidently, no such thing is the case. If anything, not being on social media and having the time to focus on weightier questions and research projects is probably going to leave me more connected (and informed) than ever!

Though not everyone has what it takes to spot this early on. That one lone follower who asked about a vegan investment opportunity is testament to that!

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