In March Montgomery Investment Management introduced the Polen Capital Global Growth Fund to Australian investors. The Boca Raton-based manager Polen Capital was established in 1979 and over the past 32 years the flagship US Portfolio has been able to compound earnings growth above 15 per cent annually versus approximately six per cent annually for the S&P 500.
Their approach to investing in a focused portfolio of the highest quality global companies that can deliver double digit annual returns, their ultra-low portfolio turnover with the average holding period exceeding seven years, and their huge outperformance historically particularly during market sell-offs all have enormous appeal.
We believe Polen Capital offers focused and consistent characteristics rarely seen in other global funds available in Australia and we are delighted to have been selected to distribute their Polen Capital Global Growth Fund and why I am delighted to have personally invested in the fund myself.
In this series of articles, which have included Accenture, Inditex, LVMH and Tencent, the team at Polen Capital describe each of the companies currently in the portfolio.
This article is focused on Abbott Laboratories (NYSE:ABT; market capitalisation of US$188 billion), a globally diversified health care company that provides medicines, nutritional products, and technologies that help people improve and manage their health.
The company has long been a leader in the health care industry, serving its customers for over 125 years. Abbott’s excellence in innovation and strategic growth has made the company the #1 or #2 player in virtually every market they serve.
Abbott’s competitive advantages include the global scale and distribution of over 1,500 products across multiple therapeutic areas with strong brands that have been developed and trusted for roughly 100 years. The company is innovative and this reflected in differentiated medical equipment that is taking market share and has a strong management team that consistently creates value for shareholders via skillful capital allocation.
Driving high single digit growth at Abbott today are;
1) Freestyle Libre system for diabetes care, which is the number one continuous glucose monitor globally by revenue and patients; it is growing rapidly because of its low cost (one-third of the price of competitive products) and its ability to easy to eliminate the need for fingerpricking; with long-term growth expectations for Libre of more than 30 per cent annually in a fast growing highly underpenetrated market.
2) Cardiovascular and neuromodulation device portfolio led by MitraClip – a small implanted clip that is attached to a patient’s mitral valve to help it close more completely and restore normal blood flow through to the heart. As minimally invasive surgery, MitraClip is a differentiated solution for mitral valve repair generating circa $700 million annually and growing above 25 per cent.
3) The Alinity family of diagnostic instruments is driving growth in Abbott’s core lab diagnostics business. It is taking share because of industry leading throughout, small size relative to competitive products, and lower total cost of ownership relative to legacy competitive products.
Supporting company growth are secular tailwinds including: increased access to quality health care worldwide, the growing middle class population in emerging markets, and an ageing population worldwide.
Abbott skews towards faster growing developing markets with increasing access to health care. Sixty-five per cent of company revenue is generated outside the US and 40 per cent of company revenue is considered to be generated in emerging markets.
The company should conservatively generate mid to high single digit growth given their leading position in multiple under-penetrated medical device markets growing double digits where Abbott is currently gaining share.
If you would like to learn more about the Polen Capital Global Growth Fund, visit the fund’s web page:
POLEN CAPITAL GLOBAL GROWTH FUND
The Polen Capital Global Growth Fund owns shares in Abbott Laboratories. This article was prepared 26 May 2021 with the information we have today, and our view may change. It does not constitute formal advice or professional investment advice. If you wish to trade Accenture you should seek financial advice.