Three technologies – quantum computing, reusable space rockets and nuclear fusion – could change the trajectory of human progress. Investment manager Luke Ward explains how a trio of private companies are bringing them closer to fruition.

Background:

Luke Ward is an investment manager in Baillie Gifford’s Private Companies Team and recently became co-manager of the Edinburgh Worldwide Investment Trust.

In this episode of Short Briefings…, he discusses three companies developing groundbreaking technologies and building innovative businesses as they do so:

• PsiQuantum, which aims to create the world’s first useful quantum computers
• SpaceX, which is well on its way to developing the first fully reusable space rocket, with a view to ultimately transporting people to Mars
• SHINE Technologies, which is commercialising applications of nuclear fusion on the path to delivering a clean and safe energy source for the future

Among the topics Ward covers are how photon-based quantum computers could drive progress in agriculture and batteries, among other industries. He also discusses how the Starlink satellite broadband provides a stepping stone to SpaceX’s larger ambitions. And he explains how SHINE’s work on detecting flaws in mission-critical aerospace components and making a new cancer treatment possible bring it closer to harnessing the reaction that powers the sun.

Resources:

PsiQuantum: making the leap to quantum computing

PsiQuantum: stock story

SHINE Technologies: an interview with chief executive Greg Piefer

SpaceX and other private company trailblazers

Starlink: broadband from above

Edinburgh Worldwide Investment Trust

Your vote, EWIT’s future

EWIT: Saba vote

Companies mentioned include:

PsiQuantum

SHINE Technologies

SpaceX

Timecodes:

00:00 Introduction

01:50  From mechanical engineering to investment

02:55  Technological innovation informing business innovation

03:45  Quantum computing versus the ‘classical’ approach

04:55  Using quantum computers to disrupt chemical fertilisers

06:10  PsiQuantum’s semiconductor supply chain advantage

07:20  A photonic approach to computing

08:05  Signs that PsiQuantum could succeed

09:45  PsiQuantum’s potential business model

10:30  Partnering with Mitsubishi Chemical and Mercedes-Benz

11:35  SpaceX: satellite launches and advanced rockets

12:35  Starlink’s high-speed internet from orbit

13:40  Connecting smartphones directly to Starlink

15:05  The investment case for Mars

16:55  Leading Baillie Gifford’s SpaceX investment in 2018

19:35  Considering other space industry investments

10:21  Nuclear fusion v fission

22:25  SHINE Technologies’ stepping stone approach

23:20  From advanced imaging to radiopharmaceuticals

24:15  Clinical trials for prostate cancer treatment Lutetium-177

24:40  Recycling nuclear waste

25:50  Saba vote: giving the public access to private companies

27:35  Investing in geothermal energy

28:30  Seeking inspiration in Silicon Valley

One way to find great investment opportunities is to ask yourself what must change over the years ahead. In this episode, Baillie Gifford partner Stuart Dunbar explores the increased use of robotics to fill gaps in the workforce and medical advances that help keep healthcare affordable, among other transformational themes.

Background:

Stuart Dunbar is a client relationship director and coordinates Baillie Gifford’s global marketing and product development activity, which includes responsibility for the firm’s Actual investors campaign.

For this Short Briefings… episode, he challenged himself to identify five transformational growth drivers that are both inevitable and investable. His picks cover:

• the rise of robotic systems that can make sense of their immediate environment and act autonomously
• the intelligent design of drugs and other efforts to deliver less costly, more effective healthcare
• the energy transition to renewables and electrification of transport
• greater dependence on the infrastructure underpinning digital payment systems
• the dawn of automated transport, including driverless trucks and delivery drones

Dunbar explains the factors making these forces of change necessary, including the ageing populations of many developed countries, the resulting labour shortages and rising medical budgets.

He also names some of the companies we have backed that could benefit, either by pioneering new or better ways of doing things or by playing critical roles in the involved supply chains. These range from John Deere & Co, whose self-driving tractors and precision-applied pesticide technologies help farmers increase yields and cut costs, to Nexans and Prysmian, whose extra-high-voltage cables connect offshore wind turbines to onshore energy grids.

Resources:

Actual investing: why thinking differently matters

Christiana Figueres: stubborn optimism

Eureka Alert: Cheryl Mehrkar’s robotic surgery

Michael Lewis: Going Infinite

Stuart Dunbar on growth investing (video)

Zeke Faux: Number Go Up

Past Short Briefings… episodes

Companies mentioned include:

Adyen

Amazon

Aurora Innovation

CATL

Coupang

Deere & Company

Enphase

Intuitive Surgical

Keyence

Moderna

Netflix

Nexans

Novo Nordisk

Nubank

Prysmian

Redwood Materials

Remitly

Renishaw

Wise

Zipline

Timecodes:

00:00 Introduction

1:30    Starting out in Hong Kong

2:20    Joining Baillie Gifford

3:20    The importance of optimism

4:30    Five inevitable, investable themes

5:45    Robotics and demographics

6:40    Investing in the rise of autonomous systems

8:30    Renishaw’s sensors

10:05  Intuitive Surgical and Deere & Co’s seeing robots

12:15  The intelligent design of drugs and Recursion Pharmaceuticals

15:40  Lower-cost healthcare

16:45  Selectively picking biotech winners

17:55  The energy transition and President Trump

19:40: Stubborn optimism

21:10  Undersea cables and solar installation

23:11  A new generation of payment providers

26:00  Delivery drones and self-driving vehicles

27:40  Focus on possibilities and what’s changing

28:35  Book picks – exploring cryptocurrencies

The US’s transformational upgrade of its drainage, power and road networks is a long-term investment opportunity hiding in plain sight. In this podcast, Michael Taylor reveals some of the outstanding companies involved and makes the case that the markets have yet to fully appreciate the advantages working in their favour.

Background:

Michael Taylor is an investment manager in Baillie Gifford’s US Alpha strategy. In this Disruption Week briefing, he explains why years of neglect coupled with the destructive consequences of wild weather and our insatiable appetite for data-processing power have led the US to embark on a massive renewal of its physical infrastructure.

Taylor suggests that many of the companies creating long-term value benefit from supply advantages, which help them defend their commoditised products’ prices. These range from ownership of gravel quarries, which are difficult to get planning permission for, to the use of a gigantic, portable plastic drain-making machine.

In addition, Taylor discusses what a second Trump presidency might mean for the sector and why finding standout companies involves travelling off the beaten track.

Resources:

Disruption Week

Building back: the great US infrastructure opportunity

Spotting the winners from the great US infrastructure renaissance

Companies mentioned include:

Advanced Drainage Systems

Eaton

Comfort Systems USA

Martin Marietta

NVIDIA

Stella-Jones

Timecodes:



00:00 Introduction

1:35    Exceptional businesses confronting an exceptional problem

3:20   The US v global infrastructure opportunity

4:35   Donald Trump’s second presidency

6:40   The benefits of patience

7:35   Wild weather

8:45   Investing in Advanced Drainage Systems

11:05  Labour shortages

12:15  Stella-Jones’s wooden telegraph poles

14:05  Tree-spotter specialists

16:15  Martin Marietta’s supply-side advantage

18:55  Recycled aggregates’ limitations

20:15  Finding US infrastructure investments

21:45  Comfort Systems USA and keeping datacentres cool

24:20  “Massive in terms of magnitude of spend and duration”

Many of the world’s most exciting, high-growth and disruptive companies are private. Moreover, the entrepreneurs running them are typically keeping them private for longer before trading their shares on public stock exchanges – and in some cases have no plans to do so.

Baillie Gifford’s Private Companies Team seeks out exciting businesses and founders in this space to give our clients access to an increasingly important source of long-term growth. Taking a highly selective approach, it has invested more than $9bn across over 140 firms over the past 12 years. In this podcast, Alexander Nicolier explains how it does so and discusses some of our notable holdings.

Background:

Alexander Nicolier is an investment manager in our Private Companies Team. In this Disruption Week briefing, he reveals the scale of the opportunity and the increasing impact that the sector’s restless founders and their exceptional companies are delivering.

From SpaceX to Bending Spoons, Epic Games to ByteDance, one of the distinguishing features of these pioneering firms is that they’ve been able to choose their shareholders. Nicolier reveals why Baillie Gifford’s patient approach and reputation have helped make us a favoured partner.

He also reveals how deep research helps him and his colleagues embrace the uncertainty that can be involved with backing companies at an earlier stage of growth than many public market stocks. And he introduces some of his team’s most recent investments, including the immersive experience specialist Cosm and the next-generation computing company Tenstorrent.

Resources:

Alexander Nicolier profile

Armand Spitz: seller of stars

Baillie Gifford Private Companies hub

Disruption Week

Private companies: investing in trailblazers

The hidden cost of software

Companies mentioned include:

Bending Spoons

ByteDance

Cosm

Disney

Epic Games

Loft

MercadoLibre

Meta

NuBank

Oddity

SpaceX

Starlink

Tempus

Tencent

Tenstorrent

Tesla

Timecodes:

0:00 Introduction

1:30    What’s often misunderstood about private companies

2:40   Relationship building in Brazil and Colombia

3:40   Why reputation matters

5:35   “Look out for a gringo”

6:30   Private markets’ scale

7:00   Our clients’ advantage

9:25   SpaceX and uncertainty

12:40  Dealing with setbacks

13:45  Bending Spoons’ business model

16:50  Cosm’s ‘shared reality’ experience

18:50  Tenstorrent and Jim Keller’s talent magnetism

20:20 The state of the IPO market

21:55  Why Epic Games has stayed private

25:00  Disney’s $1.5bn stake in Epic Games

26:40 “Too big to ignore”

China is transitioning from a property-led economy to one focused on advanced manufacturing. It already leads the world in electric car production and the batteries that power them. And it’s also a growing force in renewables, robotics and biotech. Investment manager Helen Xiong discusses some of the growth companies involved, why concerns about overcapacity seem overstated and why rising trade barriers have implications for stocks traded inside and outside China.

Background:

Helen Xiong is an investment manager in Baillie Gifford’s Global Alpha Team and recently became joint deputy manager of The Monks Investment Trust. In this episode of Short Briefings on Long Term Thinking she discusses why global growth investors can’t ignore China even if they don’t directly own stakes in any of its companies.

She describes how the country has made ‘advanced manufacturing’ a strategic priority, laying the foundations for future growth. This has already yielded results, with companies such as the electric vehicle maker Li Auto and battery producer CATL creating long-term value for shareholders – with the prospect of more to come.

Xiong suggests that ‘rising trade barriers’ are one consequence of Western nations’ seeking to protect domestic industries and discusses how she takes this into account when deciding which companies to back. In addition, she considers the implications of Chinese retaliation and what that might mean for some of the US and Europe’s leading exporters.

Xiong also shares her view on recent stimulus by the Chinese central bank and government agencies, focusing on signals of a shift that could create long-term shareholder value.

Resources:

China: finding the new shoots of growth

Jonathan Haidt: The Righteous Mind – Why Good People are Divided by Politics and Religion

More from Helen Xiong:

Beyond NVIDIA: investing across the semiconductor ecosystem

Global Alpha Investor Forum 2024

Companies mentioned include:

Li Auto

CATL

Timecodes:

00:00    Introduction

1:30      The advantage of being Chinese, African and European

3:00      Relationships v individualism

5:15      China’s post-Covid economy

7:00      Why China matters to global investors

8:30      Overcapacity: a feature, not a bug

10:15    Brutal competition

10:55    Investing in Li Auto

13:45    Li Xiang’s attention to detail

14:30    The car industry’s iPhone moment

16:25    Trade tariffs

18:20    Potential Chinese retaliation

19:35    Chinese regulators

20:35    Stimulus

21:35    Focusing on long-term shareholder value

22:20    Book choice

23:45    Conclusion

Upheaval can create opportunity. Baillie Gifford’s Japan Team seeks out companies that will derive the greatest long-term benefit from transformational forces impacting business and broader society. In this podcast, investment manager Matthew Brett identifies four ‘structural growth’ drivers and the portfolio companies taking advantage of them.

Background:

Matthew Brett is the investment manager of The Baillie Gifford Japan Trust and our Japanese Fund, as well as co-manager of the Japanese Income Growth Fund. In this episode of Short Briefings on Long Term Thinking he discusses four forces creating long-term growth opportunities:

-        Japan’s late embrace of digitalisation

-        the rising spending power of its Asian neighbours

-        the accelerated adoption of industrial automation

-        the unmet health needs of an ageing population

Brett also names some of the Japanese companies driving these changes or otherwise gaining advantage, including ecommerce conglomerate Rakuten, skincare beauty firm Shiseido, machine vision specialist Keyence and Alzheimer’s drug developer Eisai.

Resources:

Japan: the next opportunity

Kohei Saito: Slow Down – How Degrowth Communism Can Save The Earth

Companies mentioned include:

Calbee

DMG Mori

Eisai

Keyence

KOSÉ

PeptiDream

Rakuten

Shiseido

SoftBank

Timecodes:

00:00    Introduction

1:45      From psychology to investment

2:25      Changing Japan

3:15      Japan’s distinguishing market characteristics

4:15      Visiting companies and other equities research

6:00      Performance versus the TOPIX

8:00      Defining digitalisation

8:30      Leaving paper behind

10:15    Rakuten’s online enterprise

10:50    The advantage of QR barcode payments

11:30    Rakuten’s loyalty points scheme

12:25    Accelerating automation and industrial robots

13:30    DMG Mori’s precision machines

14:40   Keyence and robotic vision

16:40    China’s chance of catch-up

17:40    Rising wealth of Japan’s Asian neighbours

19:00    Shiseido’s skincare advantage

20:10    Unmet healthcare needs of an ageing population

21:30    Testing further uses for Eisai’s Alzheimer’s drug

23:30    PeptiDream’s synthetic peptides

24:00    Using AI to put peptides to use

25:10    Calbee’s continued innovation

26:00    Book choice

28:50    Conclusion

Sometimes, you have to take a step back to leap forward. Over the past couple of years, Meta, Amazon, Block and Shopify are among the growth companies to have made efficiency cuts following the pandemic. Gary Robinson, an investor in Baillie Gifford’s US Equity Team, says that’s made them more agile and resilient – qualities that will let them take advantage of artificial intelligence and other opportunities to drive long-term growth.

Background:

Gary Robinson is joint manager of the Baillie Gifford US Growth Trust, a manager of the American Fund and a partner in our firm. In this episode of Short Briefings on Long Term Thinking, he explores how four leading internet-focused firms have streamlined their operations and reallocated resources to become more adaptable during a period of rapid change.

Robinson draws a parallel with companies that made cutbacks after the global financial crisis to suggest that the markets may have underestimated how much growth can be unlocked by leaders taking a hard look at their firm’s spending, organisational structure and business priorities.

Robinson suggests that recent efficiency drives will help Shopify, Meta and Amazon pursue AI-related opportunities that could meaningfully increase their earnings. And at Block, efforts to bring two products closer together could help the firm challenge Visa, Mastercard and American Express.

Resources:

Behind The Tech: Tobi Lütke: CEO and Founder, Shopify

Dwarkesh Podcast: Mark Zuckerberg – Llama 3, Open Sourcing $10b Models & Caesar Augustus

Bent Flyvberg: How Big Things Get Done

Cyril Northcote Parkinson: Parkinson’s Law, and Other Studies in Administration

More from Gary Robinson:

Lessons from evolutionary biology

Why companies should embrace chaos

Companies mentioned include:

Amazon

Block

Meta

Netflix

Shopify

Timecodes:

00:00    Introduction

01:40    A background in biochemistry

02:55    The appeal of American companies

03:30    Parallels with the global financial crisis

04:40   Post-Covid efficiency efforts

06:25    Addressing overhiring and patched-together processes

07:40    Future-proofed businesses

08:00    The potential of AI

08:10    Shopify and the distraction of side quests

10:45    Shopify’s Sidekick assistant

12:50    Engineering Shopify’s internal operations

14:20    The authority of founder-leaders

16:00    Meta’s ‘year of efficiency’

18:00    How AI can drive further growth at Facebook and Instagram

20:10    Business chatbots on WhatsApp and Messenger

21:15    Investing in Block

22:30    Capping employee numbers without compromising growth

24:40    Square and Cash App’s potential to rival Visa and Mastercard

26:35    Meeting Jack Dorsey

27:40    Discipline and focus at Amazon

29:00    Amazon’s fast-growing advertising business

30:20    Generative AI’s trillion-dollar opportunity for AWS

31:25    Offloading routine tasks to artificial intelligence

32:25    Book recommendation

33:40    Outro

Emerging markets have sometimes promised more than they have delivered, but circumstances may be tipping in growth investors’ favour. Will Sutcliffe, head of our Emerging Markets Team, explains why it’s an opportune time to invest in the asset class.

Background:

Will Sutcliffe is the head of Baillie Gifford’s Emerging Markets Team and co-manager of our Emerging Markets Leading Companies Fund. In this episode of Short Briefings on Long Term Thinking, he brings his 23 years of experience in the field to explain what makes the specialism different from other types of growth investing.

He makes the case that finding exceptional growth companies at attractive valuations is only part of the equation. Investors must be mindful of the broader macroeconomic environment, he explains, to avoid getting caught out by currency swings or spiralling debt costs. This leads him to conclude that recent resilience in emerging market economies could point to a favourable outlook for the asset class’s growth stocks.

All this only matters to our portfolios if there are exceptional businesses to invest in, and Sutcliffe argues that the emerging markets are home to an increasing number of world-class companies. They range from the Taiwanese chip maker TSMC to the energy, retail and telecoms conglomerate Reliance Industries.

Resources:

Emerging markets: why bother?

Stock story: Pinduoduo

South-east Asia’s rising export stars

Jio Financial Services

Natura

PDD Holdings

Pinduoduo

Reliance Industries

Temu

TSMC

Gabriel Garcia Marquez: Until August

Timecodes:

00:00    Introduction

01:45    Joining the Emerging Markets Team

03:15    A ‘terrifying’ baptism of fire

05:00    Emerging markets’ ‘dirty little secret’

05:45    Qualifying for emerging markets status

06:45    Higher-calibre companies

08:00    Macroeconomic resilience

09:30    US-China tensions and Russia’s invasion of Ukraine

12:00    Investing in China

13:45    PDD Holding’s Pinduoduo and Temu

A new medicine that can help patients lose 15 per cent of their body weight could have far-reaching consequences for healthcare. Wegovy mimics a hormone the gut releases, reducing appetite and slowing digestion to delay hunger’s return. Research is also underway into other potential health benefits.

In this podcast, Baillie Gifford investment manager Ross Mathison discusses its maker, the Danish pharmaceuticals manufacturer Novo Nordisk, which became Europe’s most valuable company in 2023.

Background:

Ross Mathison is an investment manager in our Global Income Growth Team, co-manager of our Global Income Growth Fund and deputy manager of the Scottish American Investment Company (SAINTS).

In this episode of Short Briefings on Long Term Thinking, he discusses how medicines that mimic the glucagon-like peptide-1 (GLP-1) hormone could help tackle the growing problem of weight gain. Forecasts suggest that by 2035, more than half the world’s population will either be overweight or obese. That’s likely to lead to more people suffering associated diseases, putting health budgets under further strain.

Novo Nordisk initially researched GLP-1s as a diabetes treatment. The company is the world’s biggest insulin producer, but it’s the release of its weight-loss drug Wegovy that’s transformed its growth prospects. News that medical trials suggest that the therapy could also reduce the likelihood of heart attacks, strokes and other cardiovascular threats among some patients has driven further investor interest.

Mathison explains that there could be further health benefits beyond this, how even more effective treatments could follow and why Novo Nordisk’s manufacturing edge and connection to the world’s biggest charitable foundation bode well for its future.

Resources:

New England Journal of Medicine: Semaglutide trial

Novo Nordisk cardiovascular trial press release

Novo Nordisk kidney trial press release

Novo Nordisk Foundation

Wegovy

World Health Organization obesity factsheet

Hitting Against the Spin

Timecodes:

00:00    Introduction

1:40      What are GLP-1s?

4:00      Scientific breakthrough

5:05      Obesity: a disease, not a choice

6:45      Novo Nordisk’s drug, Wegovy

08:10    Prescription costs

What distinguishes companies that will thrive from those that will perish? In this episode, we explore three traits that mark out the companies set to surge ahead from those more likely to struggle:

1.      They solve real-world problems

2.      They are financially strong and disciplined

3.      They are highly adaptable

Baillie Gifford partner Tim Garratt discusses these characteristics, gives examples of companies that exhibit them and explains why this feels like a once-in-a-generation opportunity to be a long-term growth investor.

Background

Tim Garratt is an investment specialist, overseeing the institutional clients who invest in our Long Term Global Growth strategy and leading our broader client specialist network.

He recently co-authored the paper Why growth, why now?, which reaffirms our beliefs about how growth investing can generate attractive returns.

In this episode of Short Briefings on Long Term Thinking, he discusses how interest rate rises, restricted amounts of capital and geopolitical tensions are causing a stock market shake-out. And he explains why this plays to the advantage of patient investors who focus on the fundamentals when picking growth stocks.

Garratt gives examples of how companies, including Netflix, Roblox, Shopify and Amazon, fulfil the criteria we seek. And he explains how Baillie Gifford itself is adapting to the times, exploring the use of machine learning and other tools to hone our investment process.

Resources:

Why growth, why now?

We’re all climate hypocrites now

See & Spray

Netflix engagement report

Timecodes:

00:00        Introduction

1:30           From abundance to limitation

03:45        Implications for investors

05:20        Real world problems: supply chains

07:30        Deere and hi-tech farming

09:00        Financial strength and discipline

09:50        Netflix and pricing power

12:00        Keeping watch on margins

14:15        China’s electric vehicle makers

16:15        Adaptability and new business models

16:50        Roblox adds AI

19:30        Microsoft, Amazon and environmental costs

21:45        Sea and the importance of culture

23:00        How Baillie Gifford is adapting

25:05        ‘Why now?’ for growth investing

26:55        Book choice