Episode 3: MercadoLibre

FEATURING:

Judy Jiao, Research Analyst

Perry Williams, President and Director of Research

Episode 3: MercadoLibre

Episode 3: MercadoLibre
June 8, 2021

President and Director of Research Perry Williams and Research Analyst Judy Jiao discuss MercadoLibre, the Argentine company that is now the largest online ecommerce company by gross transaction volume. Since its 2007 IPO, the company has continued to seek new drivers of growth. The team takes a look at how the company launched its fintech business in Latin America, expanded into grocery, and finetuned its logistics network.

See portfolio holdings for portfolio holdings purchase dates. As of the episode date: Walmart and GE are not current holdings in any Sands Capital strategy. MercadoLibre and Tencent are current holdings in our Global Growth and Emerging Markets Growth strategies. Netflix is a current holding in Global Growth.

SHOW NOTES

00:50 Why Latin America isn’t known for innovative companies.

01:43 MercadoLibre’s initial attraction for Sands Capital.

04:51 Insights from MercadoLibre into emerging markets’ technology adoption.

06:30 How is the pandemic affecting MercadoLibre?

09:05 How MercadoLibre is democratizing ecommerce and increasing financial inclusion.

14:05 Potential for improving logistics.

16:44 Is remotely conducted research here to stay?

20:33 Comparing MercadoLibre to other businesses.

22:42 Interesting story about MercadoLibre’s response to the pandemic.

23:44 Advice for people considering a career in investment management.

27:40 What Perry and Judy are reading.

TRANSCRIPT

Kevin: Welcome to What Matters Most, Sands Capital’s podcast series, in which we will explore some of the innovative growth trends in businesses that are propelling the pace of global innovation forward and changing the way we live and work today and into the future. Today, I’m speaking with Sands Capital’s President and Director of Research Perry Williams and Research Analyst Judy Jiao about MercadoLibre, the Argentine company that is now the largest online ecommerce company by gross transaction volume, with a growing fintech business in Latin America. The spread of the coronavirus pandemic accelerated the adoption of ecommerce around the world. MercadoLibre was one of the beneficiaries, having grown gross transaction volume over 100 percent year-over-year each quarter on a constant-currency basis in the last three quarters of 2020.

I want to thank you both for joining us today to talk about MercadoLibre. Perry, I’ll throw the first question to you. Latin America is not widely known for producing innovative companies as much as some of the other emerging market regions. Can you talk a little bit about why this is?

Perry Williams: Kevin, thanks for the question. I think, in many ways, MercadoLibre has helped to catalyze innovation in Latin America the last 20 years. It’s important to highlight that MercadoLibre’s founder, Marcos Galperin, attended Stanford business school and graduated in 1999, which folks will remember, it was an exciting time in the technology space. And, he was clearly inspired, influenced by what was going on in Silicon Valley at the time. So, when you look at the last five to 10 years, a lot of the companies that have begun in Latin America in the region, many of them have connections back to MercadoLibre, either through executives or other investments.

Kevin: Perry, your team was invested in MercadoLibre since 2007. Tell us a little bit about what drew you to the company initially.

Perry Williams: MercadoLibre was a company we’d come across as part of the work we were doing to identify attractive businesses in Latin America. This was back when we were preparing to launch our global growth strategy. And, as I mentioned, the company was founded in 1999. It went public though, a year prior to when we’d looked at it. It went public in 2007 on NASDAQ.

We’d owned Amazon at the time. So, we were familiar with the ecommerce space generally and how these businesses worked. MercadoLibre back then was primarily a marketplace, and the largest category was consumer electronics, and within consumer electronics, probably the largest subcategory was mobile handsets.

So, what we saw was the potential for this marketplace, as other categories were gaining traction, and we thought the platform could be much bigger. For context, in 2008, MercadoLibre was doing about $2 billion in gross merchandise volume, commonly referred to as GMV. This is equivalent to top-line sales. Today, gross merchandise volume at MercadoLibre is in excess of $20 billion. Latin America is, and has been, a challenging market for ecommerce. When we initially invested in the business, credit card penetration was low, internet access—not to mention broadband—was not widely available. Only about 22% of the population had access to the internet compared to greater than 70% for the U.S., and shipping networks were slow and unreliable. So, for many consumers, MercadoLibre was their first experience buying anything online. And, when we initially invested, a quarter of all people connected to the internet had a MercadoLibre account. MercadoLibre helped build confidence with buyers and sellers by offering a flexible payment platform called Mercado Pago that was really nascent at the time.

We invested, but we thought that had a lot of potential. It’s very similar in many ways to PayPal, with escrow-like functionality. Looking backwards, without Pago, it’s likely the platform wouldn’t have gotten to be as big as it has. That’s an assertion. One of the things that was attractive about the marketplace was that many items that were offered at that time were very difficult to find or acquire for consumers offline. So, the region was still transitioning to formal retail as ecommerce was gaining momentum. This has happened in other emerging markets as well.

And we theorized it would be easier for a local player to navigate the landscape and build momentum. And that’s mostly been the case. The value of having that local context and knowledge can be underappreciated. So, if we think about the classic ecommerce flywheel we’re all familiar with now, I would assert, Kevin, that selection was a huge driver. That may be more so than convenience or price. So, while internet access and ecommerce penetration were both nascent, one could imagine, as we did, the population of greater than 500 million at the time, that demand would increase, and the value proposition would grow as friction was reduced over time.

Kevin: I know in exploring new businesses in new markets, you can rely on your experience with similar businesses in developed markets. And you referred to that in your answer there. Can you talk about, though, how maybe that early work with MercadoLibre helped expand your knowledge base in technology adoption in emerging markets, generally?

Perry Williams: Everything’s clear in retrospect, Kevin. Back then, there was a fairly predictable lag between what was happening in developed markets and what would happen in developing markets. In some ways, that’s flipped, I would say, over the past decade. So, you could see something, for example, that Google was doing, and some of the emerging platforms would adopt those as best practices. I would say that’s kind of flipped again, especially in Asia. A contributing factor to ecommerce adoption, in all markets developed and developing, has undoubtedly been the proliferation of affordable mobile broadband access. And, I would say, combined with consumers’ familiarity and comfort shopping online.

So, as stated previously, a lot of emerging markets had never fully developed retail, the retail that we all take for granted when ecommerce was gaining traction. For this reason, selection and access to products drove millions of new users to platforms like MercadoLibre. And, as these platforms got bigger, they attracted new entrants. And when I say new entrants, it’s important to emphasize it’s not only the buyers, it’s the sellers and the marketplace, the platform. You get more sellers, you’re gonna attract more buyers; you get more buyers, you attract more sellers, and that’s another component of that flywheel.

Kevin: All right. Well, let’s bring the conversation into the present and I’ll turn the questions over to Judy. Judy, you’ve been following MercadoLibre since 2017, really pre-pandemic. Did the pandemic accelerate adoption in many areas of ecommerce, and, if so, are you concerned that, post-pandemic, that this recovery might curb some of the growth for businesses like MercadoLibre?

Judy Jiao: Yes, the pandemic did accelerate the adoption of ecommerce globally. For MercadoLibre, ecommerce GMV has been growing consistently over 100 percent in the last four quarters. So, this is really impressive growth, and, as we head into the next few quarters, there could be more difficult comparables as the world reopens.

At the same time, MercadoLibre has actually become a stronger company during the pandemic. As Perry mentioned, people initially were drawn to MercadoLibre mainly because of the selection, and the shipping experiences were pretty terrible and really expensive. MercadoLibre started investing in its own logistics network in the last three to four years, and this has meaningfully inflected during the pandemic. Currently, over three-quarters of all products are shipped through MercadoLibre’s own network. And this means improvement in speed and the improvement in cost. On the speed side, about three-quarters of all products are delivered within two days. This is compared to as long as four weeks in the past. And on the cost side, things used to cost $8 per package, and because MercadoLibre has been able to substantially improve its network and its density, things are costing as little as $2 to $3 per package. Because of this, MercadoLibre has been able to offer free shipping for a majority of the goods sold on its platform.

So, currently items over 79 reais, which is just $15, are shipped free. So, for consumers in Latin America, or Brazil specifically, ecommerce is much cheaper, much faster, and therefore we expect ecommerce penetration to continue to increase. If we really take a step back, ecommerce is only 10% to 11%, even in the most-penetrated country of Brazil. And, this is compared to China, where ecommerce is about 28 to 30% of total retail. So, there is still a long runway of growth ahead for MercadoLibre.

Kevin: OK, great. And along those same lines, I think you’ve partly answered this but go a little deeper on it. MercadoLibre’s founder, Marcos Galperin, has said that he envisions democratizing ecommerce and generating financial inclusion. So, what does that really mean from your point of view?

Judy Jiao: MercadoLibre’s platform consumers in remote villages and regions can have access to the same selection of goods as consumers in big cities and, for the most part, delivered equally fast. So, ecommerce has really enabled small merchants and less affluent consumers to have the same choice and the same options as large merchants and large and wealthier consumers with better access.

Perry Williams: Judy, just to emphasize: We take for granted, in the United States, prior to Amazon, Walmart, for example, had brought affordability, and selection, and a lot of the things that MercadoLibre brought to consumers in Latin America, years ahead of time. But, in many respects, MercadoLibre was enabling consumers in these markets to access products at reasonable prices that they previously weren’t able to get a hold of.

Kevin: Would you characterize that as a mission driven by a social good or pure profit motive? In your understanding of Marcos Galperin’s motivations, is he looking to make the world a better place or is he simply exploiting an opportunity?

Perry Williams: I would say, Kevin, I don’t think those things are mutually exclusive. That’s how I would answer it. There’s an opportunity to do both. And, when you look at any of the businesses or a lot of businesses that have been massively successful, when you can combine those two things, it’s pretty powerful.

Judy Jiao: I would assert that the most successful businesses are both. When they started, they may not necessarily be driven by a social mission, but being a large business usually means enabling consumers to have a much better experience while benefiting society, in some ways. When electricity was invented, it really improved people’s lives, but at the same time, it also enabled GE to become a meaningful business, and it’s a similar story with ecommerce. Well, they are democratizing access for other marketplace players, like the merchants and consumers. They are able to keep some profit from facilitating this convenience.

Kevin: So net positive for the business and society.

Great. So Judy, before I turn it back over to Perry, is there anything else investors may not know about MercadoLibre and its potential for future growth?

Judy Jiao: MercadoLibre’s work on financial services is also in the very early innings. I think a lot of the investors are focused on the ecommerce part of the business and may miss the huge upside that the financial services can bring in the future. In particular, credit can become a much bigger business over time. In Latin America, a large percentage of the population are either unbanked or underbanked, making it very difficult for traditional financial institutions to offer them credit.

According to World Bank research, in 2018, only 21% have been able to borrow from a financial institution in Latin America. And this is compared to 68% in the United States. MercadoLibre actually knows these consumers really well. They know where they live, because they shipped to them, they know what they like to buy.

And, increasingly more consumers actually deposit their paycheck directly with MercadoLibre. So MercadoLibre even has information about their income, and this gives MercadoLibre a much better ability to accurately score these consumers and to offer the high-quality consumers credit, even without the traditional credit information, using MercadoLibre’s own data. And on the merchant side, MercadoLibre is increasingly the main source of income for many, many merchants who rely on MercadoLibre to sell.

So, for these merchants, MercadoLibre not only has their credit history and their financial information, MercadoLibre is also the very means by which these merchants are getting income, making it much easier for MercadoLibre to collect their loan payment and making these merchants much more willing to prioritize MercadoLibre when they are paying back loans.

MercadoLibre’s efforts are still in the very early innings, they have issued about $1.2 billion worth of loans cumulatively in 2020. This compared to about $50 billion worth of transactions processed through MercadoLibre in 2020. And in terms of the number of consumers, we estimate only about 4 million consumers have received loans from MercadoLibre, relative to about 130 million active users on MercadoLibre.

Kevin: Does MercadoLibre have the potential to not just grow through new technology and new ideas, like fintech, but how much improvement is there left on the logistics part of the platform?

Judy Jiao: There is actually a lot of potential left on the logistics platform. MercadoLibre’s efforts in logistics is still very early. They have only started in the last three to four years. And in terms of speed, currently about three-quarters are shipped within two days, but as we’ve seen after two-day shipping, there is also one-day shipping and even same-day shipping or next-eight-hour shipping.

So, there is a lot of work to do on the speed front. There is also a lot of work to do on the efficiency front. MercadoLibre has only started gathering all this data on where the packages are going, and they are still in the early innings of optimizing routing to improve efficiency. And lastly, there’s also a lot of room to improve on the volume front.

MercadoLibre has been able to scale rapidly, but currently, they are processing only about 2% to 3% of total retail sales in Latin America. And a lot of this volume is actually going through cross-docking, and their own fulfillment operation is even earlier stage than their total logistics network. I think getting products to consumers faster and for cheaper is a constant iteration process, and there is a lot more that MercadoLibre can offer, down the road.

Perry Williams: And, Judy, logistics is a really big initiative, though, for them, right, as we move forward? And do you think that they’re leveraging some of the learnings from watching what Amazon has done in the United States, particularly?

Judy Jiao: Sure, of course MercadoLibre’s management team are students of ecommerce across the world, and they have studied all the players very carefully.

I remember a while ago when MercadoLibre first launched its own branded trucks, I shared the story internally on Slack, and Perry replied, “Soon planes will be coming.”

And this is because Perry is not just the analyst on MercadoLibre, he’s also an analyst on Amazon. So, he has seen this playbook playing out before. And, in the short span of maybe four to five months, MercadoLibre did announce its decision to launch its own branded planes. And I told Perry that, “Hey, Perry, as you predicted, the planes did come.”

Kevin: That’s true. Actually, that’s a good segue to the next question, which isn’t really about MercadoLibre, specifically, but about the research process.

And I’d like to hear Perry’s answer on this and then, Judy, yours as well. Perry, at the beginning of this conversation, you talked about spending time in Latin America, visiting the company, visiting management down there. Obviously, that’s something you haven’t been able to do for the past year-plus. Do you expect that this remote research, anything that you’ve adopted over the last couple of years, is here to stay? Communications and even meetings that might remain part of your routine that are now happening from a distance: Do you see that sticking with the process?

Perry Williams: Kevin, we’re going to continue to optimize our research process and leverage this technology. We were talking last week about some of the early consumer panels, for instance, that we did in Latin America and that we continue to do in places all around the world.

And, it used to be 10 years ago, we’d literally go and recruit people. We’d bring them into a conference room. We’d hire somebody to translate. We’d ask them questions. We’d take notes. And, today, we can do all of that remotely. And it’s a much, much better experience for everybody.

I’ll tell you another story. Prior to mid-March 2020—we’ll all forever remember mid-March 2020, we transitioned to work from home on March 10th—that week, we were supposed to be in India doing a due-diligence trip, and we thought, well, let’s just try to do a call on Zoom. So, we were sitting in a conference room, we had this Indian management team up on the screen, they were sharing their presentation.

It was great quality, and afterwards, we were all hoping that we’d be in person soon. And little did we know, a year later we would still be on Zoom. But we looked at ourselves, we hung up the call, and we thought that was great.

So, the answer, Kevin, I think, is we’ll continue to leverage this technology. It’s amazing. It’s transformative. But we will continue to travel. I think all of the members of the investment team are excited to get back on the road when they can, when it’s safe. In-person research has always been a part of our process. Also, we’re known for traveling in small groups. I think that’s a competitive advantage of ours. And the reason is that it builds shared context. Everybody on our investment team has been to all of the regions and the countries in which we invest.

And there’s value in being able to talk about things and have your team members understand and appreciate what you’re referring to. So, I think it’s going to be a combination, Kevin. That’s what I’m imagining. I heard someone say recently, though, it’s easy to maintain a relationship on Zoom, but it’s really hard to establish one.

And I’ll use MercadoLibre as an example. We’ve gotten to know the management team there very, very well over the years. A lot of that’s been via teleconference, but a lot of it’s been in person. And I would say that you can’t discount the value of in-person interactions.

Kevin: Judy, any comments on that? Any thoughts about how your routine might change or things that you lock in that you’ve been doing over the last year?

Judy Jiao: I definitely missed in-person meetings, and I think they are extremely valuable, but perhaps one upside surprise is, during COVID, we were forced to do a lot of activities online. In the past, we would travel to different cities and do consumer panels. But now we are able to do consumer panels online, and much to my surprise, we are able to include much of the investment team. We can build a shared context.

With virtual consumer panels, we’re able to talk to consumers from a much wider range of geography because we are no longer constrained by the city we are visiting or having to have visit multiple cities at once. So, this is definitely one thing that we’ll keep in addition to the onsite visits.

Kevin: So, Perry, a big part of our process, especially when exploring new businesses, is to draw in a deep pool of understanding about those businesses to start with. Can you talk a little bit about how what you know about MercadoLibre today was maybe informed by other businesses that you cover? And then maybe how what you know about MercadoLibre will help you explore other businesses similar to that in emerging markets?

Perry Williams: A couple of things, Kevin: One of the benefits of having a one-to-many model—where the team is supporting all your different strategies and emphasizing the value of collaboration and open communication—is that we’re all familiar with the research that’s being conducted, at any given time.

So, for instance, like when we owned Amazon and Google, I covered Amazon. The analysts that covered Google sat right next to me. That was a conversation that was ongoing. And, by the time we got around to finding and evaluating MercadoLibre, we were already very familiar with how these marketplaces worked, how these payment platforms worked. We could conceptualize the opportunity, and we could talk amongst ourselves. It wasn’t just one person who was familiar with how ecommerce worked. It was multiple people. And as a global investor, over time, you can start to connect the dots. You can start to say, “Hey, this reminds me of this company, five, 10 years ago.”

Or, I’ve seen this playbook before, and we do that as investors. Operators think the same way. So, I mentioned earlier how MercadoLibre very much and very openly would take the learnings from Amazon, Google, and apply them into their market. And then, over time, that became how do we take the learnings from our Chinese counterparts into our market?

So, I think it’s really valuable to be able to do that. And, that domain expertise, that shared context, it builds over time. And it’s something that becomes a competitive advantage, I think, as a long-term investor, especially.

Kevin: So, Judy, you mentioned that MercadoLibre has been a beneficiary of the pandemic, which is clear to everybody, but they’re also operating in this pandemic. And I think you mentioned an anecdote to me recently that I’d love for you to share with the listeners, regarding a part of their culture, a part of their approach to this whole period that probably goes unnoticed or has gone unnoticed by those of us in North America, but probably something well known to those who use MELI’s service regularly. Can you share that anecdote with us?

Judy Jiao: So, when COVID first hit, MercadoLibre actually changed its logo from shaking hands to an elbow bump, to promote social distancing. MercadoLibre also did other things to ease the pressure of the pandemic. For example, it actually absorbed restaurant staff laid off and hired them on a temporary basis in its fulfillment centers.

Kevin: All right. Great. Well, we covered a lot of ground here on this podcast, and hopefully, the listeners learned something about MercadoLibre and why it’s a high conviction business for Sands Capital. So, Perry and Judy, I’m sure the listeners would be curious to know a little bit more about what drives you. And, Perry, I’ll start with you.

So, Perry, you touched on this a little bit, but what piece of advice would you give to someone considering a career in investment management?

Perry Williams: Kevin, I tell people all the time our industry is gigantic, and yet, it’s really, really small. OK, so I would say, just get your foot in the door. I spent the first couple years of my career doing data entry, reconciling investment returns by hand. It wasn’t fun, but it led to opportunities down the road.

And, in the past 23 years, I’ve run into a lot of folks that I’ve worked with in the past. Again, emphasizing the point that our industry is very small. I’d also encourage anybody under the age of 30 to take the CFA exam. I learned a lot from that program and was fortunate to finish it in my early twenties. I think it’s increasingly difficult, well, it’s hard as you get older and have more responsibilities, to commit to it.

And, finally, if you’re interested in fundamental research, always be asking yourself how could I look at this from a different angle? And is there something others are missing or not appreciating, and in a sea of information, and we’re all drowning in information today, what’s the insight, and how can I build confidence and conviction around that?

This is where the creative side of investing comes into play, and that’s the fun part. We’ve owned MercadoLibre in client portfolios for 13 years, and it’s been fun to watch this business evolve over time.

Kevin: So, Judy, on that same topic, what attracted you to the profession of long-term growth investing?

Judy Jiao: What’s really special to me is long-term investing. We’re just really investing behind innovation. Coming from China, I have personally experienced how innovation can really improve people’s lives. From my cousin having to drive four hours to shop in Beijing, she now can do most of her shopping online and in a much more convenient manner. And, similarly, we also saw the same positive change in terms of food delivery, in terms of digital payments. So, these innovations really improved people’s lives, and it’s incredibly rewarding to learn about these innovative businesses and invest behind these really thoughtful founders.

Kevin: Great. So, this question is for both of you: Tell us about a professional or life experience that influenced you most as investors.

Perry Williams: Kevin, I guess I can’t help but recall the events of 2008 beginning on September 15th with the fall of Lehman Brothers and having gone through that experience. And then lived through the following year. That’s one that I’ll never forget. But most importantly, how our team coalesced around really dissecting everything that we own and asking ourselves: What would happen under a worst-case scenario?

Kevin: Judy, how about you?

Judy Jiao: My parents were both retail investors in China, and when I say retail investors, they’re actually really speculators. They would go watch tickers and see which stock price had been going up in the last two days. And they would identify that as a trend and invest behind them. They, for the most part, don’t know anything about these businesses, and if they know the full name of the companies they invested in, I would consider that as a win.

This has worked well in a bull market, but when the market started to turn, this ended really badly for them. And this was also a pretty bad experience for us. So that’s the reason that I really wanted to learn a different way of investing, and that’s what really attracted me to this profession.

Perry Williams: That’s a great story, Judy, I hadn’t heard that before.

Kevin: Well, so let’s leave our listeners then with a little gift here. Maybe the two of you could spend a few minutes telling us about what you’re reading, what you’re currently learning. Perry, I’ll start with you. What is on your nightstand at this present time?

Perry Williams: Oh, well, a Kindle. To answer your question, Kevin. So, I recently finished Phil Jackson’s book Sacred Hoops, which was great. I was inspired to read it after watching The Last Dance last year, and I’m sure many of our listeners watched The Last Dance. So, this book covers a lot of the same territory, but it’s from Phil’s perspective as a coach. And I thought it was particularly interesting.

And I’m currently halfway through a book called The Art of Learning by Josh Waitzkin. And Josh was a chess prodigy, and the movie Searching for Bobby Fischer was based on his life. My son’s a competitive chess player. And this has helped me appreciate how he thinks about the game and how his mind works. And it’s also reminded me that learning is a lifelong pursuit that never ends.

Kevin: Yeah. Excellent. Judy, how about you? What are you currently reading?

Judy Jiao: Recently I’ve been more interested in company culture, so one book I’ve been reading is called No Rules Rules by Reed Hastings and Erin Meyer. This is about Netflix’s culture of radical transparency, which I thought is interesting.

Recently, I’ve been reading Tencent: The Extraordinary Story of a Chinese Internet Enterprise by a journalist called Wu Xiaobo. He has the opportunity to sit in many of Tencent’s internal meetings and really understood Tencent’s culture well, in a way that’s new to the outside world. But it’s actually coming out in English next year.

Perry Williams: Kevin, this isn’t a question, but to the extent it’s helpful, I think it’s interesting to note how Judy is the same person covering MercadoLibre, who’s covering other ecommerce companies in other places of the world. And that again is really powerful because she’s looking at these businesses and comparing them against each other and able to connect the dots. And not a lot of organizations are structured that way. And I think that’s an advantage of ours when it comes to evaluating companies like MercadoLibre.

Kevin: Well, I guess we’ll conclude here, and thank you again, Perry and Judy, and thanks to our listeners. We hope you enjoyed listening, and we hope you learned something about this fascinating business and a little bit about Perry and Judy along the way.

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Disclosures:

The featured podcast portfolio companies represent a subset of Sands Capital holdings that illustrate the types of businesses in which we typically invest. The series uses rotation whereby podcasts are selected to highlight different sectors and geographies. 

The views expressed are the opinion of Sands Capital Management and are not intended as a forecast, a guarantee of future results, investment recommendations, or an offer to buy or sell any securities. The views expressed were current as of the date indicated and are subject to change. This material may contain forward-looking statements, which are subject to uncertainty and contingencies outside of Sands Capital’s control. Readers should not place undue reliance upon these forward-looking statements. There is no guarantee that Sands Capital will meet its stated goals. Past performance is not indicative of future results. A company’s fundamentals or earnings growth is no guarantee that its share price will increase. Forward earnings projections are not predictors of stock price or investment performance, and do not represent past performance. References to companies provided for illustrative purposes only. The portfolio companies identified do not represent all of the securities purchased or recommended for advisory clients. There is no assurance that any securities discussed will remain in the portfolio or that securities sold have not been repurchased. You should not assume that any investment is or will be profitable. GIPS® Reports and additional disclosures for the related composites may be found in the Sands Capital GIPS Report.