Unlocking Value: The GreenWood Investors' Blueprint for Success
A Phenomenal First Half: Celebrating Robust Returns and Strategic Victories
GreenWood Investors has announced an outstanding first half of the year, boasting net returns of 39.6% that significantly outpaced the MSCI ACWI's 9.9%. This impressive performance extends their track record, with compounded returns reaching 12.7% since inception, compared to the MSCI ACWI's 8.0%. The firm attributes this success to its proactive, owner-centric investment philosophy, which focuses on guiding companies through pivotal transformations. This strategy, initially centered around CTT, has expanded to five distinct initiatives, each bolstered by dedicated capital and a sense of urgency. GreenWood emphasizes durable, secular growth prospects, noting that their board mandates have been a key driver of returns for several years, a trend they anticipate will continue for at least another decade.
Foundational Principles: Durability, Balance, and Strategic Alignment in Investment Partnerships
GreenWood Investors adheres to rigorous criteria when selecting companies for partnership, drawing inspiration from Peter Kaufman's principles for identifying exceptional capital allocators. These include impeccable integrity, deep industry expertise, fair fee structures, operating in an uncrowded market, and offering long-term growth opportunities. The firm applies similar standards to its portfolio companies, seeking businesses with limited downside, strong existing performance, and clear avenues for value addition. A critical element for GreenWood's involvement in company governance is the alignment of industry drivers with long-term tailwinds. They prioritize collaborative teams and boards that embody emotional intelligence, creativity, discipline, and accountability, recognizing that a balanced collective can overcome individual shortcomings and foster true value creation. Far from being aggressive activists, GreenWood identifies as active owners, committed to building superior companies and achieving best-in-class growth that transcends mere benchmarks, as demonstrated by their track record of outperforming industry peers.
Leonardo: A Strategic Powerhouse Driving Exceptional Portfolio Performance
Leonardo has emerged as GreenWood's top-performing portfolio company for the fourth consecutive year, delivering a remarkable 18.0% contribution to first-half returns (excluding FX) with over 100% year-to-date gain in USD. GreenWood was drawn to Leonardo's undervalued portfolio of best-in-class products across defense verticals. The transformation of Leonardo's market perception, from "ugly duckling" to a robust growth leader, is largely credited to CEO Roberto Cingolani, whose candid leadership and ability to foster collaboration have been instrumental. Under Cingolani's guidance, Leonardo has forged crucial partnerships, such as with Baykar Systems for unmanned aerial vehicles, leveraging its protective jamming technology. The company's core competencies in electronics have expanded into space and anti-missile defense, offering a globally unique defense shield that allows customers full operational control and integration of local components. Leonardo's commitment to industrial efficiency, as emphasized by Cingolani, ensures sustained growth in a volatile geopolitical climate, making it an invaluable partner for peaceful nations.
CTT: A Testament to Patience and Exceptional Management in a Dynamic Logistics Landscape
CTT continues to impress with its over-delivery, contributing 9.8% to GreenWood's first-half performance (excluding FX gains). The company's unique e-commerce logistics model, encompassing customs clearance, fulfillment, last-mile delivery, and extensive out-of-home networks, provides highly differentiated services in Iberia and beyond. CTT's deep integration across the e-commerce value chain not only creates synergies but also establishes a quality-of-service benchmark in the industry. The long runway for e-commerce growth in Portugal and Spain, coupled with the newly acquired customs operation, positions CTT for continued expansion. While the initial strategy to separate BancoCTT was delayed by negative interest rates, the recent sale of a competitor at a favorable valuation signals a sweet reward for patience. With Iberian bank multiples on the rise and BancoCTT's strong growth in new accounts, GreenWood anticipates an ideal timing for strategic options. CEO Francisco Barbeira's focus on technological reinvestment promises to accelerate BancoCTT's growth trajectory, proving that the wait for optimal market conditions has truly been worthwhile for CTT's stakeholders.
Swatch: Navigating Challenges and Advocating for Transformative Governance
GreenWood Investors has extended its active ownership strategy to The Swatch Group, launching a co-investment fund for the company, which is currently trading at an unprecedented net-net valuation. Despite its strong brands like Harry Winston and Omega, Swatch's shares are priced as if the company is in decline. GreenWood challenges this view, advocating for transformative governance changes. A significant step was taken when 61.9% of bearer shareholders voted to elect Steven to Swatch's Board of Directors, a legally binding outcome under Swiss law. GreenWood emphasizes collaboration over conflict, believing that a balanced approach to viewpoints is crucial for true value creation. Having engaged with numerous former managers, luxury experts, and shareholders, GreenWood asserts that the high-end mechanical watch industry, particularly among Generation Z, is booming. They contend that Swatch's flawed response to shareholder will underscores the need for cultural evolution and reforms in its governance procedures, affirming their commitment to being a constructive part of the solution rather than merely a critic.
The Ownership Mentality: Driving Sustainable Growth Through Engaged Governance
GreenWood Investors firmly believes in the "owner's mentality" as a core mission, re-establishing deep connections between company ownership and management teams. This approach, which emphasizes a strong cost focus, a bias for action, and an aversion to bureaucracy, underpins long-term business sustainability and value creation. A recent white paper published by GreenWood highlighted that owner-operators surprisingly exhibit minimal share repurchases and dividends, reinforcing their focus on sustained growth. This philosophy is evident in their latest investment, a globally recognized brand that, despite its focus on financial engineering, possesses incredible untapped potential in new markets. GreenWood believes that unlocking this potential requires the right skills in the boardroom. The successful outcome with MEI Pharma serves as a case study: despite initial setbacks with clinical assets, a strategic pivot towards a digital asset treasury strategy, supported by a collaborative, owner-oriented board, led to a favorable resolution for investors. This outcome, further strengthened by the involvement of Litecoin founder Charlie Lee and GSR Asset Management, underscores the power of diverse thought and engaged governance in achieving win-win outcomes even in challenging environments. GreenWood's commitment to partnering with accountable, driven, and humble executives, whether on or off the board, remains a cornerstone of their strategy for building capital alongside their investors.