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 | Wednesday January 31, 2024 |
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Tom Waterhouse, the racing scion turned fund manager, has saddled up to meet Sydney’s rich and famous in hopes of securing a top-up for his five-year-old fund. |
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Street Talk understands the team began mailing out pitch decks earlier in January, requesting meetings with Waterhouse (official title, chief investment officer) and Peter Stevens, a portfolio manager. |
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Potential backers are being told Waterhouse VC is mounting a fundraising push because it sees opportunities in option deals with companies that provide technology services to bookmakers. Of course, the 14-page deck mentions that one year the firm hit triple-digit returns, while reminding the reader of the Waterhouse family’s 100-year-long history in the wagering industry. Then there is a smattering of individual investments. |
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Listed among Waterhouse VC’s recent winners is a crypto-wagering technology platform, Saintly. It signed a three-year option to buy 20 per cent of Saintly in February 2023, and sold it six months later for 2180 per cent above its strike price. That was a quick 23-times return, according to the deck. |
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The flyer also lists an investment into Project Tennis, a betting syndicate, where Waterhouse VC expects to get its entire investment back in distributions within two years. Another investment, Voxbet, is a Siri/Alexa alternative for sports bettors. Lastly, there’s ASX-listed BetMakers which compiles data feeds for bookies and has lost nearly 56 per cent in past year. |
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Strangely, the team is also screening 13F filings from 16 investing titans like Tiger Global, Farallon and Bridgewater for stock picks. [13-F filings are forms filed by bigger fund managers in the US, which list their portfolio companies at the end of each quarter]. |
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The team looks for companies that are at least 1 per cent of the portfolio at each of those 16 funds, and screens further for leverage, earnings growth and valuation. The process throws up about 30 names each quarter, into which Waterhouse VC tosses some of its extra cash. |
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It has made the fund an investor in Marathon Petroleum, US regional bank Western Alliance Bancorporation, pharmaceutical distributor McKesson, and credit rating agency Moody’s. |
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We will leave it to professional traders to argue the finer points of mirroring professional investors’ 13-Fs. But it is worth mentioning the resulting stocks in banking, pharma, and refineries are a bit outside the Waterhouse family’s expertise in wagering. |
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It’s the kind of presentation deck that an asset consultant or a pension fund investor wouldn’t touch with a 10-foot pole. Even if they didn’t have ESG concerns to think about, Waterhouse VC’s deck is missing key details like individual contributors to the returns, nitty-gritty of risks involved in its options deals, or even the fund’s size. In short, it’s hard to understand how exactly it made 39.46 per cent last year or 492.8 per cent in 2020 (see chart below). |
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But then, Waterhouse VC clients are more the Magic Millions crowd than the pension fund parade. Indeed, the flyer says existing investors are leaders at companies such as PointsBet and Flutter. |
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Read the full story tomorrow and more on the Street Talk page. |
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