SumZero Manager Q&A Interview: Building an ESG Framework Around “Quiet Innovators”
- The Portfolio of dividend-yielding H.E.R.O. Innovators from our selection rose for the fifth consecutive week during the week ended 9 October 2020, maintaining her overall absolute positive and relative outperformance against major world indexes since her recent birth on 28 August 2020, during which MSCI ACWI All World index declined -0.1%, S&P 500 -0.9%, NASDAQ -1%, and Greater China stocks slumped with Hang Seng index -5.1%, CSI 300 index -3.4% and HSCEI -6.7%, and gold physical spot (in USD) -1.8%.
- The separate equity portfolio of H.E.R.O. innovators for our clients rose +5.3% during the week to a new record high with +50.7% in average returns since it was invested in March 2020 when the H.E.R.O. research methodology was implemented in March 2020.
- North America, Australia, Japan and Nordic stocks were key contributors in the Portfolio of dividend-yielding H.E.R.O. Innovators from our selection during the week, led by: (1) Canada’s Dominant #1 Overnight Domestic Freight Cargo Network with a Near-Monopoly Share of 95% (+14.2%); (2) Japan’s #1 E-Manual Database SaaS Innovator (+14.5%); (3) Australian Global #1 Leader in Hand-Held Metal (Gold) Detection & Ground Radar Technology (+10.2%); (4) Sweden’s #1 Cloud Accounting & Financial Management Software Leader for Small Businesses & Accounting Firms (+10%); (5) Australia’s #1 Enterprise Content Management (ECM) Cloud Software Leader for Mission-Critical Operations of Governments and Regulated Industries (+7.6%); The World’s Largest Pure-Play Dedicated Semiconductor Foundry (+9.9%); Global Leader in Simulations & Modeling Software for Drug Discovery & Development (+9.7%); Finland's #1 Market Leader in Specialized Cloud-Based ERP & Accounting Software Solutions for Construction, Building Services Engineering, and Manufacturing Companies (+9.4%), etc.
SUMZERO MANAGER Q&A: BUILDING AN ESG FRAMEWORK AROUND "QUIET INNOVATORS"
Catch SumZero's latest manager spotlight with Koon Boon ("KB") KEE on designing an ESG framework around "Quiet Innovators" solving complex global challenges from microbiological food production to extreme weather forecasting. [SumZero is the world’s largest community of investment professionals working with the industry’s most prominent hedge funds, mutual funds and private equity funds.]
[From SumZero] "For the fourth instalment of SumZero’s Active #Investor Series, we are excited to share an in-depth conversation with KB on his proprietary ESG framework, which hinges on the UN’s Sustainable Development Goal #9 and seeks to root out the most effective global innovators solving critical social and environmental challenges.
The rise of ESG as an asset class has been broadly covered by the financial media, with over $21T of generational wealth predicted to change hands over the next two decades. According to numerous studies by J.P. Morgan, Accenture, ImpactAssets and others, the next generation of asset-owners imbue a much deeper sense of social responsibility in their investment decisions.
In this interview, KB Kee offers his insights on industry perceptions of ESG, the K-shaped pandemic recovery, and the importance of investing in innovators during times of crisis. Kee also walks us through several H.E.R.O. Innovator portfolio companies from weather forecasting technology to microbiological food production to pharmaceutical drug products."
Public link to Q&A: https://sumzero.com/sp/HERO_innovators_qa
Our big thanks to SumZero's Avery Pagan, and her colleague Lorig Stepanian, for her thoughtful questions. Truly appreciative of the opportunity to share with the SumZero community about our H.E.R.O. investment framework in ESG investing.
[Excerpts from the Q&A]
"My decade-plus career - in the buyside from a boutique hedge fund to Korea’s largest mutual fund firm to H.E.R.O. - has been assisted by two mentors whom I am very grateful for their valuable guidance and kind encouragement.
My first mentor is Mr. TAN Seng Hock, who is the founder of a Singapore-based boutique investment management firm specializing in Asian small- and mid-cap stocks using the tenets of fundamentals-based value investing, GARP-style. I started out my buyside career here in December 2001 as an intern analyst and then senior fund manager and head of research. I learnt a lot from Hock’s philosophy of “Lion Entrepreneurs vs Hyena Businessman”. Both Lion and Hyena possess survival skills to win in the stern strife of actual life, though Hyenas are short-term thinkers with an opportunistic mentality. The most important difference between a businessman and an entrepreneur is that a Hyena businessman can always make money for himself in opportunistic arbitrage dealings (“doing this can make money”) but does not really care about the products or services or the customers he is serving, while a Lion Entrepreneur focuses on building an idea larger than himself or herself to serve others with a greater Purpose. The best way to preserve and grow capital in the long run is to identify honest, hardworking and farsighted Lion Entrepreneurs in whom to invest.
Another superhero is Professor LEONG Kwong Sin (“KS”), and he is the kindest and wisest teacher ever, like karate master Mr. Miyagi and Jedi Master Yoda of Star Wars. Prof KS Leong taught me the language of business – accounting - at the Singapore Management University where he was one of the key founding members who helped started and built the university, where the School of Accountancy is now ranked first in Asia and third in the world for Archival Research (All Topics), and second in the world for Archival Research in Financial Accounting. Above all, Prof Leong inspires his students to be critical thinkers and become a better person through his unique Socratic-style of teaching.
Later, I was fortunate to have the opportunity to teach at my alma mater for several years as a full-time faculty member at the School of Accountancy, where I pioneered the 15-week course and module on Detecting Accounting Fraud in Asia. I remained grateful to be invited by Singapore’s top financial regulator, the Monetary Authority of Singapore (MAS), to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community.
As a fund manager and educator in the Asian capital jungles since 2002, I have witnessed a number of investors and friends who invest their hard-earned money in companies with financial numbers that look good, have lots of cash in the balance sheet that’s audited by the Big Four, and have attractively cheap valuations, only to find them unravel into accounting frauds, in which financial numbers were propped up artificially to lure in more funds from investors, and the studiously assessed asset and cash had already been “tunneled out” or expropriated. This issue is compounded as western-based fraud detection tools and techniques have not been adapted to the Asian context to avoid these traps. It is disheartening to witness many fraud perpetrators go away scot-free and live a life of super luxury, on these unsuspecting minority investors’ hard-earned money.
In response, I went on to develop a proprietary system to detect accounting fraud in Asia. This is now embedded in Step 1 of the four-step H.E.R.O. framework in the often-overlooked ‘G’ in ESG to eliminate the downside risks from accounting tunneling fraud and misgovernance which escape detection by western-based forensic tools. For instance, prevalent across Asian companies, previously Big-4 audited “cash” in the balance sheet are often misclassified “cash equivalents” disguised from improper short-term related party loans employed by the insiders to expropriate or tunnel out cash from the company after initially propping up financial numbers artificially to create false positive signals to lure in funds.
In this journey that’s full of trials and tribulations, there have been also several kind and supportive heroes whom I would like to express my heartfelt thanks: John Mihaljevic, founder and chairman of MOI (Manual of Ideas) Global, and his brother Oliver; Dr. Hendrik Leber, founder and managing partner of ACATIS Investment Group; Professor Dr. Hermann Simon, founder of global strategy consulting firm Simon-Kucher & Partners; Mr. Hemant Amin, founder, CEO & CIO of single family office Asiamin Capital; François Badelon, founder and president of Amiral Gestion; and Mr. Benjamin Ng, founder, MD & CIO of Whitefield Capital; Value Investing 3.0 supporters Mr. KC Ong and Michael Roukounakis; my business partner Keith Wong; as well as our institutional investor client."
We have posted on our website: www.heroinnovator.com an uncut version of the Q&A, which include more cases from SaaS innovator in the Nordic to B2B e-commerce platform in Japan, and a meaningful conversation I have had with the happily-retired former CEO of the multi-billion family office of Tetra Pak, Mr. Beat Burkhardt, who once shared with me the inspiring entrepreneurial story of Tetra Pak and why next-generation asset owners should care deeply about purpose-driven investment. Download the uncut PDF.
WEEKLY MARKET COMMENTARY BY H.E.R.O. (5 to 9 Oct 2020)
The Portfolio of dividend-yielding H.E.R.O. Innovators from our selection rose for the fifth consecutive week during the week ended 9 October 2020, maintaining her overall absolute positive and relative outperformance against major world indexes since her recent birth on 28 August 2020, during which MSCI ACWI All World index declined -0.1%, S&P 500 -0.9%, NASDAQ -1%, and Greater China stocks slumped with Hang Seng index -5.1%, CSI 300 index -3.4% and HSCEI -6.7%, and gold physical spot (in USD) -1.8%.
The separate equity portfolio of H.E.R.O. innovators for our clients rose +5.3% during the week to a new record high with +50.7% in average returns since it was invested in March 2020 when the H.E.R.O. research methodology was implemented in March 2020.0.
- North American, Australia, Japan and Nordic stocks were key contributors in the Portfolio of dividend-yielding H.E.R.O. Innovators from our selection during the week, led by: (1) Canada’s Dominant #1 Overnight Domestic Freight Cargo Network with a Near-Monopoly Share of 95% (+14.2%); (2) Japan’s #1 E-Manual Database SaaS Innovator (+14.5%); (3) Australian Global #1 Leader in Hand-Held Metal (Gold) Detection & Ground Radar Technology (+10.2%); (4) Sweden’s #1 Cloud Accounting & Financial Management Software Leader for Small Businesses & Accounting Firms (+10%); (5) Australia’s #1 Enterprise Content Management (ECM) Cloud Software Leader for Mission-Critical Operations of Governments and Regulated Industries (+7.6%); The World’s Largest Pure-Play Dedicated Semiconductor Foundry (+9.9%), etc.
- The K-shaped recovery divergence, coupled with the worsening U.S.-China relationship, points towards the new world order in the post-pandemic future that marks the ascent of the quiet Nordic powerhouse region – comprising of Sweden, Denmark, Norway, Finland and Iceland with a combined GDP of over US$1.6 trillion, combined population of around 27.3 million people, and the highest regional GDP per capita in the world at over US$62,000 – where they are a Winter War kind of country: innovation happens when things are tough, not when they’re easy and comfortable.
Portfolio Snapshot: Japan's #1 E-Manual Database SaaS Innovator
[Week 5 to 9 Oct: +14.5%]
One of our portfolio companies in the Portfolio of dividend-yielding H.E.R.O. Innovators from our selection, Japan's #1 e-manual database SaaS innovator, is up +14.5% during the week (5 to 9 Oct 2020) and +43.4% since the inception on 28 August 2020, versus MSCI ACWI World index/NASDAQ -0.1%/-1% over the same period. The rising dividend-yielding company has also compounded +1,289% in capital gains in the recent 4 years vs MSCI ACWI World index +37.2%.
Founder, Chairman & CEO Mr. M shared: "VISION is the ultimate AI-AR (augmented reality) manual that anyone can use easily, which does not need the user to see nor memorize tens of thousands of pages of manuals, not only in Japanese and English, but also in any language. We want to escape from the conventional manual that has bothered engineers so far and have AI to monitor and guide the worker to prevent mistakes and complaints, and to shorten the training period for new workers. We have over 30 years experience in preparing manuals entrusted by manufacturers and we incorporated our existing product of cloud 'e-manual' know-how in AI and developed VISION. VISION is possible only because we know the manual. We are familiar with where to watch out and what kind of warning should be given. High performance machine vision in complicated shape recognition is also a big feature of VISION. The AI also recognizes procedures such as tightening the valves, injecting liquid etc and tells the workers how to do it and displays how many times to do so. In addition, it is also possible to call and talk to workers working in different places, so it will be useful for tasks that require team work, such as checking the work progress of the members.”
Portfolio Snapshot: Australia's #1 Enterprise Content Management (ECM) Cloud Software Leader for Mission-Critical Operations of Government and Regulated Industries
[Week 5 to 9 Oct: +7.6%]
One of our portfolio companies in the Portfolio of dividend-yielding H.E.R.O. Innovators from our selection, Australia's #1 enterprise content management (ECM) cloud software leader for mission-critical operations of government and regulated industries, is up +7.6% during the week (5 to 9 Oct 2020) and +12% since the inception on 28 August 2020, versus MSCI ACWI World index/NASDAQ -0.1%/-1% over the same period. The rising dividend-yielding company has also compounded +707% in capital gains in the recent 5 years vs MSCI ACWI World index +43.6%.
Founder, Chairman & CEO Mr. W shared: "Our ultimate vision is to connect government, by enabling processes and information to transcend organisational boundaries and also connect with private organisations and citizens. To connect government the culture of government had to change and the technology had to change. With both of these occurring, our company is uniquely positioned to allow an organisations to drive more efficiency and greater strategic value from their information. . A lot of people are coming back to market, not necessarily just looking for the next generation of product, but because they didn’t really succeed in implementing ECM and managing unstructured data the first time."
"If you look at the heritage of our company, we’ve been implementing multi-server systems across government for a long time. There are still massive silos of information across government and we are finally able to link those up. Our solution enables the connection of information and processes across those departments and agencies. A government process typically involves a document or case file of some sort. Our solution allows you to securely manage that case file through the reviews, approvals and conversation threads that occur around those documents. Our solution is all about connected process management.”
Portfolio Snapshot: Australian Global #1 Leader in Hand-Held Gold Detector & Ground Radar Technology
[Week 5 to 9 Oct: +10.2%]
One of our portfolio companies in the Portfolio of dividend-yielding H.E.R.O. Innovators from our selection, the Australian global #1 leader in hand-held gold detector & ground radar technology, is up +10.2% during the week (5 to 9 Oct 2020) and +13.3% since the inception on 28 August 2020, versus MSCI ACWI World index/NASDAQ -0.1%/-1% over the same period. The rising dividend-yielding company has also compounded +1,279% in capital gains in the recent 5 years vs MSCI ACWI World index +43.6%.
CEO Mr. M shared: "We are the world leader in handheld metal detecting technologies for recreational, gold mining, demining and military markets. Despite the challenges presented by the global COVID-19 pandemic, our company has once again achieved its highest ever sales and profitability, as we continued to successfully implement our strategic growth plan. This was driven by the strength of our gold detector sales into the artisanal gold mining market, continued growth in sales of our recreational metal detectors and several major contracts delivered by the Communications business which designs and manufactures mission-critical communications equipment for global military and public safety applications. The demand for our recreational detectors has been remarkably resilient right through the pandemic, which we attribute to metal detecting being a remote outdoor hobby that has the potential to find items of value. We also provide unique, high-precision tracking, productivity and safety solutions for underground hard-rock mines. Our technology allows real-time monitoring and control of mining operations in order to optimize productivity and enhance safety. It is an enabling technology required for mining automation."
Portfolio Snapshot: Canada's Dominant #1 Overnight Domestic Freight Cargo Network With a Near-Monopoly Share of 95%
[Week 5 to 9 Oct: +14.2%]
One of our portfolio companies in the Portfolio of dividend-yielding H.E.R.O. Innovators from our selection, Canada's dominant #1 overnight domestic freight cargo network with a near-monopoly share of 95%, is up +14.2% during the week (5 to 9 Oct 2020) and +25.8% since the inception on 28 August 2020, versus MSCI ACWI World index/NASDAQ -0.1%/-1% over the same period. The rising dividend-yielding company has also compounded +817% in capital gains in the recent 5 years vs MSCI ACWI World index +43.6%. Dr. V was recently recognized as Strategist of the Year, as well being named one of Canada's top leaders of 2020 representing the best corporate leadership, innovation, vision and responsibility by the Globe and Mail's Report on Business.
CEO Dr. V shared: "We posted the best quarter in our company’s history. The momentum that we started in quarter one has picked up speed in quarter two. Virtually all our key metrics including revenue, gross margin, adjusted EBITDA posted strong record growth level and this is allowing us to strengthen our balance sheet and create further capacity to capture hyper growth. We are experiencing a strong tailwind driven by several factors. Let me highlight a few things that help drive a strong quarter. Number one, let me begin with our charter business. We had a very strong charter revenue in quarter two. With passenger airlines cutting down over 90% of their flight schedules, there was a worldwide shortage of cargo flying capacity. The freight that used to fly in the bellies of passenger airplanes had no other alternatives. This led to a strong demand of our charter services and we flew charter flights to bring personal protective equipment from Southeast Asia and Europe for various federal and provincial agencies and some private companies in Canada."
"The online shopping or e-commerce as a percentage of total retail doubled in April compared to Q1 of this year. This trend continued in May and we have no reason to believe that it is slowing down. We are about 7% to 8% of total retail sales prior to COVID on e-commerce, and the rest was all still traditional sales. I can tell you that, us talking to many customers, everybody feels that this will certainly enhance and speed up Canada catching up to U.S., where 15% or 16% of the sales are on e-commerce, and in Europe and Asia, over 20%. Our customers are handling more B2C packages than Xmas or Black Friday. It is worth pointing out that the growth in e-commerce was not restricted to traditional larger retailers only. We saw thousands of small and medium-sized merchants shift their sales to online channels. We expect this trend to continue. We can accept cargo till 15 minutes of the flight and load it. So when people see the differences and we've noticed that in many cases, it same like when you're sitting home and ordering supplies online your habits have changed.”
“I would like to see a bigger stimulus package, frankly, than either the Democrats or the Republicans are offering,” Trump said on a radio program on Friday, saying he’s going in the “exact opposite” direction from his earlier stances. “Covid Relief Negotiations are moving along. Go Big!” Trump added in a tweet Friday. The hot air of stimulus hopes that’s widely expected to be announced before the U.S. elections has ballooned up the market to its best weekly gain in four months after the seemingly recovered Trump completely reversed his stance following his shocking unilateral walk away from U.S. fiscal relief talks on Tuesday. Markets continue to rise even as U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin failed on Friday to reach agreement on a COVID-19 stimulus package. Pelosi has proposed a $2.2 trillion plan, down from the $3.4 trillion package the House passed in May, while Mnuchin floated a new $1.8 trillion proposal, but the differences between the two sides involve more than money. They also differ on how it should be spent. Senate Majority Leader Mitch McConnell, the top Republican in Congress, said he doubted lawmakers would pass a package before the election. Underpinning the bullishness is the view that more stimulus is inevitable, regardless of who wins. The most bearish scenario for the market and a recovery is a Biden win with Republicans holding the Senate, which would make further stimulus least likely. The “Biden-is-bad for Wall Street” narrative is starting to fade as markets are repricing increasing odds of a Blue Wave scenario with Democrats winning the White House and the Senate, while retaining control of the House of Representatives, which is viewed as bullish despite the prospect of higher taxes, because of the potential of an even larger fiscal stimulus package and a less hostile relationship with China.
Notably, the S&P 500 had experienced a “breadth thrust,” the term used to describe a 10-day period in which advancing stocks outnumbered decliners by at least 2-to-1. That doesn’t happen very often—just 29 times since 1990—and it signals massive buying pressure in the market. Yet, interestingly on Friday, the dark crawling creatures of Cyclicals and Financials, who have been feeding off the misty vapors of stimulus hopes to a V-shaped recovery, were retreating back to their holes even as overall market gains, which looks to bode well for structural growth innovators to take back the market leadership as the grim reality sets in from the continued worrying and stubborn rise in global coronavirus cases dampening the stimulus efforts.
The earnings season will be starting again soon, with 25 U.S. S&P 500 companies worth $2.5 trillion reporting third-quarter numbers next week. This time round, the bar will be higher and the market beast is unlikely to be satiated with just the beating of conservative earnings expectations and will demand more of a positive and visible outlook prognosis to keep dancing.
While the short-term day-to-day price movement can be volatile, what continues to be crystal clear is that the quiet structural growth H.E.R.O. innovators remain the most visible and vibrant pathway in a foggy, volatile, whipsawing, uncertain market to deliver sustained outperformance with their healthy fundamentals results.
|The H.E.R.O. Investment Framework
The H.E.R.O. framework, methodology and strategy are powering equity portfolio asset for our institutional client. The Portfolio of dividend-yielding H.E.R.O. Innovators from our selection is the only equities strategy in the market that focuses on both dividend yield and innovation-driven capital gains to enhance total shareholders’ returns. It is also the only dividend-yielding equities fund in the market that is entirely not dependent on and with zero exposure to: (1) cyclicals (concentrated in economically-sensitive and rate-sensitive sectors such as financials, property & construction, energy & materials) that may not be resilient in economic downturns, and (2) cheap-gets-cheaper yield- and value traps. It also applies the proprietary forward-looking fact-based accounting fraud detection system that was pioneered and taught at the Singapore Management University, ranked top five in the world accounting rankings, and presented to the top management team of Singapore’s top financial regulator Monetary Authority of Singapore (MAS), to mitigate downside risks which escape detection by typical western-based forensic tools.I. Strategic Focus on Quiet Innovators & The H.E.R.O. Investment Framework
Our investment strategies distinguish from those of all other tech- and innovation-themed funds with its singular focus on quiet innovators, which present structurally mispriced opportunities and avoid overcrowded misopportunities that stem from the human tendencies to equate flashy popularity with excellence, and have an active ratio of over 95% (vs the MSCI World Index). The portfolio companies are exceptional innovators and focused market leaders in their respective fields with unique, scalable, recurring-revenue and high-profitability business models delivering innovative products and services indispensable to our well-being in daily life and run by high-integrity, honorable and far-sighted entrepreneurs with a higher Purpose in solving high-value problems for their customers and society whom we call H.E.R.O. – Honorable. Exponential. Resilient. Organization.H.E.R.O. is operationalized into a systematic 4-step investment process and investment framework powered by sustainability & ESG principles to identify the winners, to distinguish between the true innovators and the swarming imitators, between the devoted missionaries forging a greater Purpose and the mercenaries.We use the framework and positive criteria of the United Nations Sustainable Development Goals (SDGs) to integrate environmental, social, and governance (ESG) considerations into the research and investment process in selecting companies that generate sales in products and services that contribute to the achievement of the UN SDGs. The central focus of our impact investing is on innovators who contribute to the UN SDG Goal 9: Industry, Innovation, and Infrastructure — “Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation”.H.E.R.O. is unique in eliminating the downside risks from accounting tunneling fraud and misgovernance through unusual related-party transactions, consolidation accounting craftiness (opportunistic shifting of expenses and debt into unconsolidated entities), and hidden balance sheet liabilities at the wider pyramidal business group level etc., which escape detection by western-based forensic tools through a proprietary forward-looking fact-based accounting fraud detection system developed by KB, and taught at the Singapore Management University, ranked top five in the world accounting rankings, and presented to the top management team of Singapore’s top financial regulator Monetary Authority of Singapore (MAS). For instance, prevalent across Asian companies, previously Big-4 audited “cash” in the balance sheet are often misclassified “cash equivalents” disguised from improper short-term related party loans employed by the insiders to expropriate or tunnel out cash from the company after initially propping up financial numbers artificially to create false positive signals to lure in funds.
|II. Be Stronger, Wiser & Kinder By Participating in the Quiet Innovators' Quest to Purpose
“Innovators” are companies that generate sales in technologically enabled new products and services that potentially transforms the way the world works. We seek to identify companies capitalizing on innovation in offering faster, cheaper, more productive, more cost effective, more compelling products and services, or that are enabling the further development of an innovation theme in the markets in which they operate.Not only do the H.E.R.O. innovators generate high profitability at the inflection point of their exponential growth trajectory, more importantly, they are governed by a greater purpose in their pursuit to contribute to the welfare of people and guided by an inner compass in choosing and focusing on what they are willing to struggle for and what pains they are willing to endure, in continuing to do their quiet inner innovation work, persevering day in and day out.
|II. Quiet Innovators Thrive in Stormy Times
Prepare and position a winning portfolio for a post-pandemic world with innovators who thrive in stormy times and transform crises and trauma into opportunities for the future. The coronavirus crisis has helped accelerate innovation and enhanced the leadership of innovators. Market positions are not redistributed during sunny and calm times, but during times of crisis. The pandemic crisis has changed the behavior of both consumers and businesses. Companies offering faster, cheaper, more productive, more cost effective, more compelling and innovative products and services are gaining significant share.Market leadership and resilient winners in stormy market environment and in the post-pandemic future will be much less about the overcrowded popular trades in mega-cap tech and loss-making tech/biotech, as defined by FAANGT-STAMP (U.S.: Facebook, Apple, Amazon, Netflix, Google, Tesla; Asia/China: SEA, Tencent, Alibaba, Meituan-Dianping, Pinduoduo), who also do not pay any dividends (with the exception of Apple and Tencent), and will be led more by highly-profitable quiet innovators, including dividend-yielding cloud Software-as-a-Service (SaaS) companies.Notably, of the 90+ cloud software companies listed in the U.S., nearly all (>95%) do not pay any dividends, with many still looped in a negative free cashflow position, while the 20 global SaaS portfolio companies in the Portfolio of dividend-yielding H.E.R.O. Innovators from our selection are unique in being exceptional market leaders in their respective field with ample internal cashflow generative capacity to reinvest for higher-margin growth and still consistently produce rising dividend yield to reward shareholders.