ELMRI April 25 Report
Dear Investor,
I am pleased to announce the release of our April 2025 Monthly Report for our Funds. During the month of April, the ELMRI ANZ Conviction Fund increased by 5.5% and the ELM Responsible Investments Global Fund increased by 6.6%.
Market Update:
April 2025 was a volatile month for financial markets, with Donald Trump’s “Liberation Day” tariff announcements on April 2 triggering sharp sell-offs. The sweeping measures included a 10% baseline tariff on nearly all imports and additional country-specific levies. However, sentiment improved later in the month with the pausing of certain tariff timelines and resilient Q1 2025 earnings commentary, with many companies reaffirming or upgrading their outlooks.
Amid these macroeconomic challenges, our investment philosophy remains steadfast: focusing on innovative and impactful companies within the sustainability universe. Such companies are well-positioned to thrive even during periods of subdued economic growth, as they offer superior products and services at lower costs.
These companies are particularly well positioned to perform during periods of anaemic macroeconomic growth or recession. In environments of low or negative growth, consumers and businesses actively seek out better products at lower prices — exactly what technology offers. This dynamic was evident in the post-GFC era when companies like Facebook, Google, and REA Group capitalised on shifts toward more efficient digital solutions. Today, we observe similar trends.
For instance, ServiceNow reported a 19% year-over-year increase in subscription revenues for Q1 2025, reaching $3.0 billion. The company's CEO highlighted strong demand for its AI-powered enterprise solutions, highlighting the value businesses place on productivity-enhancing technologies amid economic uncertainty.
Tesla also continues to innovate, with plans to launch its Robotaxi network in Austin in June 2025. While the initial rollout will utilise modified Model Ys, the company aims to introduce its purpose-built Cybercab in 2026. This initiative represents a significant step toward more affordable and efficient transportation solutions.
While earlier pessimism has eased, we continue to see several reasons for optimism:
The extreme nature of the announced tariffs suggests they may serve as negotiation tactics rather than long-term policies.
Anticipated tax reforms and deregulation could provide further support to equity markets.
Inflationary pressures are easing, with key components like shelter costs beginning to decline, potentially shifting from a headwind to a tailwind for investors.
The ongoing integration of AI across various sectors is still in its early stages, indicating substantial investment opportunities ahead.
Our disciplined approach, centred on identifying and modeling Key Value Drivers (KVDs), enables us to navigate volatile periods effectively. Reviewing our KVDs, we see no reason to lower forecasts and instead anticipate increasing growth opportunities.
Historically, periods of heightened volatility and market dislocation have created attractive entry points for long-term investors.
The chart above shows that quarterly drawdowns in the ELMRI ANZ Conviction Fund have consistently been followed by strong subsequent performance. April has been a strong month (shown in light green), and this trend has continued so far into May. Together with a supportive investment backdrop, we believe now is an opportune time to invest in companies positioned for long-term growth.
Company Spotlight: Tesla
Tesla reported weaker than expected vehicle deliveries for the first quarter of 2025, marking a 13% year-over-year decline. The company attributed the shortfall to production halts across major factories, including Fremont, Austin, Shanghai, and Berlin, due to the global rollout of its refreshed Model Y.
Despite the delivery miss, management provided several strategic updates with long-term implications. CEO Elon Musk confirmed that Tesla will launch its autonomous ride-hailing service in Austin in June 2025. Robotaxi production is expected to begin scaling by the end of the second quarter.
Tesla’s Full Self-Driving (FSD) system remains at SAE Level 2, requiring active driver supervision. However, the company continues to make progress toward full autonomy. In comparison, Waymo has deployed Level 4 autonomous vehicles in Austin, which Uber CEO Dara Khosrowshahi noted are busier than 99% of human drivers based on daily trip volume.
Tesla aims to produce at least 2 million robotaxis annually by 2026. If fully deployed, a fleet of 1–2 million robotaxis operating 40,000 miles annually could generate 40–80 billion miles per year. At a conservative monetisation rate of US$0.3 per mile, this translates to US$12–24 billion in recurring annual revenue.
CEO Elon Musk also announced plans to reduce his involvement with the U.S. government’s Department of Government Efficiency (DOGE), reallocating time toward Tesla’s operations as the company enters this critical expansion phase.
Company Spotlight: ServiceNow
ServiceNow is a leading enterprise software company specialising in digital workflow automation and AI-driven business transformation. Its platform enables organisations to streamline operations across IT, HR, customer service and other departments, enhancing productivity and efficiency.
ServiceNow's Q1 2025 earnings call highlighted strong financial performance, strategic acquisitions, and a focus on AI-driven growth. Total revenue reached $3.09 billion, marking an 18.5% year-over-year increase, with subscription revenue accounting for $3.0 billion, up 19% from the previous year, exceeding expectations.
CEO Bill McDermott attributed the strong performance to robust demand for ServiceNow's AI-powered platform, Now Assist, which has become its fastest-growing product. The company raised its full-year subscription revenue guidance to a range of $12.6 billion to $12.7 billion, reflecting confidence in its business despite macroeconomic uncertainties.
ServiceNow is also strengthening its competitive position through strategic acquisitions like Moveworks and Logik.ai to enhance its CRM offerings and enable a unified, AI-powered front office that integrates sales, service, and fulfilment workflows. The acquisitions address key areas within the CRM space, such as CPQ and sales order management, which are ripe for AI-driven automation and efficiency gains.
Company Spotlight: Novo Nordisk
Novo Nordisk reported robust first-quarter 2025 financial results, with revenue rising 18% year-over-year to DKK 78.1 billion (approximately USD 11.9 billion) and operating profit increasing 22% to DKK 38.8 billion. The growth was primarily driven by strong performance in its GLP-1-based therapies, including Ozempic and Wegovy.
Ozempic sales rose 24% year-over-year to DKK 32.7 billion, while Wegovy sales grew 85% to DKK 17.4 billion but missed forecasts due to competition from compounded semaglutide in the U.S. Despite these strong quarterly results, Novo Nordisk lowered its full-year 2025 guidance, citing slower-than-expected uptake of branded GLP-1 therapies in the U.S. market.
Looking ahead, Novo Nordisk anticipates a recovery in U.S. Wegovy sales in the second half of 2025, supported by the FDA's enforcement against compounded semaglutide products and expanded partnerships with telehealth providers and pharmacies. The company is also progressing with its pipeline, including regulatory submissions for an oral semaglutide formulation for obesity and a weekly injection for metabolic dysfunction-associated steatohepatitis (MASH).
Novo Nordisk remains focused on expanding access to its GLP-1 therapies globally, with Wegovy now available in 25 markets. The company continues to invest in manufacturing capacity to meet growing demand and maintain its leadership in the obesity and diabetes treatment landscape.
Company Spotlight: ResMed
ResMed is a global medical device company specialising in cloud-connected devices for the treatment of sleep apnea, chronic obstructive pulmonary disease (COPD), and other respiratory conditions. Its products and software solutions aim to improve patient outcomes and reduce healthcare costs by enabling better care outside the hospital setting.
Shares of ResMed rose approximately 4% following the release of its first-quarter 2025 earnings, which surpassed Wall Street expectations. The company reported revenue of $1.2 billion, an 11% year-over-year increase, driven by strong demand for its sleep apnoea devices and masks.
CEO Mick Farrell attributed the robust performance to ongoing momentum and strong execution across all areas of the business. He highlighted that the company's focus on operational excellence resulted in year-over-year margin expansion and a 34% increase in operating profit.
Company Spotlight: Mercado Libre
Mercado Libre is a leading e-commerce and fintech company in Latin America, operating in 18 countries, including Brazil, Mexico, and Argentina. The company offers a comprehensive ecosystem of services, including its online marketplace and digital financial services through Mercado Pago and aims to democratise commerce and financial services in the region.
Shares of Mercado Libre rose approximately 9% in after-hours trading following the release of its first-quarter 2025 earnings, which surpassed Wall Street expectations. The company reported revenue of $5.9 billion, marking a 37% year-over-year increase, and net income of $494 million, up 44% from the previous year. Earnings per share reached $9.7, exceeding analyst forecasts of $8.3.
The strong performance was driven by a significant rebound in Mercado Libre's Argentine operations, where Gross Merchandise Value (GMV) sales surged 126% on a foreign exchange-neutral basis. Argentina reclaimed its position as the company’s second-largest revenue market, overtaking Mexico, due to reduced inflation and interest rates enhancing consumer spending and credit demand.
Mercado Libre also reported a 75% year-over-year increase in its credit portfolio, totaling $7.8 billion, particularly through credit card offerings.
Conclusion
These companies are all actively investing in innovation and expanding into new markets, with a proven track record of success. We are excited about the future of our companies and remain invested for the long term.
Both the ELM Global Fund and the ANZ Conviction Fund are well-positioned to deliver long-term returns while capitalising on the transformative opportunities presented by AI and sustainability. By adhering to a disciplined investment strategy and focusing on companies driving innovation and positive change, ELM Responsible Investments continues to create value for investors while supporting a sustainable future.
If you wish to discuss any aspect of this report in greater detail, please do not hesitate to reach out. I would be more than happy to arrange a meeting at your convenience. Those interested in investing with us can explore our investment portal and review our fund documentation by clicking the "Invest Now" buttons provided below.
Thank you for your ongoing interest and support.
Kind regards,
Jai Mirchandani
Founder, CIO and Portfolio Manager
ELM Responsible Investments
ELM Responsible Investments Global Fund
ELMRI ANZ Conviction Fund
This note has been prepared by ELM Responsible Investments (‘ELMRI’) ABN 70 607 177 711 AFSL 520428, for Australian wholesale clients for the purposes of section 761G of the Corporations Act 2001 (Cth).
The information is not intended for general distribution or publication and must be retained in a confidential manner. Information contained herein consists of confidential proprietary information constituting the sole property of ELMRI and its investment activities; its use is restricted accordingly.
This note is for general informational purposes only and does not purport to be comprehensive or to give advice. The views expressed are the views of the writer at the time of preparation and presenting and all forecasts, assumptions, opinions, data and other information are not warranted as to accuracy or completeness and are subject to change without notice. This is not an offer document and does not constitute an offer or invitation of investment recommendation to distribute or purchase securities, shares, units or other interests to enter into an investment agreement. No person should rely on the content and/or act on the basis of any material contained in this note. Any potential investor should consider their own circumstances and seek professional advice.
ELMRI funds, its directors, employees, representatives and associates may have an interest in the named securities.
Past performance is for illustrative purposes only and is not indicative of future performance.