European Stock Story of the Month – Logitech

Most of us are so utterly at ease with the ability to connect ourselves to the outside world via whichever electronic device we choose. We think nothing of Bluetooth, of wireless speakers, of tablets that click into magnetic slots for keyboard functionality. In short it seems a world away from 1981, when, as an 11-year-old, I remember the first time I saw a computer. I wasn’t that impressed. A big box that could do complex maths, and something for which so many of my peers queued patiently in that most British way, to play a single and simplistic game called Lawnmower. None of us knew that 1981 was the year that our February stock story Logitech leapt onto the world stage to become a powerful and daily feature of many of our lives.

Logitech (www.logitech.com) was founded in Apples, Switzerland, forty years ago. Its purpose was to provide improvements in the experience for users of the personal computer platform. They commercialised the concept of the mouse – not their own invention – it was Douglas Engelbart who pioneered the creature in the early 1960s. Logitech used their engineering capabilities and their marketing to push the concept of PC peripherals with huge success. Nowadays Logitech employs 6,600 people across the world[1] of whom around half work in production. The organisation works via a network of 24 principal offices and smaller sales offices worldwide. The shares are listed in Switzerland and on the New York Nasdaq and have been held in the fund since inception.

The buy case is very simple. Logitech has excellent innovation abilities and whilst staying away from the bleeding edge of technology such as virtual or augmented reality, the company provides very high-quality consumer products at a mid-range price. They have diversified from the purely peripheral items such as mice and webcams (though their 10-year-old webcam is still an absolute winner, smashing all expectations during lockdown) to higher tech and growth areas such as gaming and video collaboration, where Logitech’s engineers are constantly innovating to capture new trends. They have also grown via acquisition, most notably with entry into the speaker and headphone market through brands such as Ultimate Ears and Jaybird[2]. Logitech has managed to navigate the challenging and constant technology advances without losing impetus or focus.

There is no doubt in my mind that the only sustainable competitive advantage in any business is its culture. Who knows who first came up with the phrase that Peter Drucker is most often associated, but I firmly believe that culture really does eat strategy for breakfast. Logitech’s President and CEO Bracken Darrell has been with the company since 2013, and he cascades his culture aspirations consistently and fiercely. The organisation’s purpose and its values are evident and clear. Sustainability is at the heart of all activities whether customer-facing or upstream in audit of their supply chains. Perhaps surprisingly, 2020 marks the twelfth sustainability report from Logitech. The company has not made fanfare of this work in the past, but we are now seeing it front and centre. We suspect that many companies have a strong ethos on sustainability but perhaps don’t expound the fact, and we like the way that Logitech presents itself in its quest for maintaining that intangible quality which endorses its social licence to operate. The commitment to align themselves with external initiatives including the Responsible Minerals Initiative, the Responsible Labour Initiative, and the National Minority Supplier Development Council[3], show that Darrell and his team have been walking the walk long before they learnt the flashy talk of ESG. We feel that Logitech is a company with strong values and clear transparent targets for emissions reduction, recycling and for responsible sourcing. The company is open about its communication on diversity. Darrell wants more female leadership. Currently the board has 4 female members of a total 13, and the company has been specific that it wishes to improve this figure[4]. Wendy Becker as chairperson will have this on the agenda. We see Logitech taking positive steps to make progress on its sustainability journey and we look forward to hearing more from a company which values transparency and challenge. We like Bracken Darrell’s statement: “As much as we’ve done and as far as we’ve come, we at Logitech aren’t moving fast enough either”[5]. This statement shows self-awareness and a clear drive to continuing the momentum. We wish more companies would be so brave.   

Written by Rory Hammerson

[1] https://www.logitech.com/content/dam/logitech/en/sustainability/pdf/resources/sustainability-report-2020-screen-double-spread.pdf

[2] https://en.wikipedia.org/wiki/Logitech

[3] https://www.logitech.com/content/dam/logitech/en/sustainability/pdf/resources/sustainability-report-2020-screen-double-spread.pdf p24

[4] https://www.logitech.com/en-us/about/leadership.html

[5] https://www.logitech.com/content/dam/logitech/en/sustainability/pdf/resources/sustainability-report-2020-screen-double-spread.pdf p7

Information is accurate as at 10.02.2021. Opinions constitute the fund manager’s judgement as of this date and are subject to change without warning. The officers, employees and agents of CIP may have positions in any securities mentioned herein. This material may not be distributed, published or reproduced in whole or in part. With investment capital is at risk.

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