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Notre Dame investment club meets, hears pitch for Adobe

| Thursday, November 18, 2021

As a portion of the University’s endowment, Notre Dame’s investment club manages a $1.2 million portfolio of long equity positions. The investment club board invests in long equity positions with the intent to sell securities when they reach a higher target price.

Libbie Frost and Grace Kamholz — the first all-female pitch team of the semester — presented computer software company Adobe Inc. at the club meeting Tuesday.

In their pitch, Frost and Kamholz gave three rationales for investing in Adobe: the expansion of Creative Cloud total addressable market (TAM), digital transformation and future work as Adobe rides the tailwinds of non-fungible tokens (NFTs).

Frost and Kamholz said Adobe has a lot of opportunities to address a larger market, especially given the growing number of creators, fueled by the growth of social media platforms like TikTok.

“The exploitation of untapped market potential for the growing amateur content creator population will accelerate the expansion of Adobe’s Creative Cloud total addressable market,” Kamholz said.

There are 46.7 million creators who consider themselves amateurs and 3.2 billion gamers in the world. Frost and Kamholz said these creators are drawn to Adobe’s expansion of the Creative Cloud. Adobe’s online creative community currently has 24 million members and counting.  

The Adobe team’s second rationale looked at how the platform is prepared to help with the online transition of some jobs.

“Document and Experience Cloud offerings are perfectly positioned to shape the future of industries lagging behind the digital transformation trend in the workplace spurred by the COVID-19 pandemic,” they said.

With the COVID-19 pandemic, industries had the chance to see just how realistic online work can be.

“Seventy percent of companies do not realize the full return of interest of the digital transformation investments,” they said.

The team argued that these findings show how much Adobe’s base will expand as companies begin to transition to hybrid online work.

Adobe can also help firms with cost optimization, tech simplification and application modernization in this new hybrid and online work era, the Adobe team said.

Companies today are saving money with features like e-signatures, one of Adobe’s many functions. Each e-signature transaction saves $428 and generates a 420% return on investment.

Frost and Kamholz’s final rationale focused on Adobe’s long-term growth.

“Adobe is poised for sustained long-term growth as an enablement tool for the newly emerging spaces of non-fungible tokens and content authentication,” said Frost and Kamholz.

Adobe is catching the rising trend of NFTs with secure digital art, music, videos and more.

Frost and Kamholz said NFTs have staying power because they solve real-world problems. Adobe has recognized this need, they add, and has responded by providing a secure platform to prepare, store and authenticate NFTs.

Among other investment rationale, Frost and Kamholz believe Adobe is positioned for future growth centered around NFTs and the launch of the Photoshop web application. Adobe also has a competitive advantage over other design programs because it gives the user more creative freedom and unique design opportunities, they said.

“In conclusion, with the expansion of the TAM, certainty position in hybrid work, then NFC and authentication tailwind, we believe that there will be a 24.5% potential share price growth for Adobe,” Kamholz said.

The Investment Club has not yet announced a decision on initiating a position in Adobe.

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