Investors have much to learn from a new Netflix documentary, The Man With 1,000 Kids. It features a musician in Holland who was so prolific that the courts had to intervene.
Jonathan Jacob Meijer is a Dutch entertainer in his early 40s. He has published thousands of YouTube videos highlighting his music and travels.
Content is not the only thing that he has created. He has sired about 550 children through sperm donation since he was in his 20s.
Meijer’s exploits were highlighted in the documentary, which has reached the top of Netflix’s ratings since its release.
Many of the mothers have accused Meijer of misleading them. They say he has understated the extent of his donations. In Holland, the law limits sperm donors from producing no more than 25 children with a maximum of 12 mothers.
The limit is due to fears of consanguinity — when a couple are blood relatives. There is a risk of incest if there were too many children from the same father. Unsuspecting half-siblings could mate.
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The documentary includes interviews with women who say they feel betrayed by Meijer. One couple said that Meijer told them he was only donating to five families.
Last year, he was restricted with potential fines from further donations.
The scandal underlines a major investment theme. There is a fertility crisis brewing across the world. Birth rates have collapsed from China to France. The pitter-patter of little feet seems distant.
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This is a stunning reversal from the situation in the 1980s. Then, there was a fear of a population explosion in poor countries. China imposed a one-child policy. India used to encourage just two children per family with slogans like “We two, ours one”.
The reasons for the collapse in fertility are complex. It has accelerated since Covid. The chaos of the Covid years deterred people from child-bearing.
Singapore has borne the brunt of the collapse. Last year, the number of babies born was the lowest since 1971. This was a 6% y-o-y drop. The net reproductive rate in this country is well below 2.1, which is the level required for a stable population. Other Asian countries are facing similar challenges.
The demand for Meijer’s sperm is indicative of a larger trend. Birth rates may have collapsed, but the fertility industry is about to explode. About 2% of the babies born in the US are conceived using in-vitro fertilisation (IVF).
There are strong reasons for this rate to increase. Women are bearing children later in life. Sperm counts are falling due to long-term health factors.
Technology for fertility treatment has improved. Today, IVF patients aged between 40 and 45 have a higher chance of conceiving children than those aged below 35, compared to 1991.
This suggests that the demand for fertility treatments could accelerate. Investors looking to plant their seed in this idea have a few options. There is fertile ground in pharmaceutical stocks that specialise in these treatments.
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Organon, a spin-off from Merck, has just listed. It is trading at 7x EV/Ebitda, which is a 30% discount to the pharmaceutical peer group average. Its Ebitda has been flat in the last two years. The Covid convulsion may have taken its toll. But, brighter times could be looming. The street expects net earnings growth of 20% in FY2024 and FY2025.
Viatris is another pharmaceutical group with heavy exposure to fertility. It is also trading at a discount to the peer group and its historic average.
CooperCompanies is a US-listed seller of fertility equipment and contraceptives. Its sales were down by over 10% in FY2023. Its EV/Ebitda valuation is at a 10-year low. The street expects its revenue and net income to rise by a third in the next two years.
All three companies may be on the cusp of sharp earnings growth. They have devised new products which could capture the market.
The man with 1,000 kids defended his behaviour by claiming that he was providing society with a service. He said he was bringing joy to barren couples.
Meijer may not be the only game in town for fertility.
Nirgunan Tiruchelvam is head of consumer and internet at Aletheia Capital and author of Investing in the Covid Era. He does not hold any position in the stocks mentioned in this column. This column does not constitute investment advice of any kind.
