Magellan Global Fund, the investment fund that has returned 15% per year, is bullish on Facebook's (FB) prospects with fund manager Hamish Douglass citing user engagement and its advertising might as two reasons for future growth.

In Magellan Global Fund’s monthly update to investors, Douglass called Facebook’s platform unique and non-replicable, with the social media company benefiting from what Douglass said is a strong network effect, which he said means the more people that join, the more valuable the network becomes to everyone. Facebook makes up 3.8% of the Magellan Global Fund. (See more: Credit Suisse: Facebook Stock Has Huge Upside)

According to the fund manager, while Facebook could end up falling short of expectations there are reasons to expect the company will continue to grow, with user engagement being a big one. The way Douglass sees it, Facebook users are very engaged and pointed to Facebook’s comments back in April of last year when it said the average user spends 50 minutes per day on Facebook, Instagram and Messenger. Douglass said that is increasing at double-digit rates this year. “Even as the number of its monthly active users has grown from 600 million in 2010 to 1.9 billion in 2016, the share of these users who visit its properties daily has increased from 54% to 66%. That means more users are visiting more often,” wrote Douglass. As for the increasing competition for users’ attention, Douglass doesn’t seem too concerned with the likes of Snap Inc.’s (SNAP) Snapchat, saying Facebook’s engagement keeps rising despite it all. (See more: Snap Rolls Out Mobile Ad Tool Aimed at Facebook)

As for advertising, Facebook’s bread and butter, Douglass credited the company with being skilled at “exploiting” its network for advertisers in a handful of ways. For starters, the investor pointed to its ad-targeting abilities, saying they are “best in class.” Facebook collects a lot of data on its users from information about themselves, friends, family and co-workers to the brands they interact with and all of that data is Facebook’s alone. That affords marketers the ability to target their ads on the social media network, which is very valuable to the advertisers. “Facebook’s ability to target such niches for advertisers will improve over time as technology advances and it collects more and richer data,” he said. But the advertising advantages don’t stop there. Douglass noted Facebook can measure ad performance and effectiveness of ads better than offline media can and is benefiting from a big shift to mobile advertising. Douglass pointed out that in fiscal year 2016, of the $27.6 billion in revenue generated from advertising, 84% was delivered on a mobile device. Over the long haul Douglass expects Facebook’s main business to grow at “high rates” and the number of users to increase, with emerging markets seeing a lot of that growth. “Facebook’s core business alone presents an attractive investment. These additional businesses provide the potential for material additional upside as Facebook offers more and better services to its billions of engaged users,” said Douglass.

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