Factsheet: January 2021
Strategy
The Fund's objective is to achieve optimal long-term capital growth through an active management of a portfolio of large-capitalisation stocks based primarily in North America.
The investment strategy is based on a fundamental analysis.
The stock selection process is based in particular on the activity of companies, their governance, financial structure and development perspectives. The fund aims above all to identify companies with dominant positions, with a significant reinvestment capacity and low levels of gearing.
The recommended investment period is 5 years. The reference currency is the US Dolla
Markets
Markets in the United States ended in the red in January, with the volatility index (VIX) practically doubling at the end of the month as a result of massive arbitrage by managers affected by the Gamestop affair.
In this context, the S&P 500 lost 1.11% and the Dow Jones Industrials 2.04%, indicating a slowdown after the upwards rally which began at the end of October.
From a sectoral perspective, there are major winners, with the automotive sector showing a recovery of 13% and the construction sector recording an increase of 8%. On the other hand, hotels and casinos, down by 11% and 14% respectively, are suffering from the surge in contamination and the fear of new variants despite the vaccination campaigns.
The Fund
The fund generated a negative performance with a decline of 3.87% over the month. This decline can be explained by the significant selling of some safe investments, which we hold in our portfolio, by Gamestop's distressed short-seller funds.
Visa and Verisk Analytics who fell by 11.65% and 11.60% respectively, have been the main victims of these forced sales by certain hedge funds who were in turn facing margin calls on their declining speculative placements. We have capitalised on this movement, which we view as being exaggerated, to reinforce certain holdings such as Visa.
The fund has benefited from the excellent performances of Waters with an increase of 8.31% and Microsoft with a rise of 5.06%, whose published exceptional results have pushed their share prices to new historical records. We therefore remain confident on the medium-term perspectives with the approaching results announcements.
The beginning of the year is still marked by a persistent uncertainty related to the pandemic and political instability in the United States. Furthermore, sector reallocations are still being made in favor of the sectors most affected by the crisis. While this could result in a slight decline in our out-performance in the short term, we obviously do not intend to deviate from our guiding principles to invest in companies whose investments do not even cover their cost of capital (what we call value destroyers).
The companies in which we have invested remain attractive in view of their growth prospects and, if there were to be a moment of underperformance, we would see this in a positive light, offering new purchasing opportunities. As you are aware, better win the war than a battle.
For more information, please email us: contact@fisconsult-sinews.com