July: Strong month for Global Security Fund - cybersecurity companies benefit from increased investment focus


It was a strong month for the Global Security Fund, which was up 3.3 percent and 3.4 percent for the share classes R and S, respectively. Cyber security companies benefited from an increased investment focus in the industry after another high-profile cyber attack. This time it was the Kaseya attack that affected COOP and many other companies around the world.

The cybersecurity company Fortinet continues to perform and reported better than expected results for the quarter. The rate of investment in the cybersecurity segment of companies seeking protection against cybercrime has benefited the company, which reported that corporate orders have seen a marked increase. The share rose 14.8 percent for the month with a contribution of 0.75 percent.

Kongsberg Gruppen released a strong report that beat market expectations. The company continues to impress within the various departments. In Defense & Aerospace, the company delivered an EBITDA of 21 percent with revenue for the quarter that was 22 percent higher than the year before. In the Maritime business area, the company sees a significant increase in new orders, while Digital has signed a number of new orders to existing customers as new. The company's management is extremely positive about future developments. The share was up 11.8 percent for the month with a contribution of 0.65 percent. The fund increased its holding in the company in July.

Saab was up 15.1 percent after a stronger report and results than expected. The company has been heavily positioned during the covid pandemic but is now seeing a recovery in the sector and with more orders than expected, the company has also upgraded the expected annual result. The company has been lagging behind the other defense companies for a long time and the price development on the share price reflects investors' dissatisfaction, but the future looks brighter. The company delivered its second unit to the flight test program for the training aircraft on July 24, and after the technology and manufacturing phase has ended, production for the project will be moved to the company's facility in Indiana, USA. The company also received a large order from the German Navy in connection with a modernization of the country's F123 Frigates. The company's price increase made a contribution of 0.41 percent.

The technology company Teledyne Technologies reported better-than-expected sales and a better adjusted earnings per share and also upgraded the company's expectations for the year's earnings. Demand for drones and robots is increasing and the company's niche in this segment provides support for a higher share price. The company was up 8.6 percent with a contribution of 0.38 percent.

L3 Harris Technologies, which reports next month, was up 5.4 percent for the month with a contribution of 0.34 percent. The company has a niche in surveillance systems and confirmed that the company has won a contract with NATO to develop their air warning system.

The cyber security company NortonLifeLock was down 8.4 percent for the month with a contribution of 0.3 percent. The company reported a slightly better than expected result but was met with negative reactions to the news that the company is interested in a merger with Avast - a London-listed Czech company that offers a so-called 'freemium' model where customers receive basic packages for free but buy more advanced services . So far no agreement has been reached and NortonLifeLock has until August 11 to place a bid on Avast.

Boeing reported better-than-expected sales and delivered a positive report showing an increase in deliveries of 737 aircraft. Great uncertainty about the recovery of the aviation industry has kept the price down and it will take time before the share returns to previous valuation levels. The company was down 4.9 percent during the month with a contribution of 0.1 percent.

Lockheed Martin delivered as expected with slightly better sales and slightly worse earnings per share. The fact that the production of the F-35 fighter aircraft is lagging behind is like a wet blanket over the company's share price, but the focus should be on the company's growth in space and hypersonic development. The company is considered a premium provider of security services and is a very successful company that also has a free cash flow of over 7 billion USD. The company was down 1.3 percent with a contribution of 0.1 percent.

The marine company and aircraft carrier manufacturer Huntington Ingalls Industries report next month but were down 2.2 percent with a contribution of 0.1 percent. The company reported on July 7 that it will buy Alion Sciences and Technology Corporation for $ 1.65 billion in a bond-financed cash transaction. Alion has a long history in the security industry in AI, cyber security and electronic warfare. Huntington announces that the acquisition will benefit the Technical Services Division area - a strategic area for the company.

Read the full report here.

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Monthly Commentary – January 2023

What a start we had to the stock market year 2023 and positive returns broadly across several asset classes. It has been risk on and risk taking