April 2020 monthly letter


Massive Central Bank interventions all over the world helped calm the panic in the market we saw in March, which led to increased investment appetite and share prices that rushed away for virtually all companies. The Global Security Fund had its best month so far and returned 12.6 percent, significantly better than the Swedish stock exchange, which was up 6.4 percent. It was not unexpected that the market recovered after the sharp downturn in March, but the intensity of the upturn is remarkable. Looking at the market in general, we see a huge difference in return on technology shares compared to cyclical shares - Netflix is up just under 30 percent this year and is trading at a PE figure of 86 which confirms investors' belief that strong growth will continue.

There is no doubt that the world will change. An example is the possible transition to a more flexible workplace where it will become more common to work remotely. Clear winners of this development are Microsoft, Amazon and Google through their cloud solution services. Microsoft, which won the US JEDI contract, is one of the fund's holdings and is up over 10 percent this year. We believe the trend towards the digital workplace will increase the growth rate of security solution demand, which will lead to good business opportunities for the technology companies in this area, but it is important to find the right company to invest in. Such a company that has so far benefited from this acceleration in demand on security solutions is Crowdstrike which is up over 45 percent this year. The company that offers cyber security solutions is based in California, but has a global presence and has been involved in a number of high-profile infringements that include the Democratic National Committee's email leaks and cyberattacks. The company is one of the five largest holdings in the fund with an allocation of 7.1 percent. The company's share price is up 145 percent since the fund bought in March and was up over 24 percent in April, again among the top-performing holdings. Other companies that performed particularly well in April were suppliers of technology and software solutions CACI, Mantech International and Science Applications International, up 20.8 18.9 and 16.6 percent.

It has been a nightmare year for the American aviator Boeing, which was the only holding in the fund whose course was down in April. It started with Boeing losing credibility in handling the 737 MAX crashes to fully evaporate market demand for new aircraft. It is obvious that this market environment will take years to repair. For a long time according to Warren Buffett who has decided to sell off his airline investments. Massive state rescue packages for the aviation industry will eventually lead to recovery in an important industry. According to the company's quarterly report, COVID-19 will lead to increased demand for smaller to medium-sized aircraft, and although demand for aircraft will be depressed for some time, the situation is not completely night-black. In confirmation of investors' belief in Boeing, the company had no problem filling its latest $ 25 billion bond issue without government assistance. The Fund's holding in Boeing is about 1 percent.

You can download the report here

More to explore


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