Compliments of the season to everyone. We wish you all the best for the year.
Above is a table showing the change in value of some of the key indicators that we have tracked during the year. We were extremely pleased with the 33% increase the Lunar BCI WW Flexible Fund achieved during 2023.
At Lunar Capital, we aim to invest in great businesses that can benefit from long term macro trends. Below are a few examples of long term trends we held last year and I mention some of the holdings we had that resulted in our performance.
1) Technology Innovation
As technology continues to advance, businesses are discovering innovative ways to harness faster and more efficient technologies. This can be done through the development of new products or the enhancement of operational efficiency, leading to cost reduction. Companies like Nvidia and ASML have been relentlessly pursuing new methods to create more efficient semiconductors and the equipment necessary for semiconductor production. These semiconductors provide the foundational building blocks for training Large Language Models, a branch of Artificial Intelligence (AI) that will have many opportunities for businesses to provide AI based services.
The world’s increasing digitization and interconnectivity to the internet have brought a heightened risk of cyber-attacks. Similarly, the increase in geopolitical tensions also increases the risk of cyberattacks. Consequently, there is a growing demand for enhanced cybersecurity measures from individuals, businesses, and governments. Companies like Palo Alto and Crowdstrike are at the forefront of developing new online security tools. Crowdstrike notably uses AI to detect and prevent cyberattacks.
3) Aging Populations and Modern Diseases
In developed nations, the average life expectancy is on the rise, leading to an increased demand for medical care as individuals live longer. This demographic shift also amplifies the need for effective wealth management, particularly among the wealthier older generations. UBS, a Swiss banker and wealth manager has benefited significantly in managing money for its wealthy clients around the world.
Companies such as Novo Nordisk and Eli Lilly have played a pivotal role in addressing health concerns associated with obesity, which is prevalent around the world . A recent trial showed that Novo Nordisk’s Semaglutide reduces the risk of major adverse cardiovascular events by 20% in adults who suffer from obesity.
Our view is that these themes can play out over multiple years. At Lunar Capital, we aim to find great businesses that we think will do well with the tailwinds from these mega-trends. Sabir covers this in more depth in his Quarterly Investment Review and Investment Strategy.
Nvidia, ASML, Microsoft, Palo Alto, Crowdstrike, UBS, Novo Nordisk and Eli Lilly are held in the Lunar BCI Worldwide Flexible fund. They are also held by Lunar Capital’s Offshore Portfolio clients.
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The Lunar BCI Worldwide Flexible Fund Fact Sheet can be read here.
This stocktake is prepared for the clients of Lunar Capital (Pty) Ltd. This stocktake does not constitute financial advice and is generated for information purposes only.