Weekly Roundup 2022-12-07

Author: Danyaal Munshi

Weekly Roundup 2022-12-07

Key Indicators

Index / Fund / Rate Start of Year Last week This Week % change YTD
JSE ALSI 73 723 74 323 74 548 1,12%
NASDAQ Composite 15 833 11 461 11 005 -30,49%
S&P 500 4 797 4 072 3 934 -17,98%
Prime Lending Rate 7,25% 10,50% 10,50% 44,83%
Lunar BCI WW Flexible Fund 165,68 149,36 147,52 -10,96%
USD/ZAR 15,96 17,51 17,35 8,71%
EUR/ZAR 17,95 18,46 18,28 1,84%
Brent Crude 77,86 85,90 76,63 -1,58%

Source: iress

Company and Market News

This will be our last weekly roundup until January. Whilst the holiday mood is settling in, we at Lunar Capital will still keep our eyes and ears on the market.

One of our core investment themes is Health. We often talk about why we are invested in Healthcare companies. Our view is innovative advances in biotechnologies, people having a more acive lifestyle and fewer violent conflicts over the years are helping people to live longer as well as other socio-economic progresses. Behind these health themes are businesses that are developing and offering people products and services to help maintain and improve their lifestyles; and providing preventative and curative treatments for diseases.

Recent advances include:

  • Biogen and Eisai having completed the early-stage trials for an Alzheimer’s treatment that has produced the first set of promising results in a while. The results show the treatment can help reduce the effects of dementia, if caught early enough.
  • Novo Nordisk has completed late-stage trials for an obesity drug that has shown it can help patients lose weight and keep their weight off.
  • Lululemon like Nike and others, creates athleisure products and promotes a healthy lifestyle.

Even though health and healthcare are good investment themes, the best investment we can make is in our own health. As we head into the holiday season, we tend to over indulge. Holiday traffic and bad driving also increase during the season.

Our final words to you are to use this extra time to reflect and take concrete actions on improving your health and staying safe. Invest in your mental health by resting, in your physical health by exercising and not over-indulging, and in your safety with safe driving.

See you in the New Year.

Lululemon and Novo Nordisk are held in the Lunar BCI WW Flexible Fund.

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Every Tuesday, at 07h45, Sabir chats with Nazia from Eastwave Radio (92.2 fm, live stream on www.eastwave.co.za) on investing and the markets.

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Disclosures
Read our full Disclosure statement: https://lunarcapital.co.za/disclosures/
Our Privacy Notice: https://lunarcapital.co.za/privacy-policy/
The Lunar BCI Worldwide Flexible Fund Fact Sheet  can be read here.
This roundup is prepared for the clients of Lunar Capital (Pty) Ltd. This roundup does not constitute financial advice and is generated for information purposes only.
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CrowdStrike’s latest quarterly results reflect a business that continues to scale at an impressive rate, while also illustrating some of the tensions between growth, profitability, and valuation that increasingly define the cybersecurity sector. The company reported total quarterly revenue of $1.39 billion, up 26% year-on-year, reinforcing its position as one of the fastest-growing large-cap cybersecurity platforms. Growth was supported by strong demand across its Falcon platform, with net new annual recurring revenue (ARR) of $256 million, up 32%. This brought total ending ARR to $5.51 billion, a 24% increase, highlighting the durability of its subscription-based model and the continued expansion of its installed base. Despite this top-line momentum, profitability remains work in progress. CrowdStrike reported a GAAP operating loss of $30.6 million, a meaningful improvement from the $108.7 million loss recorded in the prior period, but still indicative of a business investing heavily in growth. While the trajectory is clearly improving, the pace of margin expansion remains a key area of focus for investors, particularly as the business scales. A central theme in management’s commentary was the growing intersection between artificial intelligence and cybersecurity. The company pointed to what it described as an inflection point, where AI is not only enhancing defensive capabilities but is increasingly being weaponised by attackers. The proliferation of AI-driven threats raises the complexity and frequency of cyberattacks, reinforcing the need for advanced, real-time protection. In this context, CrowdStrike’s access to leading AI models through partnerships with firms such as OpenAI and Anthropic stands out as an important competitive advantage. These relationships, alongside collaborations with Microsoft and IBM, position CrowdStrike at the centre of an evolving ecosystem where cybersecurity, cloud infrastructure, and AI capabilities are becoming deeply interconnected. Stock-based compensation still remains elevated and continues to weigh on the company’s path to sustained profitability. While common across high-growth technology businesses, it represents a real economic cost to shareholders and, at current levels, raises questions about long-term margin structure. Valuation is another important consideration. CrowdStrike continues to trade at a premium relative to its revenue base, reflecting both its growth profile and its perceived strategic importance in the cybersecurity landscape. However, this also leaves less room for execution missteps. Notably, while revenues grew by 26%, this fell short of some market expectations, suggesting that the bar remains high and that incremental disappointments can have an outsized impact on sentiment.
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Lunar Capital
on Eastwave Radio

Every Wednesday, at 07h45, Sabir chats with Nazia from Eastwave Radio (92.2 fm, live stream on
www.eastwave.co.za) on investing and the markets.

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