VCS Agency

“The earth, the sea and air are the concern of every nation. And science, technology, and education can be the ally of every nation.”

— John F. Kennedy

South Africa, through the Independent Communications Authority of South Africa (ICASA) took a big step, when it finally auctioned off the 5G spectrum last month (March 2022). 5G stands for fifth generation cellular network.

Let’s quickly look at the advantages of 5G technology:

• 5G is substantially faster than 4G, allowing speeds of up to 20 Gigabytes per second. For example, movies can be downloaded in seconds, versus the minutes that it takes to download movies on 4G.
• It will be a key enabler of new technologies, such as robotics, robotic surgery, self-driving vehicles, and the Internet of Things (IOT), as it can transmit vast amounts of data very quickly.
• It allows quicker access to data, as the speeds at which data is transmitted is much faster. Thus, we can rely more on critical data been transmitted timeously and with significantly reduced lag times. This is critical in very time-sensitive data transmission like security, self-driving vehicles, robotic surgery, etc.

Now, let’s look at some of the disadvantages:

• The broadcasting distance of 5G is shorter, thus requiring more towers closer to each other and 5G transmissions are also prone to interference from high trees and buildings. This means that more towers will be required, which costs the network operator (and ultimately the consumer more). But this is not the only cost factor. Other factors may influence costs both positively and negatively.
• Whilst faster speeds benefit users, it is also beneficial to hackers as they too now have increased capacity to hack into networks and devices. Imagine being hacked (is that hihacked?) into a self-driving vehicle.
• Access to 5G, will not only require access to a 5G network, but you will also be required to have a 5G enabled mobile phone or another 5G enabled device. Ofcourse, these would cost more.

Our experience with most technologies is that we may not fully appreciate how our needs may change as these technologies mature. Newer technologies enable newer services or products that we may not even have thought about. According to Computer Weekly, 5G technology provides some exciting prospects for innovation in:

• Agriculture by improving analytics and resource usage, to improve crop yields.
• Remote education by improving content, transmitting content more reliably and improving learner experience.
• Improved logistics (safer transport infrastructure, perhaps?), through IOT devices tracking goods wherever they go and in autonomous vehicles.
• Advanced healthcare through analytics, patient monitoring, remote diagnostics, and robotic surgery.
• More efficient and personalized retail experiences, for example allowing customers to visualise furniture in their own homes, contactless shopping.
• Smarter government and utilities to track traffic flow and service use with multiple endpoint sensors, to have smarter grids to improve energy resilience (i.e. reduce loadshedding), etc.

At Lunar Capital, we are optimistic on these possibilities of 5G and we have invested in a number of companies (e.g. MTN, Vodacom, Qualcomm) that we think may benefit as these technologies roll out and mature.

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February 2022 Fund Fact Sheet

The Lunar BCI Worldwide Flexible Funds February 2022 Fund Fact Sheet can be found on our website, showing the latest performance of the fund, amongst other pertinent information.

If you wish to subscribe to our mailing list, you can do so here. Please feel free to forward this to anyone who may be interested in receiving our Insights.

Privacy Notice

Lunar Capital is committed to safeguarding the privacy of all persons transacting with us.  We collect personal information from you, and you may submit personal information to us. We handle the collection, processing, and storage of your personal information in accordance with the Protection of Personal Information Act (POPIA) No. 4 of 2013, and your information will not be shared for direct marketing purposes.

Our Privacy Policy can be found on our website, www.lunarcapital.co.za as amended from time to time.

“The stock market is a device for transferring money from the impatient to the patient.”

– Warren Buffett

What a tumultuous time we live in currently, with the Russia/Ukraine War, increasing commodity prices, including oil; higher inflation and we don’t even know what Covid-19 has in store for us in the next round.

Understandably, clients of Lunar Capital have called us to ask what they should do under these circumstances. Some are concerned and want to sell; some see this as a buying opportunities and others who want to invest don’t know whether they should or shouldn’t invest now.

In our view, it is not easy to predict what will happen in the short-term. The answers to our clients’ questions also depends very much on their own financial circumstances, risk appetite and their long-term plans.

If you are investing for the long-term, then the biggest mistake that you can make as an investor is to sell in a panic. Panic selling is an emotional decision. It locks in a loss in your portfolio. But perhaps the biggest mistake is that you will more than likely stay out of the market and miss out when market rebounds, losing out on potential future gains as well.

Another mistake is that investors may be a bit too aggressive early on in a bear market. This may be because they have excess cash that has yielded very low returns, or they missed out on a previous bull market, or they have a higher risk appetite. This approach may pay off if the bear market is short and sharp (like we experienced in March 2020). However, it could be a longer bear market and the aggressive investor may miss out on future cheaper prices.

Our view is to take a more considered and cautious approach. Invest in small amounts (like regular debit orders) and ride out the peaks and troughs of the market swings. This reduces the risk of large capital losses but also allows you to take advantage of prices as they are lower.

The best approach is to have a long-term strategy which guides you through the swings in the market. For example:

• Regular contributions to a fund or funds that meet your long-term financial objectives.
• Increasing your offshore exposure to a pre-determined target (e.g., 40-50% of your net investable assets).
• Having the right mix between growth assets like stocks and some cash required for emergencies and short-term requirements.
• Have some diversification in your investments, but not too much.

You can also take advantage of sale prices in excellent businesses that will likely pay-off in the long-term. You will need the patience to ride out the volatility and bear market conditions in the short-term, however.

Be cautious, there may still be more volatility and pain in the short-term, many stocks are certainly offering better value then a few months ago.

 

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January 2022 Fund Fact Sheet

The Lunar BCI Worldwide Flexible Funds January 2022 Fund Fact Sheet can be found on our website, showing the latest performance of the fund, amongst other pertinent information.

If you wish to subscribe to our mailing list, you can do so here. Please feel free to forward this to anyone who may be interested in receiving our Insights.

Privacy Notice

Lunar Capital is committed to safeguarding the privacy of all persons transacting with us.  We collect personal information from you, and you may submit personal information to us. We handle the collection, processing, and storage of your personal information in accordance with the Protection of Personal Information Act (POPIA) No. 4 of 2013, and your information will not be shared for direct marketing purposes.

Our Privacy Policy can be found on our website, www.lunarcapital.co.za as amended from time to time.

“All overnight success takes about 10 years.” ― Jeff Bezos

In 2021, we achieved several milestones at Lunar Capital:

• Celebrated 5 years of the Lunar BCI Worldwide Flexible Fund
• Launched the Offshore Portfolio management Service
• Increased our assets under management by 79% through growth and investments from existing and new clients, and take-up of our Offshore Portfolio management service
• We more than doubled our client base to 138 active clients.

We would not have achieved this without the support of our clients. We are grateful for the trust that you have placed in Lunar Capital managing your hard-earned money. All our shareholders and directors continue to have a significant portion of our wealth invested in the fund. This keeps us aligned with our clients, as co-investors in our fund. Be rest assured that we look after the fund like it is our own (because it is).

We are very pleased with the performance of the Lunar BCI Worldwide Flexible Fund to end December 2021 as summarized below. These performance figures are net of costs:

Period	% Return pa	% Total Return
1 year	19.37%	19.37%
3 years	17.35%	62.34%
5 years	11.36%	71.25%
Since inception 1 June 2016	9.98%	69.95%

Source: MoneyMate

Our performance last year was primarily driven by the performance of the local portion of our fund. The following investments gave us exceptional returns last year:

• MTN: +173%
• Long 4 Life: +80%
• Metair: +50%
• Shoprite: +39%

Our offshore holdings did not return as spectacular returns last year, but performed well, nonetheless. Here are some of our top performers of our offshore investments for the year:

• ASML: +57%
• Microsoft: +54%
• Berkshire Hathaway: +30%
• iShares MSCI UK: +17%

We held a large portion of cash in the last few months of the year, selectively buying where we saw value. A stance we are taking going into the new year as well.

Our view is that in as much as there are risks in the current market (inflation, US-China and US-Russia tensions, Covid-19, high valuations), there are opportunities as well. Many good businesses have been re-rated sharply, providing opportunities to acquire these businesses at better prices than a few months ago.

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We wish all our clients a prosperous and healthy 2022.

December 2021 Fund Fact Sheet

The Lunar BCI Worldwide Flexible Funds December 2021 Fund Fact Sheet can be found on our website, showing the latest performance of the fund, amongst other pertinent information.

If you wish to subscribe to our mailing list, you can do so here. Please feel free to forward this to anyone who may be interested in receiving our Insights.

Privacy Notice

Lunar Capital is committed to safeguarding the privacy of all persons transacting with us.  We collect personal information from you, and you may submit personal information to us. We handle the collection, processing, and storage of your personal information in accordance with the Protection of Personal Information Act (POPIA) No. 4 of 2013, and your information will not be shared for direct marketing purposes.

Our Privacy Policy can be found on our website, www.lunarcapital.co.za as amended from time to time.

\”It is better to be roughly right than precisely wrong\” – John Maynard Keynes

Just when you thought it was time for a good break, along comes Omicron, the latest variant of the SARS Cov-19 virus. In many ways, this is another reminder that the future is not certain. Trying to predict the future precisely is thus a futile exercise. However, there is significant opportunity in trying to pick out certain themes that could play out over the near to medium future, with the understanding that these themes may play out in different ways.

So, what are some of the key themes that we are watching and thinking about?

Covid-19

In 2021, we experienced a brutal third wave of Covid-19 caused by the Delta variant. We had high levels of infections and lost many of or friends and family. For a brief time, our infection and death rates were coming down and we thought that life would soon return to normal. Alas, the dreaded virus mutated and our brilliant scientists in South Africa discovered the latest variant of the virus, named Omicron.

What are we looking for? How will the virus mutate, how quickly can we develop herd immunity either naturally or through vaccinations? We watch this to try and understand how we should manage our risks or even take advantage of opportunities that may be presented depending on how this plays out. An example is the continued acceleration in the technology trends of online and digital growth for work from home, on-line shopping, on-line gaming on the one hand and release of the pent-up demand for travel and physical entertainment, increase in elective surgeries that were curtailed during the peak of the pandemic.

Long Bull Market with Easy Monetary Policy

We are witnessing one of the longest bull markets in history, fueled by easy monetary policy (i.e., central banks printing money and creating liquidity) since the GFC (Global Financial Crisis) in 2008. Covid-19 providing another reason to extend this easy monetary policy. At some stage this easy monetary policy must stop, otherwise we will witness high inflation across the globe. In fact, inflation has been ticking up and there are views that this may not be transitory impacting consumers, especially the poor and investors.

What are we looking for? What will central bankers do with interest rates and quantitative easing? Will this tame inflation or could we witness sustained high levels of inflation in the coming years? How will the stock market react and how should we be positioned for different outcomes? When will the stock market correction come and which sectors will be mostly impacted? An example of industries benefiting from mildly higher inflation are banks and retailers. In contrast, companies that require continued investments to grow tend to do badly.

Cold War 2.0

One of the risks we are also watching closely now is the increasing tension between the West and Russia on the one side and the West and China on the other side. The situation in the Ukraine and the diplomatic boycott of the Beijing Olympics are pointing to increasing tensions.

What are we looking for? Could this lead to war or a cold war or even both? And how could this impact the world order, global and local security, the markets, the supply chain, etc. Ironically, markets tend to do well in war times. Could this trend continue? How should we position our and our clients’ funds?

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These are a few of the themes that we are tracking.

To date, 2021 has been a good year for the portfolio and we have attracted significant flows from existing and new clients. Some of our winners this year include MTN, Aspen and Shoprite locally, and ASML, Microsoft and Berkshire Hathaway offshore.

Going into the new year, our fund has excess cash that we plan to deploy as these, and other themes play out and we see opportunities in specific companies or sectors to invest in.

Finally, we wish all our clients, staff, and partners well over the festive season. We hope you can rest and spend quality time with your loved ones.

Stay safe.

November 2021 Fund Fact Sheet

The Lunar BCI Worldwide Flexible Funds November 2021 Fund Fact Sheet can be found on our website, showing the latest performance of the fund, amongst other pertinent information.

If you wish to subscribe to our mailing list, you can do so here. Please feel free to forward this to anyone who may be interested in receiving our Insights.

Privacy Notice

Lunar Capital is committed to safeguarding the privacy of all persons transacting with us.  We collect personal information from you and you may submit personal information to us. We handle the collection, processing, and storage of your personal information in accordance with the Protection of Personal Information Act (POPIA) No. 4 of 2013, and your information will not be shared for direct marketing purposes.

Our Privacy Policy can be found on our website, www.lunarcapital.co.za as amended from time to time.

We at Lunar Capital follow an investment philosophy of “Growth at a Reasonable Price”. This essentially guides us to look for companies that have a growth strategy and that are trading at a reasonable price relative to their growth potential. This ultimately leads us to technology companies and companies that utilise technology to drive their competitive and growth strategies.

Shopriteˣ

In this first edition of Tech Talk, we feature Shoprite, a long-term investment in our Lunar BCI Worldwide Flexible Fund.

Shoprite serves over 1 billion customer per annum, and stock over 7 billion different types of products. Over 20 million of Shoprite clients have benefited from the Xtra savings loyalty scheme. Why is this important and what does this have to do with technology?

Shoprite through their Shopriteˣ unit has been collecting data on the spending habits and experience of their clients. This rich and deep dataset is mined and informs how Shoprite innovates to improve the shopping experience of their clients and incentivises them to shop and save at Shoprite stores, including Checkers, Usave, and, House and Home.

Some of you may have used the Sixty60 app, where you order on-line from Checkers and have your goods delivered within 60 minutes of ordering. This is an amazing service and convenience, and is particularly useful for many who are now working from home.

Recently, Shoprite launched a new concept store called Checkers Rush, where you will be able to shop at a Checkers Rush store by a simple process of registering yourself as you enter and picking goods off the shelf and walking out without having to go through a checkout process. Machine vision cameras identify the goods you have taken and charge this to your account as you take items off the shelf. No more checkout queues.

Shoprite’s loyalty and savings scheme, Xtra, is also honed by the insights that they derive from their data that they have collected and mined.

The motto of Shopriteˣ is to fuse data, technology and innovation to create a fast and frictionless experience for their clients. These and other innovations make Shoprite a significant competitor by attracting more customers, who experience better shopping experiences through these innovations.

August 2021 Fund Fact Sheet

The Lunar BCI Worldwide Flexible Funds August 2021 Fund Fact Sheet can be found on our website, showing the latest performance of the fund, amongst other pertinent information. If you wish to subscribe to our mailing list, you can do so here. Please feel free to forward this to anyone who may be interested in receiving our Insights.

Privacy Notice

Lunar Capital is committed to safeguarding the privacy of all persons transacting with us. We collect personal information from you and you may submit personal information to us. We handle the collection, processing, and storage of your personal information in accordance with the Protection of Personal Information Act (POPIA) No. 4 of 2013, and your information will not be shared for direct marketing purposes. Our Privacy Policy can be found on our website, www.lunarcapital.co.za as amended from time to time.