End of Year 2020 Report

Author: Danyaal Munshi

End of Year 2020 Report

 

“The value of our good(s)* is not measured by what it does, but by the amount of good it does to the one concerned.”

Milton S Hershey

At Lunar Capital, our ultimate measurement of how well we are doing is not by the fees that we earn or by the value of our assets under management but rather by the financial freedom you, our clients and co-investors have achieved; and the wealth that you have generated for your families.

We have all suffered the consequences of the Covid-19 pandemic; from the loss of those close to us, to hospitalisation or illness, to the loss of jobs or income and being locked-down for extended periods with limited social interactions. I would like express my deep gratitude and to thank you our clients and co-investors, our staff and directors and our business partners for continuing to show faith in us despite the difficulties that you may be facing.

We have had a significant number of new clients joining us in 2020. Welcome to all of you and we hope to have a long and mutually fruitful relationship with you.

Pleasingly, your faith has paid off well for you, our investors; where your investments in the Lunar BCI Worldwide Flexible Fund grew by:

  • 15.57% for the 2020 year, and
  • 42.38% since inception of the Fund (Source: Morningstar).

R100 000 invested in our fund at inception would be worth R 142 000 as at the end of December 2020.

We highlight below the key positioning of the Fund:

  • ±60% of the fund is invested in offshore assets.
  • ±35% is in technology via holdings in Amazon, Microsoft, Square, OKTA, Pinterest, Naspers, amongst others.
  • ±12% is in Biotechnology via holdings in iShares Nasdaq Biotech ETF and Aspen.
  • Our offshore position has been increased from 30% to 60% over the past 18 months.

An absolute highlight was being independently recognised with the Fund featuring in the prestigious FINWEEK business magazine.

Our Top 10 equity holdings as at the end of December 2020 are:

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We continue to view technology as the underpin to our investment strategy, whether directly in technology companies or those that are able to use technology to create a competitive edge.

You can visit our website for more detailed reporting on our performance.

We thank you again for your support and you wish that you and your loved ones are healthy and that your journey to financial freedom and building wealth for your family continues.

 

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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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