Portfolio Manager comment Coeli Global Select February 2024

The performance of Coeli Global Select was 3.88% for February, falling 0.89 percentage points short of our benchmark index. The top performers in the month were two very different companies: tech company NVIDIA and construction firm Sterling Infrastructure. Both shares have been excellent contributors to the fund’s returns in recent years, and since we first invested in Sterling Infrastructure (then called Sterling Construction), the share price has risen from USD 17 to around USD 110 at the time of writing. This is an increase of more than 500%.

It’s not just tech stocks with the potential to see share price increase of several hundred percent. In Sterling’s case, this excellent development has been prompted by a combination of the company restructuring its business and a particularly robust construction boom, primarily in Texas. For NVIDIA, it has been its fantastic GPUs (graphics processing units), which are today used in data centers around the world to power AI, among other things.

Two stocks that had a negative impact on performance in February were Vonovia and Adobe. We are unsure exactly why Vonovia hasn’t performed, but it likely stems from interest rate developments in Europe. In Adobe’s case, its share price decline is because OpenAI is on its way to launching a revolutionary AI tool that can generate high-quality videos from text prompts. As soon as we learned about the product, we slashed our exposure to Adobe and are a little hesitant about the share for the time being.

Key market events and trends (what has influenced performance most?)

During the first two months of 2024, we’ve seen market interest rates rebound to slightly higher levels, affecting the rise in the stock market for sectors like real estate, among others. We note, however, that the market’s reaction during reporting season was, in most cases, more positive than negative. We have seen something of a strengthening by the Swedish krona versus the US dollar, which is a sign that the markets is starting to favor more risky assets. The latest data points on US inflation statistics show an ongoing decline, although the movements compared with last month were minor.

Portfolio changes

After a week’s travel in India, we’ve decided to make a switch from Kotak Mahindra Bank to ICICI. The latter has a more developed branch network, allowing it a considerably higher degree of self-financing.

The fund’s positioning—our market expectations

In an environment with falling interest rates, equities see a robust stock market performance. As the interest rate cuts take off, consumers will have more cash to spend, and this is what is currently driving the stock markets upwards. Some of our analyst team visited the Mobile World Congress (MWC) in Barcelona in February to learn about the latest trends in smartphones, semiconductors, and software. You can find our comments regarding this fascinating trade fair on our LinkedIn page.

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