Portfolio Manager comment Coeli Global Select May 2021

The return that Coeli Global Select generated during May was 1.02 percent, beating the benchmark by 0.91 percentage points. The three best performers for the fund were adidas, Traton, and Beijer Ref, while those with the worst performance were Mastercard, Vonovia, and Amazon. Two delivered solid reports during the month: PayPal and Nvidia. PayPal saw its strongest quarter ever, with y/y growth at 29 percent. Nvida’s revenue growth landed at 84 percent y/y, thanks to robust growth in its gaming and data centre businesses. During the month, Vonovia announced its acquisition of Deutsche Wohnen, sending the share price down. For more on PayPal, see our recently published blog post (in Swedish) on our website.

Key market events and trends

Despite high inflation figures from the US in April, there was little impact on US 10-year government bond yields, which are now hovering at around 1.6 percent. Interest rates have risen from their trough last June, around 0.5 percent, and we believe they have now reached equilibrium. Among the beneficiaries are tech companies that trade at higher valuations than cyclical stocks.

We note with pleasure that several countries are beginning to open up thanks to an increase in the number of those vaccinated, which will benefit consumption and the travel industry. Estée Lauder, L’Oréal, adidas, Renault, Fiserv, and Mastercard are among the constituents of our global fund that will benefit from eased restrictions.

We also believe that the so-called ”value race” (increase in cyclical equities) is over for this cycle; most cyclical stocks are trading at historically high prices and valuations. Most share prices have now discounted that the companies’ revenue will return to normal levels. There is also a positive cost effect factored into share prices, as many cyclical companies have had to review costs, which can have boosted share prices.

Portfolio changes

We made no changes to our portfolio during the month.

The fund’s positioning

Recently, we have had meetings with three of our Special Situations companies: Traton, Carrier, and John Deere. Our meeting with Traton confirmed our investment hypothesis that the truck manufacturer is undervalued. We received confirmation at our meeting with Carrier that the company should trade at a higher multiple (P/E) than today. John Deere explained to us that it is raising prices on its tractors and investing in the digitalisation of agriculture with a cloud solution for farmers. We expect that our emerging markets, Special Situations, and global tech companies will contribute the best returns in the coming months. We have a solid mix of stable growth stocks and cheaper cyclical holdings.