Judging by our inbox, it seems a lot of you were watching the market over the Christmas break.
And some of you have sent howling missives of disapproval that your Spaceship balances moved around so much.
But let’s say you didn’t watch the market, and were more preoccupied dealing with an unexpected declaration of love at a family gathering or waiting despondently for baggage at an Italian airport instead.
And only when you came back to work, let’s say this week, did you again check the sharemarket.
You might have seen something like this:
(And here I’m using the following index as a general representation of what global shares did.)
On Monday 7 January 2019, the MSCI All Country World Index (which is a common benchmark for 'world' or 'global' stock funds intended to represent a broad cross-section of global markets) closed at 649.21 points.
And 18-days earlier, on 20 December 2018, when you perhaps skipped out of your office for a break, the MSCI World Index closed at 633.82 points.
That’s an 18-day trading move up of 2.43 per cent.
I mean, that doesn’t seem like a great deal.
And you could be forgiven for reaching the conclusion that nothing really happened over the Christmas break.
Which is obviously at odds with the outraged horror contained within our DMs we received from some of you guys and all the delighted financial reporters who could write about the desperately horrific, deeply significant, excruciating bloodbath that was the Christmas sell-off.
For what it’s worth, let’s begin the year with a reminder that markets go up and down, and sometimes, when you take a break from watching, you won’t even know that anything has happened. (Keeping in mind that past performance is not a reliable indicator of future performance!)
In other news though, we’ve completed our quarterly review of the Spaceship Voyager portfolios. We’ve covered-off the changes in the Spaceship Universe Portfolio and the reasons below.
At the end of last quarter we sold some of the companies in the Spaceship Universe Portfolio - and we've outlined what we did below.
Next week, we’ll cover the companies we replaced them with.
As part of its regular review, the investment team considers and determines whether the companies in the Spaceship Universe Portfolio still measure up to our Where the World is Going methodology.
Changes in circumstances have meant the below companies don’t measure up right now.
SOLD - Allergen
Allergan manufactures Botox, one of the pharmaceutical company's most well known drugs.
And while Botox is generally performing well, as at December 2018, it’s accounting for only 15 per cent of Allergan’s sales.
The rest of the business - products that address the central nervous system, eye care (Restasis), medical aesthetics and dermatology - is declining more than we expected.
Our reason for owning Allergan still exists, that more people are using Botox, but the rest of the business is losing patent exclusivity with no indication that new products will be introduced to pick up the lost sales.
We’ve decided on another company, Align Group, in order to gain exposure to the selfie/Instagram/cosmetic global trend.
SOLD - Adidas
Adidas is the second largest sports brand behind Nike and recently, they’ve made the transition from a performance brand to a performance and lifestyle brand.
Unfortunately we noticed that Adidas’ growth in Europe is slowing, and Spaceship's investment team prefers other investments with higher moat scores and more upside opportunity.
SOLD - Sillicon Valley Bank
These guys primarily provide corporate lending and other banking services for businesses around San Francisco.
Out of many financial institutions, we believe it is one of the best run banks but we question whether we should invest in any banks at all.
Again, our Where the World is Going methodology points us instead towards fintech companies like Square that are building services to the underbanked parts of the population and building customers from the ground up.
Fintech’s edge against traditional banks is data. Square’s relationship with merchants gives them a real time view of customer sales and a better understanding of their business needs.
SOLD - BlackRock
BlackRock is the largest money manager in the world and, while we still believe it’s a great company, the rise of fintech stocks has contributed to the fact that its moat has eroded somewhat.
We also have concerns with BlackRock's margins - there is downward pressure because competitors are pricing funds at zero to attract customers. Also BlackRock’s EBITDA margins are currently higher than Google and Apple which gives us concern over future profitability.
At current, fintech stocks that are building platforms for the digital age are scoring higher in our investment process.
Important! We’re sharing with you our thoughts on the companies in which Spaceship Voyager invests for your informational purposes only. We think it’s important (and interesting!) to let you know what’s happening with Spaceship Voyager’s investments.
However, we are not making recommendations to buy or sell holdings in a specific company. Past performance isn’t a reliable indicator or guarantee of future performance.
P.S. The header features Gudetama, a Japanese lazy egg yolk that hatched in 2013. He is part of Sanrio's (the creators of Hello Kitty's) character roster.