• Sean Rapley

January 2021 - Luke's Global Fund Performance Update

Luke's Global Fund achieved a return of 3.5% (in constant currency) return over the month of January, and a 48.1% gain to date for FY21 on a constant currency basis. International markets ended January generally down over the month, with the S & P 500 returning -1.0% for the month of January.


Our portfolio as at January 31, 2021:


January was a long month, after a very long, and challenging year. It began with the storming of the Capitol, and was followed by US 7-day average deaths peaking at over 3 300 deaths per day by January 23. Late in the month, an extraordinary series of short squeezes, led by retail investors connected through social media platforms such as Reddit, have rocked hedge funds such as Melvin Capital, who had to raise fresh capital after booking a 15% loss in the month of January.


Teladoc Health rallied strongly over the month, overcoming the mirth of the Teladoc Health / Livongo marriage, with investors beginning to look ahead to what is seasonally strong quarters for the business, during a period where digital health services are needed more than ever.


Meanwhile, in the UK, Blue Prism group released their preliminary full year results. Revenue grew 46% over the year, with operating costs up 13% over the same period, is showing some promising operational leverage. Management report they expect to reach cashflow breakeven over the coming financial year, and with cash burn at 13% of revenue in the most recent half, this seems achievable. However, there are some warning signs in decelerating revenue growth, as shown in 6% half-on-half revenue growth. We will wait to see if revenue growth can accelerate after pandemic related sales disruption fades towards the end of 2021.


KEY LEARNINGS THIS MONTH:


Our greatest takeaway, is to appreciate that every market is different, and is experiencing differing challenges. However, market leaders, with competitive advantages, experiencing secular tailwinds, with competent leadership, and with a strong balance sheet can prevail.


If you have any opinions on the companies we hold, or would like to know more about our investments, we would love to hear your feedback.


Regards,


Sean



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