- Sean Rapley
October 2020 - Luke's Global Fund Update
Luke's Global Fund achieved a return of -0.6% (in constant currency) return over the month of October, and a 15.8% gain to date for FY21 on a constant currency basis. International markets also ended October generally down over the month, with the S & P 500 returning -3.3% for the month of October. We are in the most uncertain of times. However, is there ever a time without uncertainty? We believe uncertainty can present opportunities, and we head into November in cautious anticipation of opportunities to improve our portfolio’s future returns.
The top two contributors to the fund performance over the month were:
Blue Prism Group, which contributed 17.2% to the portfolio performance. Blue Prism announced the launch of a new offering, Service Assist, created to improve call centre productivity and improve customer experience. Saddletree Research has reported the COVID-19 pandemic has caused a dramatic spike in demand for automated solutions, which is expected to reach a compound annual growth rate (CAGR) of 64.2 percent from 2020 to 2024. Blue Prism will release a trading update in November.
Tradedesk, which contributed 16% of the returns despite revenue falling 13% y.o.y. for the quarter. We closed out our position in Tradedesk over the month of October, primarily on valuation grounds.
The two main detractors for the month were:
1. Crowdstrike, which contributed -29% to the portfolio performance over the month. Crowdstrike is our largest position, and there is no company related news driving the share price fall.
2. Datadog, which contributed -10.8% to the portfolio performance over the month. Again, there is no company related news driving the share price fall. We note however, the valuation of Datadog is the highest of all our holdings. We will continue to hold, given its rapid revenue growth rate, competitive advantage, and the relatively small position in our portfolio.
One notable change to the portfolio was the sale of our remaining holdings in Tradedesk. We considered the valuation of Tradedesk as being rather stretched, at an EV/S in excess of 30, for a company growing revenue below 40%.
We anticipate opportunities to deploy our cash balance over November, and plan to re-weight our portfolio holdings, following the strong results reported from Teladoc Health and Livongo Health, and the bleak COVID-19 outlook for the Northern Hemisphere Winter.
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.