After a difficult October, November proved to be another challenging month for growth/quality focused strategies, but, helped by a few stock-specific winners, we managed to finish almost in line with the index performance.
There are two stocks that performed particularly well during November that merit specific attention. First, Novo Nordisk has bounced back nicely following a weak October. Recently, some investors had been concerned that positive Phase 2 data from Eli Lilly on their GLP-1/GIP combination treatment significantly threatened Novo’s GLP-1 product Ozempic. This concern is now easing as investors realise that the Lilly treatment has potentially significant side effects, is a number of years away from reaching market and that its success may actually help to grow the overall size of the GLP-1 market.
Second, Vestas has rallied very strongly in recent months. During the earlier part of 2018, there was significant concern that turbine prices were coming under pressure, led by very competitive auctions. This threat is now perceived to be easing and the shares have moved to reflect this. We continue to view the company as being exposed to decent structural growth and to be improving in quality as the revenue base increasingly shifts to after-market activities.
We had a quiet month in terms of trading activity. We have sold our position in the Dutch bank Van Lanschot and we have trimmed positions in Amundi and in Deutsche Post. With Amundi, we are reacting to a weaker environment for slows that we fear may persist well into 2019 and with Deutsche Post we are responding to a slower volume growth environment in their Express business; we retain decent sized positions in both of these businesses.
After a difficult couple of months, we are starting to see opportunities arising in some of our key long term holdings. We remain in a net cash position overall and will look to use the current sell off in growth/quality companies as an opportunity to increase our overall exposure to specific name.