December: rise rounded off by strong year

Fondraket

After the large sector rotation in November, December became a strong month for equities in general. GP Bullhound Global Technology ended 1.1 % and thus rose 43.6 % in 2020. The USD / SEK development held back the development during the year when 90 % of the holdings were traded in USD. However, many companies we own will benefit from exports of the weaker USD, such as Microsoft.

Demand for products and services during the fourth quarter is similar to the trend we saw earlier in the year. Strong demand for work-from-home ("WFH") products and weaker demand for office products and a general high demand for technology.

If we look at the gaming side, many companies had focused their new releases until the last quarter when the new consoles were released. Demand has been high throughout the year due to Covid, but the new consoles, the second wave of Covid, Christmas and new games lifted everything further during the fourth quarter. What stands out in our eyes, however, is the continued strength of the Nintendo Switch sales of both games and consoles, which means that we expect a further guidance increase from Nintendo.

Demand for semiconductors has been unusually strong during the fourth quarter, driven by many different factors and industries. However, the two biggest reasons have been good demand for the Apple 5G phone and a boost for car components. The memory side also seems to have improved during the quarter. All this means that we are entering 2021 with a high degree of use in the factories for semiconductors and in many cases increased lead times. This is clearly positive for the equipment manufacturers, while the uncertainty surrounding the policy and China is the biggest uncertainty factor.

Cloud services have been experiencing strong growth in recent years and WFH has only accelerated that development. Growth may come down somewhat when we return to our work, but we believe that many decisions made during this pandemic have led to stronger underlying growth for many services and cloud solutions. However, the values hold us back somewhat from buying many interesting companies, but we follow them closely and hope to be able to buy in in the future.

Many digital platforms and services have benefited greatly from the WFH trend, such as streaming services Netflix, etc., while others that have offered services for travel, hotels and advertising have been negatively affected by the trend, such as Bookings.com and Facebook. The platforms focused on advertising such as Facebook and Google have now, however, a bit into the pandemic gained new customers who have replaced the areas and customers affected by Covid and are now almost back where they were before the pandemic struck.

During the month, we bought smaller positions in Facebook and Salesforce after the declines and we have reduced our position in Apple after the strong rise.

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