BMC Global Select December 2024

The shares that contributed the most during December were Alphabet, Hermes, and ASM International. The weakest performers during the month were Watsco, Adobe, and Martin Marietta. The reason for Alphabet being in the top three was the breakthrough with its quantum chip, Willow. The new chip has shown an exceedingly good performance and can make calculations of vast amounts of data in a particularly short time compared with "normal" super-computers.

During January, we're heading out on many exciting trips, including to CES in Las Vegas to witness the latest trends in tech and electronic consumer products. We will also attend two equity conferences, one in Copenhagen and the other in Milan. In Copenhagen, we will meet a range of exciting Nordic companies, while in Milan, we are looking forward to seeing some interesting Italian companies.

Key market events and trends (what has influenced performance most?)

The stock markets moved sideways in December, owing to increasing concerns about higher inflation in the US. On January 20, Donald Trump will be sworn in as US president, and the reforms he has promised during his presidency will most likely lead to rising inflation in the country. Trump plans to expel all illegal immigrants, which, in practice, means that cheap labor will leave the country and be replaced by workers who demand higher wages. In addition, Donald Trump wants to reindustrialize the US in earnest and bring manufacturing jobs back to the country. Like many other countries, such as Germany, the US relocated jobs to China, where production costs are lower. Bringing these jobs back to the US means paying higher wages, pushing up production costs. If Trump gets this through, there will be a labor shortage in the US, which will put further upward pressure on wages. To even out the differences in production costs between the US and China, Donald Trump plans to implement tariffs on all imports into the US—not just from China, but from all countries. These tariffs will mean extra tax revenue for the US state apparatus.

Speaking of taxes, Trump also plans to drive an expansionary fiscal policy of cutting taxes on both labor and corporate profits. Cutting taxes when the US is struggling with its largest-ever national debt could be considered quite controversial, but the aim is to stimulate the economy. Another sensational aspect to Trump's coming presidency is his naming of Elon Musk as a new advisor. He will help Trump to streamline the entire US state apparatus to get more out of each tax dollar. Moreover, Donald Trump wants a weaker dollar to make US products more attractive. Right now, the market is betting on a stronger dollar, which has the reverse effect. We are entering a period when the US will have a president with new and different policy ideas and who can do things in another way. The equity and bond markets are trying to price in (discount) the new fiscal policy, meaning interest rates have risen and the equity market moved sideways during December. For the moment, there is considerable uncertainty, leaving the markets wondering about what policies will be issued by the White House.

Portfolio changes

We made three changes to our global fund during December. In the semiconductor industry, we switched one Champion for another, with ASML making way for Broadcom. Among our Special Situations, we added holdings in Nestle and Everus Construction.

We have owned ASML since 2018 and sold now because we believe its profits will grow more slowly in the coming years. ASML has so far earned vast sums furnishing the semiconductor industry with DUV and EUV machines, but we now see diminishing investments among semiconductor companies, as Samsung and Intel ease their pace of investment. Among other things, Broadcom manufactures semiconductors and communication equipment and has also begun to design and produce AI chips. The company recently acquired VMware, a leader in virtual servers, which should offer a positive contribution to Broadcom's total profits.

Nestle is well known for its daily-used products: coffee, candy, pet foods, etc. We consider Nestle an exciting investment at present, since its valuation is currently particularly low. In our view, the market will reassess its profit growth and turn more positive on the company, which means Nestle should trade at higher multiples.

The third new holding is Everus Construction, a newly listed company following its spin-off from MDU Resources. We believe Everus has a bright future as the US continues to invest heavily in expanding and renewing infrastructure across the country. 

The fund's positioning—our market expectations

We have a solid portfolio of what we consider the world's finest companies—our Champions—in industries such as insurance, tech, software, construction materials, finance, and fintech. In addition, there are our Special Situations, which we invest in at low valuations and aim to sell at higher values.

We thank you for your faith in us in investing your capital.

* MSCI All Country World NTR USD in EUR