BMC Global Select September 2024

The stocks that provided the best contribution for the month were Atlas Copco, Vonovia, and Fortnox. The weakest performers during September were Adobe, Pagseguro, and Hermes.

Despite Adobe's turnover and profits rising by 11% and 14%, respectively, this was not enough to propel the share price the day after the report. The equity market was not satisfied with the company's guidance for turnover. We consider Adobe , along with Microsoft, Alphabet, and Fortnox, to offer an excellent opportunity to earn more money by introducing AI products to customers. Vonovia, our real estate Special Situation stock, had a stellar month, thanks to lower interest rates in Europe. We bought Vonovia around one year ago, and it has since returned more than 30%.

In early September, we were on an analysis trip to California, where we met many exciting companies. We had meetings with NVIDIA, Tesla, Cadence, Broadcom, Salesforce, and Synopsys, to name a few. Much of the focus at these meetings was on AI investments and all the thrilling new AI products that companies will be able to earn money on in the future. We have also traveled to Poland to meet a range of exciting companies, including various industrials firms. Poland is a country currently experiencing very high growth and investing substantially in infrastructure, among other things, to bolster its economy further. The country has ambitions to become an important economy and trade partner both in Europe and globally. 

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

One of the key events during the month was the Fed finally carrying out its first rate cut since 2019, trimming the policy rate by 0.5 percentage points. The fixed income market believes the Fed will make further cuts this year, and the benchmark is that it will lower interest rates by two percentage points over the next two years. If we include the latest rate cut, the US will have a policy rate of 3.5% by 2026. The central banks of Sweden and the EMU have also cut rates as inflation fell. As money becomes cheaper, companies will be able to invest more, and consumers will have more money to spend on purchases.

Vehicle manufacturers in Europe are currently undergoing a smaller crisis, with VW, BMW, and Stellantis forced to issue profit warnings. New vehicle sales are sluggish, with investments in purely electric cars, above all, proving dire. In general, people consider electric vehicles too expensive, with too poor ranges, for them to consider switching from fuel vehicles to electric. European electric vehicles have to compete with cheaper Chinese models with a lower price point for the same range. Over the past ten years, China has built up a competitive auto industry with considerable economies of scale at a lower production cost. The country is not only skilled at building electric vehicles but is also among the best in the world at manufacturing their batteries. The only vehicle manufacturer that can currently match the Chinese on price, performance, and range is Tesla. Right now, Europe and the US impose tariffs on Chinese vehicle imports to give the western world's vehicle manufacturers a chance to compete and catch up. Presumably, we would need new subsidies for those buying new electric vehicles, but because of the tight economic situation, governments have no spare cash for this. We must remember that we need an alternative to fossil fuels if we are to reduce global warming, and electric vehicles are currently one of the best alternatives. China has invested heavily in electric vehicles to improve the environment and reduce its dependence on oil.

The country currently suffers from problems with its economic growth. We have heard that the Chinese state will support its citizens by handing out vouchers they can use when shopping. It is called "helicopter money" when the state provides money for consumption to bolster economic growth. China's poor growth stems from the country's long-lasting weak real estate market, among other things, creating economic problems. 

Portfolio changes

We made no changes to BMC Global Select during September.

The fund's positioning—our market expectations

At the time of writing, BMC Global Select's expected aggregated profit growth for the coming years is more than 16%. We believe this profit growth will contribute positively to the fund's performance. Our global fund offers an interesting mix of solid Champions and exciting Special Situations stocks. We expect the fall's rate cuts will prove a key trigger for returns in the future. 

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