– Andrew Macken & Chris Demasi
After a strong December quarter last year, 2024 has commenced with another solid March quarter. Few predicted such ongoing strength: the lesson that markets are essentially unpredictable over short time periods – to the downside and the upside – continues to be reinforced.
We continue to observe substantial dispersion in performance across different sectors – as well as between individual companies within the same sector. We think this situation is the inevitable outcome of a few major structural changes – in fields like technology, finance, and geopolitics – affecting businesses in ways that are unprecedented. Complex change of this nature can continue to present great investment opportunities going forward.
It can also create conditions that appear unusual, feel unprecedented, and cause investor anxiety. The significant increase in stock market concentration is one such example. Today, the ten largest stocks in the S&P 500 account for 33% of the total market cap of the index – a level that exceeds the 27% concentration experienced in the 2000 dot com bubble.
But as Andy demonstrates in”Should investors fear an increasingly concentrated US stock market“, the evidence shows this increased concentration in equities reflects a fundamental increase in concentration in the real economy by the same mega tech platforms. And it looks like this concentration will only build from here, meaning one’s fears of a substantial misallocation of market value can be allayed.
Last October, we took advantage of temporary stock price weakness to acquire a world-leading ‘compounder’ that we had been patiently monitoring for several years: LVMH. In “Six reasons LMVH will keep compounding for decades to come“, Lachlan highlights the valuable aspects of LVMH that we believe the market is underappreciating.
Finally, in this month’s Spotlight Series podcast, Andy and Chris step through our recent essay titled: 4 simple steps to unearth great investment opportunities. They underscore the one step that is often overlooked the most.
Sincerely,
Andrew Macken & Chris Demasi
Podcast: Join the Montaka Global Investments team on Spotify as we share real-time examples and investing tips that govern our stockpicks. Click below to listen. Alternatively, click on this link: https://podcasters.spotify.com/pod/show/montaka
To request a copy of our latest paper which explores the empirical research around the 3 pillars of active management outperformance, please share your details with us:
Note: Montaka is invested in LVMH
Andrew Macken is the Chief Investment Officer & Chris Demasi is the Portfolio Manager at Montaka Global Investments.
Letter from the PMs – April 2024
– Andrew Macken & Chris Demasi
After a strong December quarter last year, 2024 has commenced with another solid March quarter. Few predicted such ongoing strength: the lesson that markets are essentially unpredictable over short time periods – to the downside and the upside – continues to be reinforced.
We continue to observe substantial dispersion in performance across different sectors – as well as between individual companies within the same sector. We think this situation is the inevitable outcome of a few major structural changes – in fields like technology, finance, and geopolitics – affecting businesses in ways that are unprecedented. Complex change of this nature can continue to present great investment opportunities going forward.
It can also create conditions that appear unusual, feel unprecedented, and cause investor anxiety. The significant increase in stock market concentration is one such example. Today, the ten largest stocks in the S&P 500 account for 33% of the total market cap of the index – a level that exceeds the 27% concentration experienced in the 2000 dot com bubble.
But as Andy demonstrates in”Should investors fear an increasingly concentrated US stock market“, the evidence shows this increased concentration in equities reflects a fundamental increase in concentration in the real economy by the same mega tech platforms. And it looks like this concentration will only build from here, meaning one’s fears of a substantial misallocation of market value can be allayed.
Last October, we took advantage of temporary stock price weakness to acquire a world-leading ‘compounder’ that we had been patiently monitoring for several years: LVMH. In “Six reasons LMVH will keep compounding for decades to come“, Lachlan highlights the valuable aspects of LVMH that we believe the market is underappreciating.
Finally, in this month’s Spotlight Series podcast, Andy and Chris step through our recent essay titled: 4 simple steps to unearth great investment opportunities. They underscore the one step that is often overlooked the most.
Sincerely,
Andrew Macken & Chris Demasi
Podcast: Join the Montaka Global Investments team on Spotify as we share real-time examples and investing tips that govern our stockpicks. Click below to listen. Alternatively, click on this link: https://podcasters.spotify.com/pod/show/montaka
To request a copy of our latest paper which explores the empirical research around the 3 pillars of active management outperformance, please share your details with us:
Note: Montaka is invested in LVMH
Related Insight
Share
Get insights delivered to your inbox including articles, podcasts and videos from the global equities world.