Annus Horribilis, Annus Mirabilis

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Looking back at 2020, we have been struck by how the pandemic has accelerated the change and disruption we have seen over the past decade. 

As for any responsible investor, a global pandemic was always on our list of exogenous events with varying probabilities, like a major terrorist incident or a collapse of the internet and access to data and computing capacity.  We observed and had concerns, but did not anticipate a pandemic of this scale and impact. 

In this year of challenges and adversity, we have been greatly heartened by the resilience we have seen around us even as we acknowledge the significant burden the pandemic has placed on us. Whether through the effects of the illness and loss on many of us and our families and friends, the economic challenges many have faced to continue to work and to provide, or the psychological strain that the lockdown and the uncertainty has caused for each and every one of us.   We have been able to operate as a business throughout the pandemic and are grateful for the effort and commitment of our team across all areas of our business in setting up processes and resources that have been resilient and have allowed us to function and support one another as best we could. 

The pandemic, the first true global crisis since the inception of our World Stars Global Equity portfolio in 2012, has validated our approach of investing in quality and value for the long-term.  Companies with strong and sustainable competitive positions in good and growing industries, with managements having track records of value creation and balance sheets so strong as to weather any adversity, has meant that we have been invested all along in many of those companies that have contributed to our resilience this year. 

Following on the strong performance in 2019, the portfolio has generated 18% in USD to the 15th of December this year, ahead of markets and our own goals for long-term return.  Importantly, it was resilient as the market declined with the uncertainty and panic in March, and rebounded with the recovery, with the significant outperformance coming on the downside not the upside.  We sought to stay focused on the long-term but were able to act from a position of strength to make changes to the portfolio and to buy a number of companies that we have wanted to invest in at lower prices during the first half of the year.

Progress and prosperity are driven by private innovation and enterprise and it is not surprising that companies that have been resilient and adaptable to change have been critical to our ability to weather the crisis as societies and as individuals. 

By far the most important impact has come from the unprecedented cooperation and resources devoted to finding a vaccine.  The prowess of smaller biotech firms like BioNTech and Moderna, of researchers like Oxford and other institutions, combined with the resources of the global pharmaceutical industry, have resulted in the first vaccines being available this month and the prospect of mass vaccinations of healthcare workers and vulnerable populations in the first half of next year.  Healthcare and life sciences companies have been instrumental in developing testing, treatment, and therapies to identify the disease and improve outcomes for those affected. 

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