October ended with a return of +1.6% for the MetaSpace Fund. In September, the FED made a major interest rate cut, and since then incoming jobs data has been stronger than expected. As I mentioned earlier, this data is by far the most important factor. The discussion on the future path of interest rates picked up quickly after the strong jobs data, but calmed down at the beginning of this month when the US labor market data came in weaker than expected.

The FED is expected to make a new rate decision later this week, and the consensus points to a 0.25% cut. The most interesting thing will be to hear what the FED thinks about the future path of interest rates. The resilience of the economy has meant that the market is now pricing in a slightly more cautious pace of rate cuts going forward than previously indicated - see graph below.

The big story at the moment is the US presidential election, which will be decided this week. There is talk of election risk and what the election could mean for the stock market. One interesting correlation is that there has been a correlation between the odds of Trump winning and a positive stock market performance. At the moment, the odds point to a win for Trump. The explanation for this correlation is probably that Trump is pursuing Republican policies of tax cuts and deregulation, which are traditionally positive for the stock market.

At the same time, even if Harris wins, she stands for policies that are not extreme in any way and are likely to work well with the stock market. The worst outcome, however, would be an ambiguous election result with a long aftermath, as the stock market dislikes uncertainty. However, looking back at the last election in 2020, the stock market performed strongly after the election despite all the uncertainty and subsequent turbulence.

In my view, the election may act as a trigger event for some short-term market volatility.

The best performing holding was the US medical technology company Procept Biorobotics. The company, which develops advanced robotic systems for the treatment of urological diseases, makes extensive use of AI to automate and increase the safety and precision of procedures. AR also has great potential to complement navigation and training of surgeons. The company has had a very strong trend since about 1 year ago and so far this year the share has gone up about 130%. For October, the return was +18.1%. Investors have great confidence and the company is growing strongly, in the latest quarterly report it reported an increase in turnover of 74% for the last 12 months. It also announced that it had received important FDA (US medical and technology regulatory agency) approvals for a key robotic system. However, it should be noted that the company is not yet profitable, which increases the risks. Procept Biorobotics represents 3.6% of the fund.

On the negative side, we find the French software company Dassault Systemes with a decline of -11.7% for October. Dassault Systemes works a lot with 3D software, among other things, and its largest customer segment - the manufacturing industry - has started to show some weakening in demand. This was evident in the Q3 report released in October, and Dassault Systemes revised its forecast downwards slightly.

Here we present one of many news stories in our megatrends section:

A historic moment occurred during the month when Elon Musk's company SpaceX succeeded in the feat of launching its Starship rocket, which then returned to Earth and was intercepted by two huge mechanical arms. Elon Musk himself described the landing as a major step towards the goal of making humanity multi-planetary.

Being able to reuse rockets in this way can drastically reduce the cost of space launches, increasing accessibility and driving growth in the space sector. SpaceX is already reusing parts of its second rocket, the Falcon 9, but has now succeeded in reusing its larger and more advanced Starship rocket - the rocket that will take us to Mars.

Monthly Newsletter October 2024

Monthly newsletter October 2024

September was a strong month with a gain of +3.21% for 

 The big event of the month was the FED's interest rate announcement, where they implemented a so-called double cut or 0.5%. The FED described a forecast where the intention is to continue lowering during 2024 and next year to 3.25% in the summer of 2025. With inflation now around 2.5%, this interest rate forecast shows that it is still fairly restrictive and thus not too afraid of a recession. By far the most important data going forward will be on jobs. So far, inflation has gone down while we still have a fairly strong labor market in the US. However, if people start to lose their jobs or worry about losing their jobs, then there will definitely be legitimate fears of recession. In that case, low interest rates will not be enough to keep people consuming.

As noted in previous reports, the US market has been uniquely concentrated around the largest companies, commonly known as “The Magnificent 7.” These companies have been responsible for nearly all recent returns, with concentration levels only increasing. In my view, the catalyst for returns to spread to smaller companies that historically deliver better performance over time is interest rate cuts. Over the past few months, we’ve observed such a shift, with smaller companies beginning to outperform. Besides rate cuts, the critical factor for this rotation is improved earnings among smaller companies relative to the largest ones—a trend that recent reports confirm is now underway.

Once again, our best-performing holding was in the space sector, with Rocket Lab posting a +55.5% gain for the month. Recently, the fund added a few space-focused companies, with Rocket Lab now our largest holding. Rocket Lab stands as the only major player aside from Elon Musk's SpaceX involved in rocket launches. Led by Peter Beck, often considered New Zealand’s answer to Elon Musk, the company has now reached profitability in its launches, and a new, larger rocket is nearing launch. Rocket Lab is also a significant player in space components, with an order backlog exceeding USD 1 billion. In September, several major analyst firms upgraded their recommendations on Rocket Lab.

Conversely, Swedish eye-tracking company 

 was the fund’s weakest performer, down -17.5% for the month. Smart Eye, which represents just over 2% of the fund, reported increased sales and reduced losses in its Q2 results. However, it issued guidance for a weaker Q3, citing challenges in the European automotive industry, which is its primary market. Smart Eye continues to develop eye-tracking and AI technology in collaboration with major car brands.

Augmented Reality (AR) remains a dynamic field. In last month’s update, we discussed Meta’s investment in slimmer “smart glasses,” with Zuckerberg recently revealing a prototype named Orion AR glasses. These glasses combine AR and AI in a streamlined form, showcasing how these two technologies can create multifunctional, smart wearables. Recently, sources within Apple have suggested that Apple, too, is shifting its focus from its advanced AR/VR Vision Pro glasses to sleeker “smart glasses.” Long a major proponent of AR under Tim Cook’s leadership, Apple is currently developing the next Vision Pro version. While the Vision Pro has been somewhat niche, a more accessible pair of “smart glasses” could achieve widespread market appeal.

Monthly Newsletter September 2024

Monthly newsletter September 2024

 return ended at -4.25%. The month started with a major correction in the stock market, and August 5 became known as “Black Monday 2024” due to widespread selling of stocks. This decline was triggered, among other things, by weak US jobs data and the return of the term “hard landing”. Since then, a slow recovery has taken place, with economic data, particularly from the United States, helping to allay fears of a hard landing or recession. In addition, the Fed has signaled that it is ready to start cutting interest rates. It is a difficult balancing act, as we need to see weaker economic data for interest rate cuts to become relevant, but not too weak data, as this could create concerns about a deeper recession. September will be characterized by a focus on the Fed's interest rate announcement in the middle of the month. A rate cut of 0.25% is seen as a given in principle, but the odds of a double cut of 0.5% have decreased. Before the announcement, however, important new job statistics will be presented that could have a major impact.

The best-performing holding for the month was 

, up +42.1%. This new addition in the space sector, often compared to Nvidia as a potential game-changer, is unique in its ambition to create a direct satellite-to-mobile network connection. In August, the company confirmed it is on schedule to launch satellites in the coming weeks. Upon completion, this network will provide nearly 100% geographic coverage in the US for direct satellite-to-mobile service, with beta testing by mobile operators AT&T and Verizon expected within a few months.

 was the fund’s worst performer, down -22.1% for the month. Although Immersion, a leader in sensory technology, released an earnings report that met expectations, the decline likely stemmed from profit-taking by investors, despite significant insider purchases following the report.

New Developments in Our Megatrends: Augmented Reality and AI Synergies

The field of AR glasses is evolving rapidly, with tech giants Meta and Google shifting their focus towards the next generation of "smart glasses." While Apple launched its high-end Vision Pro last year, combining Augmented Reality (AR) and Virtual Reality (VR), Meta—likely Apple’s main competitor with its Meta Quest Pro—now appears to be focusing on smart glasses, in collaboration with Google. Supporting this shift, Meta recently concluded its “La Jolla” project, which insiders describe as its attempt at a Vision Pro competitor. Additionally, since 2021, Meta has partnered with Ray-Ban to develop smart glasses.

The terminology in this field can be confusing: unlike VR-enabled devices, smart glasses leverage AR for notifications and basic holograms, without advanced graphics or immersive VR. This approach reduces the technical complexity and cost. Another reason for this shift is the rapid advancement in AI. With AI, these glasses can perform many functions with minimal hardware. A few sensors, voice activation, and a camera allow the glasses to interpret the environment and answer questions, exemplifying the powerful synergy between Augmented Reality (AR) and Artificial Intelligence (AI).

Monthly Newsletter August 2024

Monthly newsletter Augusti 2024

The summer started calmly but ended in great turbulence that continues into August and at the time of writing. We have long been waiting for weaker data for the Fed to start its rate cuts. However, it is a balancing act, as excessively weak figures increase fears of a recession or a so-called “hard landing”. The big headline grabber was the US jobs data for July that came in recently. The slowdown in job creation was much greater than expected, while unemployment rose. Such weak figures have not been reported since the pandemic. This was enough to suddenly set off recession fears in the market and suddenly the stock market's fear index -VIX, is now at its highest level since the pandemic, see the graph below. At the same time, the market has quickly gone from speculating about a first rate cut from the Fed in September to fully pricing in a double cut. Futures trading indicates more than four cuts this year.

A couple of events in the tech sector also led to increased fears. The reporting period has started with mixed results, but Intel's report, for example, which announced major job cuts, was interpreted as a worrying sign. We have also just received news that Warren Buffet's Berkshire Hathaway sold half of its position in its largest holding - Apple, which is also seen as negative by the market.

The stock market often tends to overreact in the short term, with doomsday predictions surfacing periodically. However, if we take a broader view, these developments are in line with what we’ve been anticipating, as they create a foundation for interest rate cuts, which would benefit many of our holdings. Additionally, several leading companies have reported strong resilience, suggesting that a “soft landing” remains a realistic possibility.

For investors, it’s essential not to overreact or make short-term decisions. Patience and a long-term perspective are key in navigating these fluctuations.

Augmented Reality Fund becomes MetaSpace Fund

As previously announced, the Augmented Reality Fund will be renamed 

 as of August 12. Alongside this change, the fund’s investment focus will expand to include gaming/eSports, space technology, and artificial intelligence (AI), while maintaining a strong foundation in augmented reality (AR). This broader focus enables the fund to incorporate promising companies across complementary sectors that align with our vision. Our investment approach remains grounded in a select group of megatrends we hold strong conviction in.

Most existing holdings will remain, with some adjustments to ensure each holding maintains a robust connection to the fund's themes. AR will continue as the dominant theme, representing approximately 40% of the fund, with each of the new areas comprising about 15-20% of the fund at present. We aim to maintain a concentrated portfolio of 25-30 companies, each with a clear and substantial link to the MetaSpace themes. Given the synergies among these technologies, many current holdings naturally connect to more than one theme. For example, AI is essential to delivering an ideal AR experience, and gaming/eSports is a key application area for AR.

In selecting holdings for these new areas, we consider how each company’s focus intersects with our core themes. For reporting purposes, each portfolio holding will be assigned to the theme we deem most central to its business and growth.

Below is a list of the new holdings in MetaSpaceFund along with a brief explanation of what they do:

 (theme - Augmented Reality) - Swedish company working on surgeon training and medical simulation using AR/VR tools.

 (theme - gaming/eSports) - Major American game developer best known for titles such as GTA and NBA, actively promoting eSports through sponsorships, acquisitions, league creation, etc.

 (theme - gaming/eSports) - Finnish game developer of the smaller kind, with a strong focus on 3D technology.

(theme - space) - Only major company besides Elon Musk's SpaceX involved in rocket launching. Run by New Zealand's equivalent of Elon - Peter Beck, it has now achieved profitability in its launches, while a new larger rocket is close to launch. They are also big on different types of space components.

(theme - space) - The listed satellite company with the most satellites in space. The satellites work to take high-quality images of the Earth that can be used, for example, for important climate work and the planning and utilization of resources and infrastructure.

(theme - space) - A company specializing in space technology by providing space infrastructure products and services, systems and components produced through innovative means such as space robotics.

 (theme - space) - The company is often referred to as the potential Nvidia of the space sector. It is unique in seeking to create a seamless direct connection to the network between its satellites and mobile phones. Many of the major mobile operators have partnered with the company.

 (theme - Artificial Intelligence) - This US medical device company develops advanced robotic systems for the treatment of urological diseases. The company makes extensive use of AI to automate and increase the safety and precision of procedures. AR also has great potential to complement navigation and training of surgeons.

 (theme - Artificial Intelligence) - Swedish company working with AI and Eye Tracking. AI models are central to the work and are used to analyze eye movements and behaviors. Eye Tracking is also closely linked to both AR and gaming.

Monthly Newsletter July 2024

Monthly newsletter Juli 2024

It's a bit of a waiting game at the moment, as much of the talk is about when we will see interest rate cuts from the Fed. We don't want to see them too late, as the risk of a “hard landing” in the economy increases the longer we are in a high interest rate environment. Data coming in from the US so far this year has been sticky at levels above what is acceptable for a rate cut. In June, however, incoming figures on both inflation and the US labor market have pointed in the right direction. At the same time, the Fed is quite cautious in its statements and wants to see stability in the trend, and says that it will probably only cut once this year. However, the market seems to be taking the Fed's statements with a shrug as the Fed has already swung many times. The Fed's Powell is also clear that it is the data that will decide. Incoming data will thus be more decisive than what the Fed says about it, and right now the market clearly believes in a first cut in September and another cut later this year.

As we move from June into July, this month's letter provides updates on some upcoming changes and shares our perspectives on the market and our funds. At Ace Fonder, we’re committed to evolving our approach to ensure that all fund investors receive the best possible offering. With that in mind, we will be implementing several key changes in the coming months.

, effective August 12. Alongside this, the fund will expand its investment focus to include gaming, eSports, space technology, and artificial intelligence (AI). Importantly, no action is required on your part as an investor.

The MetaSpace Fund will retain its core focus on augmented reality, while also allowing for additional investments in high-potential sectors that align with our vision. Our investment strategy remains anchored in specific megatrends that we believe will fundamentally transform society. These trends, which we feel are underappreciated by the broader market, are positioned to generate meaningful returns by tapping into innovation before it becomes mainstream.

While AI has captured widespread attention, we are selective in this space, choosing only those AI companies that support the growth of our core trends: augmented reality, space technology, and gaming/eSports. AI is essential in driving these fields forward, from refining satellite data to enhancing AR holograms and creating personalized gaming experiences.

Another upcoming change is the closure of the 

 on August 30. To continue exposure to gaming, eSports, and space technology, investors can transition to the MetaSpace Fund by purchasing units directly.

These adjustments consolidate our thematic investments into a single fund, optimizing our strategy while preserving our thematic approach. Additionally, we will be reducing the management fee from 1.9% to 1.5% as we streamline operations, aiming to create better opportunities for you as an investor.

If you have questions about these changes, please feel free to contact us at info@acefonder.se.

Among the top-performing holdings this month was 

, with a +26.5% return. Adobe’s June report exceeded expectations, and the company also raised its forward guidance. Adobe continues to see success in integrating AI tools across its suite of programs, particularly those used for AR and 3D modeling. While the recent rise has made Adobe’s valuation more challenging, we have chosen not to increase our position, which currently represents about 4.1% of the fund.

 continues to struggle, ending June with a -9.8% return. As mentioned in previous letters, Unity has undergone significant organizational changes, streamlining its product portfolio to concentrate on core offerings. This refocusing is intended to reduce costs and eventually yield positive results. While it remains to be seen if these changes will succeed, we maintain confidence in the company and its products, recognizing that it may take time for the adjustments to have a meaningful impact.

Monthly Newsletter June 2024

Monthly newsletter Juni 2024

After a few months of higher-than-expected inflation figures in the US, the April figures came in slightly lower than expected at the end of May. The PCE figures showed a price increase of 0.2%, which is the lowest increase for a month so far in 2024. However, the rhetoric from Fed representatives is still quite cautious, stating that “greater confidence” in the decline in inflation is needed before starting to cut interest rates. The market is currently pricing in two cuts from the Fed this year. As I noted earlier, incoming data on growth, inflation and jobs will be crucial for when we will see interest rate cuts. We have already started in Sweden, but the entire world market is waiting for the Fed to cut rates, which will set the tone for the global interest rate market.

Among the top performers, two holdings stood out: Immersion (+39.1%) and Himax Technologies (+30.1%). Immersion, a US-based leader in haptics or sensory technology, has a solid patent portfolio that it licenses to major companies like Nintendo, Samsung, and Meta. In May, Samsung renewed its licensing agreement with Immersion, while Meta’s agreement remains fairly new. If AR/VR continues to grow, Immersion is well-positioned to benefit. Asian-based Himax Technologies, a leader in various display technologies, delivered an impressive report in May, surpassing expectations. After recent struggles, Himax appears to be returning to a growth phase, driven largely by its automotive industry connections.

On the downside, Unity was the fund’s worst performer with -25.6% for the month. At the beginning of May, Unity announced Matthew Bromberg as the new CEO, with former interim CEO Jim Whitehurst moving to Chairman. While we view this transition as positive and planned, leadership changes often generate short-term uncertainty. Additionally, Unity’s report was mixed, which added pressure to the share price. The company has now completed its cost reduction phase and can refocus on development.

Magic Leap, once a highly anticipated player in augmented reality, made headlines for its $2.6 billion in investments to develop AR glasses, which ultimately saw only about 6,000 units sold after needing further capital. In May, news broke of a collaboration between Magic Leap and Google to develop AR glasses. Although Google’s previous attempt with Google Glass was unsuccessful, its partnership with Magic Leap could leverage Magic Leap’s extensive AR patent portfolio, potentially positioning Google to compete with Apple and Meta in AR.

Logitech was the best performer, up +26.6% for the month. Known primarily for computer accessories like keyboards and mice, Logitech’s recent report showed growth in its gaming segment, with keyboards as a standout. The company is also well-positioned in AI, with plans to incorporate AI-specific functions into its products.

Conversely, last month’s best-performing holding, Tobii, was among the worst this month. Tobii’s May report disappointed, showing a decline in sales and growing losses. However, CEO Anand Srivatsa expressed optimism, stating that cost-saving measures are expected to improve year-end results.

Esports remains an essential tool for major game developers to build community and loyalty around their games. An interesting example is Geoguessr, a Swedish game that has gained international popularity, evolving into a new eSport where players compete in global geography challenges. This year, the World Championship will be held in Stockholm. This eSports element has been a valuable surprise for Geoguessr, generating publicity and new users; today, the game has approximately 70 million registered users.

AST Spacemobile had an exceptional month, rising +266.1%. Although high-risk due to its lack of revenue, AST Spacemobile now represents 5.28% of the fund, and we intend to reduce the holding slightly due to its risk profile. AST Spacemobile aims to provide global broadband coverage using its BlueBird satellites, uniquely designed to offer internet access directly to mobile phones. In May, AST Spacemobile announced partnerships with major US telecom companies AT&T and Verizon, aimed at providing connectivity in remote areas, reducing the need for costly cell towers by utilizing AST Spacemobile’s services.

On the downside, Velo3D, a space-focused 3D printing company, dropped -42.3% after reporting a mixed month. The company’s cost-reduction strategy is starting to show results, and it aims for profitability by year-end. However, low cash reserves mean that new funding is likely needed, creating uncertainty and affecting the stock price. Velo3D currently represents 1.6% of the fund.

China also made strides in space exploration. Through its Chang’e-6 mission, China completed a lunar landing in May, collecting and returning lunar material to Earth. This mission involved four spacecraft, furthering understanding of the Moon’s origin and evolution, and providing valuable experience for future Mars missions. Mars materials could offer insights into fundamental questions about the origin of life and the potential for human habitation on Mars. While NASA and the European Space Agency are also working on Mars exploration projects, delays have positioned China as a leader in this mission.

Monthly Newsletter May 2024

Monthly newsletter Maj 2024

At the time of writing, the first interest rate cut has come here in Sweden, which was expected. Sweden is thus cutting interest rates before both the US and the European Central Bank. The threat of inflation is most likely over and there will be more cuts ahead. However, the US economy is surprisingly strong and inflation is therefore somewhat more stubborn there. The market's belief in interest rate cuts has shifted during the year and now the market believes in a first cut for the US in September. Above all, the jobs data that have come in have been stronger than expected. However, we see a break in the trend in April when this month's data came in weaker than expected, which suggests a rate cut.

April was a month with many reports, not least from the largest tech companies. Generally speaking, the reports have been strong. As I have written about before, the concentration in the indices of the absolute largest tech companies, the so-called Magnificent 7, is historically high. For example, the Magnificent 7 make up more than 50% of the Nasdaq 100. The valuations of these companies are historically high and they have significantly outperformed the rest of the stocks in the indices. There has even been talk of the “mediocre 493” in the S&P 500, with Mag7 accounting for most of the positive performance in recent years. Historically, one can see a pattern of this return spreading to other stocks after similar record situations. I think this is likely in the future, in other words that the good returns delivered by Mag7 will spread to smaller companies.

What will cause this spread so that the market broadens? Well, the simple answer in my opinion is that we are starting to see interest rates being lowered or that we at least feel a greater certainty in how the Fed will act in the future regarding cuts. It can be noted that the historical average from when the FED cuts for the first time after their last increase is 8 months. The record ever is 18 months in connection with the IT bubble. It has now been 10 months, so a cut is sure to come. We are therefore very much looking forward to the FED lowering the interest rate and we believe it will benefit many of our holdings.

The Swedish eye-tracking company Tobii had a strong month, gaining +32.1%. Although Tobii is a smaller holding, representing 1.45% of the fund, it has faced challenges with poor price performance recently. Tobii is among the companies that have been heavily impacted due to its lack of profitability. It also has significant exposure to the automotive sector, which has experienced declining demand. Recently, Tobii completed an oversubscribed share issue, raising around SEK 300 million, which offers a new opportunity to reach its profitability target, now within closer reach.

The fund's worst-performing holding was Autodesk, which fell by -18.0%. This American software company, known for its essential 3D graphics and AR programs and recent AI initiatives, announced a delay in filing its annual report due to an internal review regarding the handling of certain financial ratios related to cash flow. While we do not expect this to have a major impact on the company in the long term, it has understandably caused some short-term concern.

Apple estimated sales of approximately 500,000 Vision Pro units this year, but so far has delivered between 200,000 to 300,000 units, indicating a need to catch up. Recently, the media has given more attention to critics pointing out declining sales, calling Vision Pro a potential failure. As I have previously mentioned, this pattern is common whenever Apple launches new products, and it’s already happening just three months post-launch. While the product currently has a limited number of apps and is relatively expensive, this is merely the beginning. Interestingly, the Vision Pro has received a warmer-than-expected reception in industrial sectors, including automotive, healthcare, and film. I am confident that Vision Pro will follow the same successful trajectory as Apple’s past product launches over the past 40 years, such as the Mac, iPod, and iPhone.

The Swedish eye-tracking company Tobii had a strong month, achieving a +32.1% increase. Although Tobii is a smaller holding at 2.43% of the fund, it has endured a challenging period with poor price performance. Tobii is among the companies that have faced significant setbacks due to its lack of profitability. Additionally, it has substantial exposure to the automotive sector, which has experienced declining demand. Recently, Tobii conducted an oversubscribed share issue, raising approximately SEK 300 million, providing an opportunity for a fresh start and placing it closer to achieving profitability.

Fragbite, which operates the largest eSports platform in the Nordic region, saw a steep decline of -46.9%. This holding accounts for 0.52% of the fund. With only SEK 25 million in cash at the end of the year, the likelihood of requiring new capital is high, though no announcements have been made yet. This uncertainty has likely contributed to nervousness in the stock price.

As I have discussed previously, mobile gaming is the fastest-growing and most profitable segment of the gaming industry. Xbox appears to be the next major player in this area, as Microsoft recently announced plans to launch its own Xbox “gaming store” for mobile, starting with games like Minecraft and Candy Crush this summer. This store will only be available in web format to avoid reliance on giants like Apple and Google, which would be necessary if it were launched as an app. Many of Activision Blizzard’s titles are successful in their mobile versions, which likely contributed to Microsoft’s decision to acquire Activision Blizzard and signals its commitment to expanding in the mobile gaming market.

The only holding in the fund with a positive return this month was the Swedish satellite company Ovzon, which gained +10.4%. There are few listed Swedish companies in the space sector, and the fund includes only two: AAC Clyde Space and Ovzon, both operating within the satellite industry. These are smaller, high-risk companies that are not yet profitable, and therefore represent smaller positions in the fund; Ovzon currently accounts for around 0.6%. In Ovzon’s April report, it was evident that order intake has increased significantly. Ovzon provides mobile broadband services and earlier this year launched its first satellite, Ovzon3, which is currently on its way to its designated orbit as planned, with deployment preparations underway. Ovzon3 is expected to become operational in mid-2024, broadening Ovzon’s service capabilities.

On the downside, last month’s best-performing holding, Velo3D, was this month’s weakest, declining by -49.3%. This drop resulted from the company’s announcement of a public offering, which negatively affected the share price. This was anticipated, as we previously highlighted that capital remains a scarce resource for this space-focused 3D printing company.

SpaceX dominates the satellite constellation market, having launched its first satellites four years ago, with 5,402 Starlink satellites now in orbit providing internet access. Subscriber revenues are projected to be SpaceX’s largest revenue source this year. The company is increasing its satellite launch pace, now with the capacity to deploy around 200 satellites monthly. The cost of the Starlink antenna for customers has decreased significantly over the years, thanks to improved efficiencies and economies of scale; it is now available for under $600. This strengthens Starlink’s position as a world leader and enhances accessibility. Interestingly, SpaceX has recently developed the capability to decommission larger numbers of satellites. They discovered an issue with an early satellite version and plan to take approximately 100 of these out of service in the coming weeks, without impacting customers or other satellites.

Monthly Newsletter April 2024

Monthly newsletter April 2024

The first quarter of 2024 was a pretty good period for the stock market. However, Q1, especially in the US, showed a slightly more stubborn inflation than hoped for. The trend is definitely in the right direction, but inflation has come in higher than the Fed's expectations. This has led to more cautious statements regarding future cuts. From expecting a cut as early as March, the market is now pricing in a first cut in July, with a reasonably high probability of a cut as early as June. Incoming data will be decisive for when cuts become reality. Interest rate cuts are usually positive for the stock market and definitely for the smaller growth companies.

On the positive side, the holding in Micron stood out with a return of +23.9% in March. This American company, a global leader in memory chips, has benefitted from the surge in AI demand, supporting the necessary hardware infrastructure that includes Nvidia as one of its major customers. Micron's memory chips play an essential role in Nvidia's GPUs, and the company reports strong demand, with some chip models currently sold out. Additionally, Micron’s memory chips are central to finished products like AR glasses, and the company is now positioned to potentially raise prices and improve margins as a result.

On the downside, Adobe was the fund's worst-performing holding, with a return of -11.6%. Adobe experienced a strong year in 2023, becoming the fund’s second-largest holding at over 6.2% in early November. At that time, I indicated in the monthly letter that I planned to secure some profits in the stock, as its valuation had become challenging. Today, Adobe represents 3.7% of the fund. Most of the decline in March followed the release of Adobe’s quarterly report, which included a slightly lower-than-expected forecast.

The Swedish media company Media and Games Invest had a strong performance following the release of its quarterly report at the end of February, which highlighted impressive organic growth and the acquisition of numerous new clients. Additionally, there is a trend of existing clients beginning to increase their advertising budgets again. As a result, the stock rose by +43% in March. Another positive contributor was Huya, the Chinese streaming giant, which also reported solid performance and saw its stock increase by +21% during the month. The report noted that cost-saving measures are proving effective, with sales exceeding expectations.

On the downside, Corsair Gaming was one of the largest detractors, with a return of -5% for the month. The American company, which focuses primarily on gaming accessories such as keyboards and headphones, is directly impacted by the state of the PC market. In 2023, the PC market declined by approximately 15%, but there is now a general belief that the market has bottomed out, with cautious growth starting to reappear.

The top-performing holding for the month was Velo3D, which gained +80.6%. This 3D printing company has one of the clearest connections to the space sector. While the stock faced challenges in 2023, it has recently trended positively, benefiting from cost reductions and an influx of new orders. The 3D printing sector has also seen numerous acquisitions, a trend that could be beneficial. However, Velo3D remains a high-risk stock with a balance sheet that leaves room for improvement, and there is a significant likelihood of needing additional capital. For this reason, the holding remains relatively small in the fund at 2.62%.

Another strong performer was Redwire, which increased by +42.1% in March and is now among the top five holdings. This American company exclusively focuses on components for the space sector, making it a true space-focused business. Most of the increase occurred after the release of its quarterly report, which featured better-than-expected sales and profits.

On the downside, several holdings posted losses around -10% for the month. One notable example is Rocket Lab, the fund’s largest holding, which declined by -9.5%, thereby having the largest negative impact. News surrounding the company was relatively quiet this month as it prepares for its next Electron rocket launches in April. Rocket Lab is also working on developing its new rocket, Neutron, with a first launch anticipated later this year. In 2023, Rocket Lab achieved its first profitable year for rocket launches. Given Rocket Lab’s growth potential, I believe its valuation remains relatively low. Rocket Lab stands as the second-largest rocket company after Elon Musk's SpaceX, which is not publicly listed but is valued at approximately twice Rocket Lab’s valuation.

Monthly Newsletter March 2024

Monthly newsletter Mars 2024

Monthly letters

Learn more about investing in augmented reality, artificial intelligence, space technology, and eSports and Gaming.