Napoleon and lucky generals
“I would rather have a general who was lucky than one who was good.” —Napoleon Bonaparte
Sometimes the life of a fund manager feels like you should run out and buy a lottery ticket. Here is why:
Our second largest holding at 8.1% of the fund, AMAZON blew past all expectations as EPS of $0.52 by estimates by $0.49. That was how much they beat estimates, not the estimate. Revenue growth was 33.7% YoY. This is the fourth consecutive quarter that has seen year-over-year revenue growth accelerate! Not bad for a company that posted $44 billion in revenues in a quarter. The quarterly revenue number beat consensus estimates by $1.6 billion! On Friday evening, AMAZON recorded a +14% move. Echiquier Global is very happy to maintain its position in this company.
Life Lesson Learned: if you have conviction in idea, don’t be scared to own it like you have conviction.
At the end of September, ALPHABET was barely in our top ten. However, we significantly added to ALPHABET as the stock drifted down in early October, raising it to the third largest position again at 5.8% of the fund as all underlying trends indicated strong results for the company. And after a nice beat on the top and bottom line, we are glad to have done so. Earnings per share were up 32% YoY to $9.57, which beat the consensus estimates by a whopping $1.24. Revenues were up 24% YoY to $27.8 billion, beating consensus estimates by $600 million. ALPHABET was up +5%. Echiquier Global is very happy to maintain its position in this company.
Life Lesson Learned: if you have conviction in an idea, and the market makes it cheaper, buy it like you have conviction in it.
Echiquier Global got out of this stock on May 2nd at $123.50. CELGENE had been one of our top picks, and for a long time had been our third largest position in Echiquier Global. We exited the position because of a newspaper article about excessive price increases on their main cancer drug. Despite a positive following on Wall Street for what was a really cheap stock, especially given management’s continued guidance for growth to 2020, the news contained in the article just didn’t seem to fit with our view of the company. And Echiquier Global is very happy today that it does not own this company because the stock dropped 10% last Friday on a failed Phase 3 trial and then dropped another 16% today, its worst one day performance in 17 years, on a really bad earnings report that saw management lower their 2020 guidance. This takes the stock all the way back to where it was a year ago. Closing below $100 today, we are happy to have missed this one.
Life Lesson Learned: No matter how much you once loved a stock, no matter how identified you are with a stock, and no matter how cheap it is, the minute it does not feel right, get out. The conviction is lost.
Les valeurs citées dans cet article sont données à titre d’exemple. Ni leur présence dans les portefeuilles gérés, ni leur performance ne sont garanties.
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