Price and Performance

For the month of May, the Company’s Total Shareholder Return and NAV Total Return were -1.1% and -0.4% respectively, while the MSCI All Country World Index (ACWI) benchmark returned -0.9%.

Over the month, the Company’s performance was primarily led by Adidas, delivering an absolute return of 16%. The German sporting goods company posted first quarter sales well above consensus early in the month triggering a rise in share price. Nutrien, the world’s largest provider of crop inputs and services, was also a leading contributor to return, posting 10% absolute return over the month. The basic materials stock benefited from an increase in demand for potash, an element used in fertilisers. In contrast to this, Amazon was the primary detractor over May, delivering an absolute return of -9%. After experiencing a tremendous boost over 2020 thanks to its pandemic tailwinds, the stock has traded sideways since late last year due to expectations that growth will slow over 2021.

Within the Company’s portfolio, the position in Berkshire Hathaway, an American multinational conglomerate, was trimmed. The stock price was up 25% since the start of the year. The managers’ assessment of intrinsic value has increased since then but not by as much as the share price. With a lower margin of safety, the position has been reduced. Elsewhere in the portfolio, the position in Alibaba was reduced, making room for more attractively valued growth opportunities in Disney and New Oriental Education (EDU). Disney is expected to see continued growth opportunities following the success of its Disney+ streaming service. Disney’s Parks and Movie businesses are also expected to rebound over the course of 2021 and 2022 following COVID-19 disruptions in 2020. For EDU, current regulatory uncertainty has created an attractive valuation opportunity. EDU is well-positioned to benefit from further industry consolidation driven by new regulations, given its strong brand, scale, and high-quality offerings.