VGI outlines turnaround strategy
Fund manager VGI Partners has detailed its strategy after a tumultuous period of poor returns.
VGI Partners has told investors it observed “some striking market dynamics” last year as it detailed its strategy after a tumultuous period of poor returns.
“Pockets of exuberance that we witnessed earlier last year have washed out with the prospect of rising inflation and higher interest rates,” the fund manager, run by high-profile investor Rob Luciano, wrote in a note to clients.
“We observe we are in a market that is willing to pay stark premiums for stocks that have strong historical visibility and perceived predictability of earnings while companies deemed to have lower predictability are being heavily penalised,” the letter reads.
“Beyond mega cap tech, we are seeing other pockets of ‘blue chip’ securities where valuations are head scratching.”
VGI Partners had a track record of stellar returns since its inception but struggled in the last year as the market marked down its investments, including in Amazon.com, which accounts for some 16 per cent of its holdings.
“We like the fact that Amazon is continuing to invest aggressively and remains focused on deepening and widening its moat, and therefore we remain highly optimistic about the trajectory for the business,” the letter reads.
VGI’s ASX-listed Global Investment Fund posting a slide of 2.5 per cent for 2021. It has a market value of $891m – down from $1.02bn.
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