08 Aug 2023 VG1 investor letter – Period to June 2023
“”I am personally skeptical of some of the hype that has gone into artificial intelligence. I think old-fashioned intelligence works pretty well.”
– CHARLIE MUNGER, 2023 BERKSHIRE HATHAWAY MEETING, MAY 2023
For the six months ended 30 June 2023 (1HCY23), VGI Partners Global Investments Limited (ASX:VG1) generated a net return of 19.7%¹ at an average net exposure of 72%.
Global equity indices have rebounded since the beginning of 2023, with the MSCI World Index rising +14% to 30 June 2023, the S&P 500 rising +16% over the period and the technology-focused NASDAQ Composite increasing +32%. The period was defined by the narrow leadership from the technology sector, with the top 7 contributors of the S&P500 driving just over 50% of the index return YTD to June. Whilst equity market indices are approaching valuation levels in aggregate that are beginning to appear stretched, this has largely been driven by such excessive outperformance from larger-cap technology companies and we are continuing to find a number of situations across a variety of sectors and markets where there remain attractive opportunities in which to deploy our capital.
As regular readers of our updates would be aware, the portfolio has seen some evolution over the previous 12 months, and we are pleased that a number of new positions have contributed positively to returns over the period. Additionally, some existing holdings have been reduced as share prices approach our assessment of fair value, while the short portfolio has also undertaken some repositioning. We discuss a number of these portfolio movements in this letter and share an overview of where we see opportunities to generate attractive returns on our capital over the year ahead.
¹ Past performance is not a reliable indicator of future performance.