March 2021 Global Shares Fund Results

March 2021 was another positive month for the Elevation Capital Global Shares Fund, returning +6.83%.

During the month we witnessed the benefits of remaining disciplined and thinking independently when reviewing investments. In 2020, we published our investment rationale for ViacomCBS and internally reset our intrinsic value targets for Discovery Communications, both of which we first invested in 2014. These companies experienced a rapid share price appreciation in February/March 2021 and reached our intrinsic valuation targets, where we exited these investments. As it turned out, these two companies were significant and highly-leveraged holdings for Archegos Capital Management, a New York-based “family office” (in reality a hedge fund in disguise). In late March 2021, Archegos faced a margin call from its brokers forcing liquidation of these holdings, causing the exponential gains in the ViacomCBS and Discovery Communications stock prices to quickly evaporate.

Investors in the Global Shares Fund were protected from the latter event as we divested these investments when we believed the stocks were trading at/near our intrinsic value targets, before the Archegos margin call. The subsequent sell-off in ViacomCBS and Discovery Communications presented us an opportunity to reacquire an interest in these companies  significantly below our intrinsic value calculations once again.

During March 2021, we also realised investments in the following companies: NZX, Starbucks, Goldman Sachs, and TripAdvisor as market optimism continues on account of the global vaccination rollout and has provided investors with renewed confidence in the hardest pandemic-hit sectors.

Elevation Capital will continue to pay attention to market movements and our internal intrinsic value calculations. We are actively managing the Fund’s cash position to ensure we have the flexibility and agility to invest when opportunities present themselves.