This week, the fund has turned positive for 2023. However, we are still significantly behind the category, around +3% according to Quantalys. This is driven by rising stock indices in Europe (Stoxx50 +15%) and the United States (S&P 500 +9%, Nasdaq 100 +27%). The driving forces are the large-cap companies, with luxury brands in Europe (Hermès +34% and LVMH +25%) and tech companies in the US (Nvidia +113%, Meta +106%, Salesforce +60%, Alphabet +42%).

Undoubtedly, this is not the start of the year we had hoped for. But it is futile to dwell on the past, and it is more constructive to focus on the second half of the year that lies ahead. With these valuation increases accompanied by a decrease in volatility, reaching a two-year low, we find ourselves in complacent markets, especially given the current economic and financial environment. Therefore, we have closely reviewed our portfolio and reduced our equity exposure by selling three positions:

1/ Volkswagen: Since our €7.5 million investment in October, the only good news has been receiving €1.4 million in dividends, partly due to Porsche's listing. However, the IPOs of other subsidiaries have been removed from the agenda, and the decisions made by the new CEO, Blume, have not been reassuring. The latest decision was to appoint a young engineer from...not Apple, Google, Intel, or Tesla, but Bentley! As everyone knows, Bentley is at the forefront of technology. In short, it is certain that the triple revolution of electric vehicles, autonomous driving, and user experience will be a challenging transition for all traditional automakers. Achieving success in this area requires flawless execution, and we had significant doubts on that front to maintain our position. Overall, this position has yielded a return of +14% during this period.

2/ Alphabet: When ChatGPT was released at the end of March, the market became excited about Microsoft and concluded that Google's monopoly in search was under threat. As a result, the price-to-earnings multiple for Google/Alphabet reached 20, which was relatively cheap considering the quality of the company. The group had, and still has, a significant lead in AI compared to Microsoft; it was just more cautious in its product launches. Two months later, this truth has become apparent, and the opportunity has closed. Google is now valued at 26 times earnings, and it is fairly priced. We have gained +26% during this short period (two months), resulting in a profit of €2.3 million for the fund.

3/ Zoom: After entering a month ago, we are exiting today with a small profit ($100K). What interested us was the fact that Microsoft separated Teams from Office to avoid European scrutiny regarding its monopoly. This meant that, for Microsoft, Zoom needed to remain a strong competitor to demonstrate to authorities that the market was indeed free. However, what prompts our exit is doubt regarding the management's ability in this new market context. The pandemic-induced surge in activity has ended, and new products need to be developed to manage communications for large corporations. Eric Yuan, the founder and CEO, knows how to create powerful communication tools, but user-friendliness is not his strong suit. As he mentioned in the last conference call, "We have an issue with our customers adopting our new products." Zoom released its expected financial figures last night, and its problem is not so much its valuation but rather its future. The pandemic was like a wave that lifted certain businesses to great heights, and their stock prices even higher. However, now that this wave is receding, it is the team and products that will make the difference or not.

With these sales, our equity exposure has decreased from 31% to 14%. This is a significant reduction, but as explained above, each decision individually makes sense, and overall, I am pleased to scale back in this context. It is important to remember that volatility has a tendency to "return to the mean," and therefore, when it has experienced a prolonged period of decline, we are usually on the eve of a regime change.