10 09/21 10/09/2021

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WEEK 36 | SEPTEMBER
WEEKLY NEWSLETTER

 

OVERVIEW

  • Financial Markets & EconomiesMore Deals
  • Good to knowThe Case for Aluminum
  • Your portfolio highlights Solar Special Value Fund, Atlas Technical Consultants
  • In other news: Shipping powerhouse invests in Californian fuel start-up backed by Warren Buffett
Financial Markets & Economies

In the headlines this week, El Salvador became the first country to accept Bitcoin (or any type of cryptocurrency for that matter) as a legal payment method. The country bought $21 million in Bitcoin which equated to 400 units. In the findings of a recent survey conducted by the Central American University 90% of the El Salvador population does not know what Bitcoin is and 69% of the ones who know are skeptical or fully against this move. Because cryptocurrency is purely speculative at this point in time, the El Salvador move is considered an experiment. The price of Bitcoin and other cryptocurrencies tumbled after the news. According to Leah Wald, CEO of Valkyrie Investments, the idea that Bitcoin will one day be accepted as a legal payment method was already priced in. In other words, adoptions such as these are not growth drivers.

On the business front, there were many deals (partnerships, mergers, and acquisitions) made so far in 2021. The deals year-to-date are estimated around $3.6 trillion globally which is close to breaking the record set in 1995. The deals are mainly driven by cheap borrowing costs (low interest rates) and strong increase in equity values (stock prices). It is thus easier for acquirers to use debt and/ or equity to finance their deals at the moment. This environment is thus beneficial for (holding) companies following the growth by acquisition strategy.

Source: Investopedia
Good to Know

Aluminum reached its 10-year all time high last week and now managed to top it reaching $2779 an ounce this week. Most of the commodities that saw massive increase in prices were due to supply chain issues. In the case of aluminum this is not the only reason for the surge. The demand for aluminum has been very strong lately and we are about to tell you why. The demand for aluminum is surging because of the increased climate-change investments around the world. Many countries and corporations around the world are setting green targets. Guess what is needed for their green initiatives? Yes, aluminum!

Aluminum is used to increase the sustainable use of energy. It can be used to increase fuel efficiency in vehicles, increase cooling efficiency in green buildings, and improve energy efficiency of solar cells. It's not just that. Aluminum is also widely used for high-rise buildings, window frames, consumer electronics, household and industrial appliances, air- and spacecraft components, ships, trains, and personal vehicles. Thus, aluminum stands to benefit from the proposed U.S. infrastructure plan as well. Aluminum has two growth drivers working in its favor. 

In contrast, the supply of aluminum will slow because of an output cut imposed in China, one of the world’s largest aluminum producers. All the above is expected to cause a shift in equilibrium in the upcoming years. Meaning, the oversupply of recent years will be wiped out shortly which will create a shortage of aluminum and consequently further increase the price. This may not be beneficial for the end-user, but it surely is for the investor.

 
Your Portfolio Highlights
 
 
The Solar Special Value Fund (SSVF) seeks substantial capital appreciation by investing in international publicly traded equity securities, with an emphasis on individual security selection based on thorough fundamental analysis rather than general equity market movements. The Fund concentrates its research and capital on special investment ideas. This can be undervalued conglomerates, family companies or other specific investments. Some of these investments carry a greater risk, but this allows for extraordinary return potential in the future. The Fund has a performance of +18.88% so far this year. In the spotlight this week is Atlas Technical Consultants (ATCX). The company has a performance of +50.28% so far this year.

Atlas Technical Consultants (ATCX) strive to be the leading infrastructure and environmental solutions company. Atlas provides mission critical services such as: Testing, Inspection & Certification; Environmental Solutions; Engineering & Design; Program, Construction & Quality Management. The company has both the public and private sector as clients with most of them operating in the transportation, commercial, water, government, education, and industrial markets.

Atlas is expected to grow exponentially over the years seeing that they have multiple growth drivers. Think about the aging infrastructure in the U.S., high growth states, increased ESG (Environmental, Social, Governance) awareness, advancements in technology and innovation, continued government outsourcing, and the growing demand for safety and reliability of infrastructures. Atlas stands to benefit immensely from the proposed U.S. infrastructure bill. The analyst consensus on the value of Atlas Technical Consultants is $15.50 per share.

*Please visit the Atlas Technical Consultants website for more information or click on one of the images below for their latest presentation.

Atlas Technical Consultants- 1 Year Price Movement
In Other News
 
We wish you a pleasant weekend and hope you stay safe.

Kind regards, 
Shernel Thielman 
Investment Manager 

www.lunarasset.com | shernel@lunarasset.com 
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