Dear readers, since our last market and trade update on the 7th of June many different global events have unfolded and we have summarized the most important ones below.
Monkeypox
The World Health Organization (WHO) has finally woken up and realized that Monkeypox “poses a real threat to public safety”. WHO is holding an emergency meeting on the 23rd of june to decide wethere Monkeypox constitutes a Public Health Emergency of International Concern (PHEIC). WHO has also called for a name change of Monkeypox since the name itself can be viewed as discriminatory.
For those of you who rememeber how WHO handled COVID-19 you may recall that the organization was reluctant to call the global outbreak a Pandemic and it took several months until the 11th of March for the WHO to finally label the virus as an official Pandemic. Before this they had renamed the virus. Is anyone seeing the same pattern we are?
A very interesting guideline was posted from WHO regarding vaccines for Monkeypox this tuesday (14/6 2022) “While some countries have maintained strategic supplies of older smallpox vaccines – a virus eradicated in 1980 – these first-generation vaccines held in national stockpiles are not recommended for Monkeypox at this time, because they do not meet the current safety and manufacturing standards.Newer and safer (second and third generation) smallpox vaccines are also available, some of which may be useful for Monkeypox and one of which (MVA-BN) has been approved for the prevention of the disease.”
MVA-BN is another name for Jynneos which is the vaccine produced by ESGFIRE portfolio company Bavarian Nordic. The guidelines above also could lead to the conclusion that all countries worlwide may soon need to replace their old stocks of smallpox vaccines with ,for example, Jynneos AKA MVA-BN from Bavarian Nordic which can also be given to immunocompromised individuals unlike other smallpox vaccines. The United States alone holds a stockpile of 100 million doses of an older smallpox vaccine called ACAM2000 from Emergent Biosolutions which is not recommended for general use.
We remain very bullish on Bavarian Nordic, although not even their stock price has been completely unharmed in the current turbulent market carnage. Bavarian Nordic has secured many new orders lately and also have got the target price of their Stock raised by several analytics to well above 300 DKK.
The ECB hikes rates for the first time since 2011!
The European Central Bank (ECB) promised last week on June 9th to deliver their first rate hike 0f 0.25 % in July which will be their first interest rate hike since 2011. The inflation in the EURO zone is at a record high of 8,1 % and still rising. The ECB stated that they fear “that price growth is broadening out and could morph into a hard-to-break wage-price spiral, heralding a new era of stubbornly higher prices.” Almost even more importantly the ECB said they would cease Quantitative Easing (QE) on 1st of July, they will then raise the rates even more in September if inflation has not curbed. However the ECB does not plan to reduce its balance sheet like the FED is planning . This should be good news for the economy seeing as the ECB reaffirmed their commitment to keep reinvesting cash maturing from the 5 trillion euros worth of public and private debt the ECB holds.
Many experts think that the ECB has been very slow to raise rates to tackle inflation however it is prudent to point out that most of the rising inflation is in Food and Energy and that this has its origin from Russias unlawful invasion of Ukraine.
The FED shocks market with massive rate hike
Inflation numbers (PCE) for the United States on June 10th came in even higher than expected at a staggering 8.6 % which was the highest number since 1981.
This extreme inflation number pushed the FED to raise rates by a whooping 0.75 % this wednesday (June 15th) which was the largest single increase since 1994. The stock markets, after initially cheering the decision by the FED ( all seemingly because the FED shows its taking inflation seriously) then crashed even further downwards on Thursday (June 16th).
Our stance on the new investment climate
We believe it will be hard to reduce inflation without pushing economies into recession especially since the high inflation is caused by reduced supply of energy and food and is not specifically a demand issue. Unfortunately this may ultimately mean that the central banks of Europe and the United States will push their economies into recession mode. This has caused us to revise our portfolio strategy as described below.
Some analysts and experts even think the FED has doomed the US economy to a recession.
Trade alert ESGFIRE portfolio
Our cash balance has dropped from 60 % to 44 % in our publicly traded portfolio. We have rebought some stock positions and also reintroduced Biofrigas to the portfolio. We sold Biofrigas not long ago because we thought their orders were taking too long and wrongly thought they were far from revenues. We were proven wrong on June 8th when their first Biogas customer declaration was announced which estimates revenues of $ 1 million dollars. The company according to their CEO Jonas Stålhandske is currently in talks with over 20 different clients on signing deals for new Biogas facilities.
Revised portfolio strategy for ESGFIRE
Following the turbulent markets and the transitioning from a low interest environment to a more normalized and possibly even high interest rate market we will be making changes to our investment strategy. Those of our Portfolio companies that are far from revenues and in which we do not have rock hard confidence in will soon be liquidated and removed from the ESGFIRE portfolio. We will also be applying a more profit based approach meaning we will be looking for new portfolio companies in the ESG sector that are already profitable. This revised strategy may lead to fewer 10 baggers however in this market sentiment it is more important to preserve capital than to chase potential 10 baggers. All changes will of course be announced in our portolio update.
Finally we want to urge our readers to reach out to us if you have any questions, concerns or if there are specific topics you would like us to write about. You can reach us either on Discord, twitter, instagram or Email at info@esgfire.com.
Investing in stocks is combined with certain risks and it is possible to lose your entire investment. Our posts are made for Educational purposes only and are not to be interpreted as tips , financial advice or recommendations of any kind to either buy or sell any stocks.
