March 2019 - The Singularity Group
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March 2019
UPCOMING EVENTS
*NEXT* May 16, 2019, Morning Session, 8:30 - 11:30 am
@ Zunfthaus zur Saffran, Limmatquai 54, 8001 Zurich
Expert Access: Blockchain - A Reality Check
Featuring: Daniel Gasteiger, Founder and CEO Procivis AG, Co-Founder
Nexussquared, Board Member of Global Blockchain Council; Laurenz Apiarius,
Founder & Managing Partner of Blockwall, adviser to the OECD on policy making
for crypto assets & blockchain technology; and more Blockchain industry experts
Please read more about Event Speakers and their expertise in this report (page 06).
Sign up: events@singularity-group.com (Members: Free | Non-Members: 70 CHF)
*UPCOMING* June 2019, TBD Zurich
Special Event: Exponential Education - The Singularity Explained
Featuring: Gabriel Baldinucci, Strategy and Special Projects at Singularity University
Sign up: events@singularity-group.com (Members: Free | Non-Members: 70 CHF)
SINGULARITY PERFORMANCE
Nasdaq Singularity Index NSI (NQ2045) vs. benchmarks: Market participants’ negativity was
short-lived earlier this year. Equity markets rebound after a long expected correction late
2018. The upswing, however, remained hesitant through the quarter. In our view, many are
still watching from the sidelines to see what political uncertainty brings throughout the next
weeks and months.
The Nasdaq Singularity Index (NSI, NQ2045) finished the first quarter up 15.18%. This
compares to the MSCI AC World (11.61%), the S&P 500 (13.07%) and the Nasdaq Composite
(16.49%) while pure Tech rebound the strongest after falling the hardest in Q4 2018 with the
MSCI AC World Technology up 18.46%. Since launch on 21 December 2017, the NSI remains
amongst the leaders, up 10.26%. (Nasdaq Composite: +10.97%; S&P500: +5.58%; MSCI AC
World Technology: +9.86%; MSCI AC World: -0.52%).
02
Performance Q1 2019 NSI vs Peers
Performance Since Launch per end March 2019 NSI vs Peers
Performance Singularity Fund vs NSI - since Launch (October 1 2018)
Source: FactSet 03
SINGULARITY SECTORS
The top performing Singularity Sector for the quarter was Space (+20.55%). Airbus (AIR;
+37.93%) became a place for investors to escape to as Boeing searches for answers to the
recent tragic crashes involving their 737 MAX line of planes. TransDigm Group (TDG; +33.50%)
performed well on strong results as the best-in-class aerospace supplier demonstrates
continued strong growth in multiple areas. The second strongest sector was Virtual and
Augmented Reality (+17.64%). Here, Advanced Micro Devices (AMD; +38.24%) and NVIDIA
(NVDA; +34.64%) showed a strong rebound along with many other semiconductor stocks
strongly positioned in areas such as VR/AR, Artificial Intelligence, Internet of Things and Big
Data processing. The worst sector for the first quarter was Neuroscience (+0.61%). Japanese
healthcare company Eisai (4523; -26.63%) disappointed investors the most with lower than
expected earnings in 2018, finishing the quarter as the worst performing stock in the NSI.
SINGULARITY STOCKS
GW Pharmaceuticals (GWPH; +73.09%) in Neuroscience and Momo (MOMO; +61.01%) in
Internet of Things were the best performers on a single stock basis for the quarter. GW
Pharmaceuticals’ rally was not unrelated to strong tailwind for many companies at the
forefront of research involving cannabis-based solutions to human and animal health
problems. It will be very interesting and important to watch this and similar trends in
healthcare, and to see how the ‘back to nature’ drive combines with recent breakthroughs
in high-tech applications.
SINGULARITY OUTLOOK
How far out (or how near) is positive performance
contribution from exponential innovation?
Having observed and analysed the NSI now for more than a year, we can confidently say
that there is indeed already much positive effect coming from a selection for innovation
within companies’ revenue: It achieves two very important things, among others: 1) A
selection for companies able to truly utilize and integrate technological developments
to make money, and 2) The ability to identify which exponential technologies are indeed
at a stage where they can add that kind of value to the economy versus being a cost
cente. The latter creates a pitfall for many investors seeking to be the early movers. They
often end up chasing one trend after the other, never lasting long enough in one to reap
the benefits.
04
Being early vs being too early - the cost of investing in a hype
New technologies that promise to change the world often have investors deducting that
they will also make a lot of money. Once a new hype hits the market, the next goal is to
position portfolios in the respective trend via preferably the cheapest vehicles available.
In the equity-space, low-cost ETFs and certificates are favoured as fees get scrutinized
in total neglect of what one ends up paying for the underlying equity, not to mention
the quality of the selection process.
The idea is to position in a ‘basket’ of equities most likely to emerge as winners in the
hopefully near future. The problem is: the main movement of cash at the early stages of
innovation implementation is cash outflow. There are certain parts of the value chain in
innovation that will be the receiver of that cash. But rarely are the companies exposed
to them identifiable via cheap and easy rules-based approaches used in ETF selection
processes. What investors end up buying - at a low fee - are baskets of companies that
have proven two things: 1) the ability to market themselves as beneficiaries of a new
trend, and 2) the willingness to spend money on that trend and the marketing of their
involvement in it. While some will be worth the purchase price, history has shown that
many won’t.
Impact Investing - a good idea - misinterpreted
The more relevant thought process that isn’t taken into account is that investing is
about giving money to entities or people to create value and that, albeit cheaply, a
big portion of money spent on low-cost investment vehicles capturing trends, has no
impact whatsoever on the development of the underlying technology, and ends up
going to waste. Impact investing had its own hype, and quickly got wrapped up in low-
cost vehicles just to cash in on yet another volume-strategy.
The NSI, in selecting for revenue generated through exponential innovation, in a way
follows an impact-strategy: Only companies where capex spent has impacted a company
in the form of revenue creation are eligible to be part of the portfolio. Revenue creation
outside the technology sector is the only true sign that a particular technological
development has viability within industry and has a chance to create earnings - and
with that - value.
As such - to answer the question first asked - “How far out (or how near) is positive
performance contribution from exponential innovation?” - It is here! It is just not
happening in the sexy, media-hyped ways one expects. Also, some trends of the past
are now showing the capex spent come to fruition. It’s just that most investors are instead
chasing the next hype.
05
Simplistic view of capex spend and revenue creation of new technology from hype
*More information will be available to Singularity Fund Clients
and Members of ‘Seeking Singularity - Insider’.
For inquiries on Membership, please email: members@singularity-group.com*
UPCOMING EVENTS
*NEXT* May 16, 2019, Morning Session, 8:30 - 11:30 am
@ Zunfthaus zur Saffran, Limmatquai 54, 8001 Zurich
Expert Access: Blockchain - A Reality Check
Featuring: Daniel Gasteiger, Founder and CEO Procivis AG, Co-Founder
Nexussquared, Board Member of Global Blockchain Council; Laurenz Apiarius,
Founder & Managing Partner of Blockwall, adviser to the OECD on policy making for
crypto assets & blockchain technology; and more Blockchain industry experts
Sign up: events@singularity-group.com (Members: Free | Non-Members: 70 CHF)
A former financial services professional of more than 20 years, Daniel
Gasteiger has decided to trade a successful career in banking for his
entrepreneurial pursuits in the field of blockchain. He’s the founder and
CEO of e-government specialist Procivis, the initiator of the world’s largest
blockchain hub, Trust Square, and co-founder of M&A advisory boutique
Verum Capital. Daniel is a widely acknowledged blockchain expert and
regularly speaks about technology’s impact on society and business.
06
Laurenz Apiarus is Founder and Managing Partner at Blockwall,
Germany’s first regulated fund to invest in decentralized technologies.
Their pioneer fund raised 16.5m EUR. As such Blockwall focuses on
early stage investments in this field. Their mission is to continue to be
a leading early stage investor from Europe. At the moment Blockwall
is raising their second fund for professional investors.
The Crypto Finance Group provides institutional and professional
investors with crypto asset management, crypto brokerage, and
crypto storage solutions of a quality, reliability, and security unique
in the digital asset space today. With these products and services,
the Crypto Finance team of experienced technology and financial
experts is building a bridge between traditional financial markets
and this emerging digital asset class. Joining us from Crypto Finance
Group will be CEO and co-Founder Jan Brzezek.
Joining us from SwissRex AG are Founders
Désirée Müller (CEO) and Reto Stiffler (Chairman).
Swissrex was founded on May 4 2018 in Vaduz,
Liechtenstein and is the initiator and manager
of the SwissRex Crypto Fund, an actively
managed crypto fund based on fundamental
analysis with a live track record since June 2018.
Base 58 Capital is a technology-driven asset management and
trading firm specialized in cryptoassets. Their mission is to advance the
adoption of decentralized systems, focusing exclusively on applications
uniquely enabled by decentralized trust and digital scarcity. Head of
Investments Tommaso Bonanata will join us from Base58.
Sygnum’s integrated solution securely issues, stores, trades and
manages digital assets. Sygnum are in the regulatory process of
obtaining a banking and securities dealer license from the Swiss
regulator FINMA, and a capital markets services license from the
Singaporean regulator; Manuel Krieger, Founding Partner and CEO
of Sygnum Switzerland will join the event.
We look forward to you joining us on May 16!
Please RSVP to events@singularity-group.com to attend.
(Members: Free | Non-Members: 70 CHF)
08
07
— Contact Us Bahnhofplatz, 6300 Zug info@singularity-group.com
Switzerland www.singularity-group.com
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