Following four successive months of doom-laden, fake-news-dominated and dithering equity markets we are pleased, at last, to report a positive return for Quotidian in the month of October. Partly as a consequence of the anticipated loosening of US money supply referenced in our September report and partly as a long-awaited nod to economic reality, we have now recovered the ground that had been slowly and unwillingly ebbing away since the end of June.

Corporate results for the third quarter of the year have been feeding through during October and have largely been above market analyst’s expectations. Thus far, 15 of our holdings have reported profit and future sales numbers which have substantially beaten anticipations whilst only two members of our current portfolio have fallen short (and in each case for good reasons). We still await figures from the remaining 7 individual company holdings (all of which we expect to be good news).

Our winners (and their percentage outperformances above expectation in respect of Earnings Per Share) were: Broadcom (+0.60%), Adobe (+4%), Constellation Brands (+ 3.2%), Netflix (+ 40.5%), Biogen (+ 10.8%), Alexion (+13%), Service Now (+ 11.9%), Paypal (+ 17.1%), Visa (+ 3.1%), Electronic Arts (+ 243.0%), Facebook (+11.9%) and Apple (+6.8%).

Amazon and Google (aka Alphabet) were the two recalcitrant companies to miss their expected profit figures and, in both cases, that was because they had chosen to invest in the future development of their services with a view to increasing future sales and profits. In Amazon’s case they have devoted themselves to providing a 24 hour delivery service and have invested substantially into the necessary infrastructure to bring that about.

As for Google, their accounts included a mysterious “other expense” item related to “equity investment.” Strong market rumour suggests that Google intends to make a bid for Fitbit (a highly successful organisation in its own right) which would further expand and extend Google’s future market reach, future sales and future profitability. Fitbit’s current market capitalisation is $1.4bn which, by extraordinary coincidence, is almost exactly the same as the “other expense” figure mentioned in their accounts.

It goes without saying that we have no immediate concerns about the current solvency of either Amazon or Google nor do we have any current distress in relation to their ability to further increase sales and future profits.

For your interest, our holding in Biogen hit the front-page headlines for all the best reasons during October. The company has been trying for quite some time to develop a drug that can combat the onward and increasingly cruel march of Alzheimer’s disease (a condition which ultimately disrupts a person’s ability to function independently).

As you will already be aware, Alzheimer’s disease is a progressive disorder that causes brain cells to degenerate and die. Alzheimer’s is the most common cause of dementia — a continuous decline in cognitive functions, behavioural and social skills which disrupt a person’s ability to function independently.

Biogen has been conducting initial trials and pursuing a promising line of ongoing research and development for some time without quite gaining the necessary evidence to confirm its efficacy. In the face of some disappointing test results (which in the event proved to be too short-term) the company abandoned that particular project in the early part of 2019 and focused instead on what seemed to be a potentially more attractive route. By September, however, enough long-term evidence had accumulated to show that Biogen’s earlier project has indeed discovered a drug that could demonstrably slow the progress of Alzheimer’s (and the hope is that it might eventually halt the decline in those who suffer from its indignities).

Armed with those latest test results and increasingly positive evidence, the USA’s Food and Drug Administration (the Federal Agency responsible for approving drugs in medicinal use in the US) met with Biogen at the beginning of October with a view to taking this drug through the necessary approval process. This is wonderfully encouraging news for those in the grip of Alzheimer’s disease and, indeed, it could also be extraordinarily good news for Biogen’s shareholders.

On that note of corporate profitability and reward for investment risk, Quotidian does not entertain the current (and in our view) unpleasant political penchant for virtue signalling. There is no doubt whatsoever that our main purpose is to invest for the long-term profitability of our investors but our investments very often do have the welcome side-effects of improving quality of life and well-being (through medicinal development work done by healthcare and biotech companies), through greater efficiencies achieved by advances in technology (our tech holdings) and through the relief from tedium achieved via the application of artificial intelligence on so many mundane and repetitive tasks.

For those who can never find a good word for the concept of capitalism but instead constantly seek to criticise and undermine its great advantages, Biogen is a valid proxy for the positive benefits of this monetary theory. Biogen and its ilk clearly validate the fact that it is entirely possible, fair and reasonable to make profits whilst contemporaneously benefitting the common good and improving the human condition

Finally, the Neil Woodford debacle came to its inevitable but sad conclusion in mid-October when the previously high-flying investment manager was relieved of his pre-eminent role in the organisation that bears his name. This is relevant in our report only in the sense that it allows me to confirm and reassure you that Quotidian does not invest in any unquoted or illiquid assets (the proximate causes of Woodford’s problems and ultimate demise).