Oups

Yesterday, NVIDIA experienced the largest single-day drop in stock market history, losing $590 billion in market capitalization as its stock plunged 17%. The scale of the decline was remarkable, with the wealth destruction exceeding Oracle’s entire market cap—equivalent to the combined value of LVMH and Unilever disappearing in Europe. At ECP, we draw several key conclusions from this event. First, even strong moats in disruptive industries like AI can be questioned overnight, as markets reassess their durability. Second, while the market is willing to assign significant premiums to companies with perceived unassailable advantages, such as NVIDIA, these valuations can be reversed just as quickly when confidence falters. Third, this reflects the advanced stage of the current bull market, where stocks priced for perfection face heightened vulnerability, and investors will rapidly adjust when expectations aren’t met.

However, share price drops of this magnitude may also create compelling investment opportunities. With this mindset, we have started to invest in Novo Nordisk in our European Value Fund as we believe continues to have strong fundamentals despite recent market volatility and now trades at an attractive valuation.

Our investment approach remains guided by humility. We focus on selecting companies with the ability to generate sustainable cash flows, taking advantage of opportunities to invest in quality businesses at reasonable valuations.