NUR May 2021 Edition

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Contents Page


Quick Take on Iberian Markets



The Archegos Fallout


Are We Entering a Commodity Supercycle?

7 Page

10 Page


Extra: What are Exchange Traded Funds (ETF)? Business Deep Dive: Intel Corporation



NIC-UD Fund: Monthly Performance

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Quick Take on Iberian Markets Portugal and Spain will finally reopen borders, with the ease of anti-covid measures. It is expected to be in the 8th of May, along with the decrease of coronavirus measures. Gatherings such as weddings will once again be allowed in Portugal, at 50% capacity. Citizens will also be allowed to enjoy outdoor and indoor sports again, while opening hours will be extended for cafes, restaurants, shops and cultural venues. On April 26, Portugal saw its first day without a single Covid-19 death since August. The Spanish market is preparing for a correction in May after the stock market rally. The Ibex 35 rose more than 9% in the first four months of the year, an outstanding result after the collapse of 15% in 2020, reaching new highs surpassing 8,800 points. The historical data would justify the fear of this collapse. In 2019, the Ibex 35 lost 6% in May after rising 8% until April. It also fell by 5% in the fifth month of 2018, although it already had annual losses of 2%. The strong mood among investors, the stock market overbought environment and the decrease in volatility are some signs. Portugal’s stock market leads to a small fall among European markets, but accumulates weekly gains. The Portuguese economy had contracted 5.4% in the Q1 of this year, when compared to the same period in 2020. In comparison to the last three months of last year, the fall was of 3.3%. In the last day of April, The PSI-20 index devalued 0.64%, after an increase of 0.90% the day before, to 5,050.69 points, which represented the biggest drop recorded by an European market. Altri and Navigator stood out with decreases of 3.20% and 1.89%, respectively, as well as the two companies of the EDP group. CTT revived 2018 highs in the middle of the session, above €3.8 per share. Repsol beats expectations with 5.4% Q1 net profit rise. Stronger upstream earnings from extracting oil and gas balanced much weaker downstream results as the pandemic sapped demand for fuel. Adjusted net profit rose 5.4% to €471m and comfortably beat the €365m expected by analysts polled by the company. Higher oil and gas prices have brought some cheer so far this year to a sector grappling with a global shift towards low-carbon energy.

João Castilho Banco Bilbao Vizcaya Argentaria, S.A. (BBVA) and Sabadell are back with pre-covid values. Both banks are signalling lower future bad debt provisions and producing stronger than expected Q1 profits, benefiting from a recent improvement in the macroeconomic outlook for the second half of the year after costly pandemic related provisions in 2020. Still hit by a decline in lending income, showing how banks in Europe are still under pressure from low interest rates in addition to looming bad debts in the medium term. BlackRock reduces its stake on EDP Renewables to less than 2%. The reduction was from 3.06% to 1,73%, thus leaving BlackRock no longer holding a qualified stake in EDP's subsidiary for renewable energies. BlackRock now holds 15,118,377 shares and respective voting rights in EDP Renewables, corresponding to 1.734% of the aggregate of voting rights in the company. EDPR says it has been notified by the American asset manager that this change occurred on April 16. CTT announced the creation of an investment fund that aims to boost innovation in Small and Medium Enterprises (SMEs) and start-ups. The company aims to invest in start-ups in the seed, series A and growth phases, as well as in SMEs companies in sectors aligned with CTT's operating priorities, such as electronic commerce, operations and logistics, communications, fintech, retail and advertising. The fund is fully financed by the CTT group, and its management has been entrusted to Iberis Capital, which has a solid curriculum in investment fund management and with a diversified company spectrum, from startups to SMEs. Poland fines Jerónimo Martins for misleading 'patriotic' Polish shoppers. Poland's consumer watchdog fined Portuguese retail group Jerónimo Martins more than $16m for labelling fruit and vegetables as grown in Poland when they were imported. The regulator UOKiK said consumers who made "patriotic" choices had been misled, at a time where the government has been encouraging to buy Polish products to support the economy during the coronavirus crisis.

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The Archegos Fallout How a family office made investment banks tremble Introduction

Patrícia Coelho

On the last week of March, the price of several companies depreciated as financial institutions decided to liquidate their positions. Among these stocks were ViacomCBS, Baidu Inc. and Tencent Music Entertainment Group, all of which plunged around 30% in a single day. All these companies had one thing in common: each one of them was the underlying asset of a Total Return Swap between Archegos Capital Management and a given investment bank. It is estimated that the eight stocks that had the most impact on investors registered a loss of $124bn in their price. In fact, several renowned investment banks incurred losses this week due to the contracts established with Archegos. The question that remains is: how can a family office that had been under the radar thus far have such an impact on the market and other institutions and have exposure to this amount of money?

What are Total Return Swaps? As the name indicates, a total return swap is a contract between two parties where one pledges to exchange the total return of a given asset for a fee. The two parties are the payer and the receiver. The payer buys the underlying asset and endows the surges in the price and the dividends to the receiver, which retributes by paying a predetermined and fixed fee and compromises to compensate any depreciation in price that the asset may suffer.

The Total Return Swaps are a type of derivative that is widely used among financial institutions and can range between equities, bonds or an index. It allows the firms to gain an elevated degree of exposure to a given asset without dispending a high amount of cash initially, with a certain level of flexibility as both parties draw the conditions underlying the contract. It also allows the receiver to remain anonymous and avoid bureaucracy as the owner of the assets is effectively the payer. However, there are also some associated risks both for the receiver and the payer. As previously stated, the payer owns the asset, but the receiver only receives the appreciations in price, and he must pay for the depreciations. As the transactions are usually of a great value and the same firm can possess multiple Total Return Swaps with different banks, if the assets start depreciating in price, the firm might not have enough money to pay for everyone and there is a risk of default. In opposition, if the other party suspects that the firm might not have enough money to pay for a possible price contraction it can ask for a collateral payment.

What happened with Archegos Capital Management? Bill Hwang founded Tiger Asia Management LLC in 2001, a multibillion-dollar hedge fund that was highly recognized in Asian territory. In 2012, he pledged guilty to inside trading and manipulating the markets and, as a consequence, was banned from trading in Hong Kong. Right after this incident, Hwang founded Archegos and was blacklisted from investment banks for several years. 4

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Even with its family office status, Archegos managed to secure contracts with major financial institutions and behave like a hedge fund. A company that had only $10bn on its account gained exposure to $50bn in a limited selection of companies (through Total Return Swaps). In the beginning the firm was registering profits. Hwang in just 9 years grew its capital from $200m to $10bn, leading investment banks to pay more attention and feel more complied to negotiate with him. However, someone should have realized that even for the most remarkable trader, a 5:1 leverage is a risk too big to endure. The fallout started on March 24th when ViacomCBS’s stock plunged 9%. As it was one of the underlying equities of the Total Return Swaps, Goldman Sachs (the payer in this particular case) realized that holding this stock was risky and asked for a higher collateral from Archegos, to compensate for the added risk. Knowing that Archegos had a 5:1 leverage, it did not possess the necessary resources to cover the higher collaterals demanded plus the possible depreciations in price, meaning that it had to default. This led to several banks trying to sell the positions they had promised to Archegos as quickly as possible in order to avoid more losses.

Right after Goldman Sachs started to exit their positions, Hwang scheduled a meeting with all the banks they were involved with to ask them not to follow Goldman Sachs’ example and hold the positions. The major difference in the share price drops that is depicted in the graph below can be translated into the simple fact that some banks managed to sell the assets instantaneously and the others could not find a contact to sell the shares with enough brevity to prevent further losses or

actually decided to hold for a while. Credit Suisse was the party that suffered the most with a loss of $5.4bn while only receiving $17.5m in fees. Following Credit Suisse was Nomura with a $2.9bn loss, Morgan Stanley with $911m and UBS with $861m. MUFG, Mizuho, Goldman Sachs and Wells Fargo were also involved but managed to escape with less traces.

Fool me once, shame on you. Fool me twice… If we look back at the past two decades, we can find several events that resembled this situation and yet the same conditions that lead to them are still in place. Long-Term Capital Management (LTCM) was one of the preeminent hedge funds in the United States and it almost caused a financial crisis in 1998 due to its highly leveraged trading strategies. The proportion of the possible aftermath of Archegos and LTCM is quite different. Nevertheless, the main cause was the same: the amount of leverage through balance sheet and offbalance sheet exposures both firms used for their investments, without taking the risk of that strategy into consideration. In fact, while Archegos had a 5:1 leverage, LTCM had a 27:1 and was not one of the financial institutions with the highest leverage at the time. In this particular case, a crisis in Russia that forced the country to default all its foreign bonds made the US government intervene and organize a fund with the cooperation of 14 Wall Street Banks to guarantee the survival of the firm and that this event would not compromise the country and the world’s economies. A decade later the US could not salvage all the banks (Lehman Brothers, Bear Sterns) that were compromised by the extremely high investment in derivatives, and the 2008 financial crisis took place. In the wake of the LTCM event, it seems counterintuitive that investors and policy makers did not study the situation carefully and realize that without proper concerns it was something that could easily be mimicked in the upcoming years. Even though they used different types of derivatives, the key takeaways were essentially the same. The banks should have a better understanding of the financial products they want to trade and there should be a proper risk management and an annihilation of the tendency to hh 5

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fully rely on the belief that “they are too big to fail”, as the consequences can be catastrophic. In the aftermath of the financial crisis there were reforms to the financial system (Dodd-Frank Act) that were approved in 2010 but have not taken place, which is quite evident in the case of Archegos. A firm with less than 15 employees is considered a family office and it is not obliged to register with the SEC, which combined with the fact that most of its investments were on derivatives off the balance sheet, conceded Archegos a certain level of anonymity. The banks were not aware that the services rendered to the firm were not exclusive and could not determine how levered the firm actually was. Thus, misperceiving the actual risk of default that they were dealing with. Shadow banking comprises all the firms that are capable of not disclosing their activities and refuse transparency by using a certain loophole, such as being denominated a family office. Allegedly, the number of family offices in 2019 increased by 38% in comparison with the two previous years and the tendency will be of continuous growth as firms look to explore more and more the lack of regulation of the financial system. The Dodd-Frank Act remains solely an idea in paper, but the Biden Administration is set to revise the role and regulations surrounding hedge funds and investment banks after this event.

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Are We Entering a Commodity Supercycle? As commodities prices are utterly rising, the million dollar question is: Are we entering the second Commodity Supercycle of our Century or are we just facing a Transitory Cycle?

Bruna Travassos

What are Commodity Supercycles? Commodity Supercycles are decade-long periods in which commodities trade above long-term price trend. Over the last 120 years, there have been four extended commodity price booms. Each had a unique driving force – two from the war recoveries, one due to the 70’s OPEC shock and the last from the rapid industrialization of the BRIC countries. This last supercycle on the 2000’s lasted well until the 2010’s, but it began to show signs of slowing when the great financial crisis and the subsequent Euro crisis plunged markets in 2008 and 2011, and it finally came to a halt when the Chinese economy cooled off in 2015. Now, as the S&P GSCI spot index, which tracks price movements for 24 raw materials, is up 24% this year, analysts have been debating whether we are entering a Commodity Supercycle in the 2020’s, so let’s analyze the causes for this possible commodity supercyle.

Certainly, contrary to the US Federal Reserve beliefs, many investors are unconvinced that the expected rise in consumer prices in the coming months will prove to be only “transitory”. As so, inflation expectations priced onto the US bond market have climbed to their highest level in eight years. Over the next 10 years, bond investors expect inflation to run at an annualised 2.4%. This is much above the average annual rate of 1.75% expected by the market since 2015. Regarding the Euro-Area, loose monetary policy is still ruling, but the delay on vaccination programmes, several countries on lockdown, and with no stimulus package already approved, makes the scenario of high inflation almost no threat. To add, the EuroArea is facing unprecedented supply-chain delays. Why is inflation relevant for commodities prices? Because they are positive and strongly correlated. As the demand for goods and services increases, the price of goods and services rises and so does the price of the commodities used to produce those goods and services.

Infrastructure Spending and Inflation

China’s Huge Influence

Recently, the US Federal Reserve confirmed once again that the monetary policy will remain loose until the economy goes back to full employment. As such, money expansion has already surged last year, and the same will happen this year. To add, President Biden has managed to get a $1.9tn fiscal stimulus bill passed by Congress, and he is about to launch a $2.3tn infrastructure spending bill and a $1.8tn expansion of the social safety net. The announcement of this major infrastructure plan made the prices of metal and oil to soar, as demand for these goods will substantially increase. Regarding the expansion of the social net, it represents a rise in “policies to address income and wealth inequality”, which will further reflect “an overheating economy and physical inflationary pressures for the US”, say analysts at Goldman Sachs.

China represents more than a half of the world’s demand for commodities, mostly tied to infrastructure. At the beginning of the year, there was a strong demand for raw materials due to the post-pandemic recovery programmes, which made prices soar. But Beijing has already begun to wind back some of the stimulus used to restart its postpandemic economy. This is signalled by the Central Bank of China already beginning to withdraw liquidity from local banks. Another adverse indicator is the $4tn Chinese corporate bond market having its highest number of defaults last year. But it is important to note that China is also the biggest market for Electric Vehicles (EV), which has been having a steady growth, and commodities such as copper and lithium are major components in EVs, so this sector might be able to outweigh the possible slowdown in infrastructure spending.


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Electric Vehicles As this industry grows, so does the demand for raw materials needed for EV batteries and motors. Lithium carbonate prices in China have rose more than 100% this year on strong domestic demand, following almost three years of decline. The rare earth neodymium-praseodymium (NdPr) oxide, used in electric motors, is up almost 40%, as is cobalt, a battery material. “You have an EV supercycle and you add a real commodity supercycle on top of that – it’s game on for the miners”, said Simon Moores, managing director at Benchmark Mineral Intelligence.

Companies’ profits For big oil and miners, the boom times which are typical on supercycles, are back. This is the signal emerging from recent company results and rising sector share prices. BP announced this week tripling profts in its quarterly reports, while Gencore, a commodities trader, issued some bullish guidelines on its full-year results. ULF Larsson, chief executive of Swedish pulp and timber company SCA says that “I don’t know if we have seen anything like this before”. The company announced a 66% increase in the net profit of the first quarter of 2021. These results confirm that the surge in commodities prices is not only a reflection of inflation expectations but rather caused by a surge in the demand for raw materials.

Goldman Sachs says that it expects to see oil prices hit $80 a barrel in the second half of 2021, warning that there could be a large supply deficit this summer as vaccine rollouts accelerate and people drive to their holidays, boosting demand by more than 5% globally. Thought the OPEC group could restore production if prices go too high, some analysts are concerned by the longer-term supply outlook as energy companies are moving away from fossil fuels.

Copper Copper has risen above $10,000 a tonne and approached its 2011 peak of $10,190. And the prospect for a greener economy sets copper for the rise. Copper, along with nickel, lithium and other metals are important components for electricity generation and batteries. Copper is a major component in Electric Vehicles. This greener economy prospects entails a different commodity cycle than those of previous bull runs. “Copper has always been a powerful cyclical indicator, but its ubiquity of usage is likely to drive the metal into a new cycle”, states the research institute TS Lombard. The institute also pointed out the high usage of copper in solar and wind energy generation, electric vehicles, and the construction of battery-charging infrastructure. Three-month LME cooper price ($ per tonne)

Oil Prices Oil prices have been strong, recovering to prepandemic levels above $65 a barrel since the start of the year. Though demand is still depressed by limited international travel, it has been able to pick up as economies reopen. However, expecting a long-term surge in renewable energy demand to coincide with higher oil prices seems contradictory. OPEC can control supply to support prices, as it has been currently doing, but that would only be possible with a multidecade jump in oil demand. Asia alone is responsible for about 37% of world consumption, and it is no surprise that most of that demand comes from China.

Source: Bloomberg

Latest Moves Iron Ore, the essential material needed to make steel, palladium, used by carmakers to limit harmful emissions, and timber all hit record highs in the past week. 8

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Important agricultural commodities also soared, including grains, oilseeds, sugar, and dairy, with corn prices above $7 a bushel for the first time in eight years. We should not forget to mention that the US Food Price Index surged 3.5% yoy, higher than the 20-year average of 2.4%, so this increase in the price of agricultural commodities is most likely not related to a higher demand, but rather from inflation. Percentage (%) change of GSCI Spot Indices

Conclusion Fund Managers have been on the search for assets that will benefit as the global economy recovers its speed after the pandemic, and the commodities sector is the perfect one to hedge against rising inflation. Concluding, classifying the rise in commodities prices as a supercycle may be an overconfident statement. Even though there are relevant indicators to consider, such as the growth of EVs and other green sectors, and a rising infrastructure spending, most of these price movements seems to be related more to inflation and supply disruptions, which are transitory trends, rather that a rising demand for commodities. In other words, it is uncertain if this is a business cycle upswing or a supercycle.

Source: Bloomberg; Note: SPGSIN Index – S&P GSCI Industrial Metals Spot Index, SPGSEN Index – S&P GSCI Energy Spot CME Index, S&P GSCI Agricultural & LiveStock Index Spot CME.

It is a fact that a slowdown in global Internal Combustion Engines car (Petrol Cars) sales is happening, but it is reasonable to believe that this trend can be outweighed by the rosing commodities prices tied to petrol cars. The price of palladium, a metal used in catalytic converters to filter exhaust gases, rose to a record above $3,000 an ounce on Friday, as Europe and China phase in stricter emissions standards and the supply is in a large deficit. Palladium ($ per ounce)

Source: Bloomberg

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Extra: What are Exchange Traded Funds (ETF)? An Exchange Traded Fund or ETF is a basket of securities fund whose shares are listed on a regulated stock exchange and can be traded like a stock. It is a security which holds a group of assets of any type, as stocks, bonds, currencies, commodities amongst others. An ETF is a fund which trades similar to a stock, so its value changes during the day according to supply and demand. Unlike mutual funds, which are traded once per day after the markets close. Most ETFs try to reproduce the performance of an Index. The most popular example is the SPDR S&P 500 ETF (SPY), which tracks the S&P 500 Index. However, there is a big variety of ETFs which can be used by investors for different investment objectives. In addition to Index ETFs, several other types can be mentioned. Stock ETFs, composed by a selection of stocks, normally less risky than individual stocks and directed to long-term investment. Bond ETFs offer exposure to every type of bond, mostly used to create regular cash payments to investors. Sector/Industry ETFs provide exposure to a specific industry and are used by investors to track business cycles, for example, in an expansion period some industries perform better, others perform better in recessions. These ETFs have more risk associated than broader market ones, but less risk than investing in a single company. Commodity ETFs, composed to track the price of commodities such as gold, oil, corn, give investors the opportunity to invest in different types of commodities at the same time. Foreign Market ETFs may contain assets from individual countries or specific group of countries and provide exposure to foreign investments, commonly directed to developing countries. Inverse ETFs which are designed to profit from a decline in the underlying market/index value are Similar to holding several short positions. Actively managed ETFs aim at outperforming a certain benchmark, compete against actively managed mutual funds. Some of them are fully transparent publishing their portfolios daily. Thematic ETFs target long-term social trends, disruptive industries. Examples can be, cloud computing, e-commerce or clean energy.

André Matos

Evidently, this type of financial product offers several advantages to the investors, that is the reason why the number of ETFs available grew exponentially recently. The main advantages revolve around the ease of negotiation which is attached to it, economical way of investing in a large range of different securities, transparency, flexibility, variety of available order types, low costs compared to mutual funds, and high liquidity. ETFs are one of the most important and useful products for individual investors popularized in recent years. The ETF industry offers new products every day, while innovation is positive for investors, the thousands of different ETFs available in the market can make the choice hard to do. Investors should examine carefully any product before investing and should be aware of the disadvantages some ETFs may have, as high trading costs, lack of liquidity, lack of exposure to mid and small-cap companies or tracking errors, technical errors can create disparities between the ETF and the underlying index. Tracking errors are usually small or non-existent but may arise in periods of high market turbulence. Liquidity risk is present in less active/popular securities with low daily volume. ETFs using derivatives and swaps to track indexes create concerns due to lack of transparency. Investors should analyse all the factors related with a specific ETF in order to guarantee it is the right method to achieve their investment goals. 10

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Business Deep Dive: Intel Corporation

Raquel Tavares

Tomás Forte Vaz

Headquartered in Santa Clara, California, Intel offers platform products that incorporate various components and technologies, including a microprocessor and chipset, a stand-alone System-on-a-Chip (SoC), or a multichip package. It has dominated the PC chip market processors such as the Intel Core processor family. The company’s latest data center solutions target a wide range of use cases within cloud computing, network infrastructure and intelligent edge applications, and support high-growth workloads, including Artificial Intelligence (AI) and 5G.

Markets For the next two decades, Intel Corporation’s stock performance grew by an annualised return of 7%, until the emergence of the dot-com bubble which drove significant growth in the tech industry. During the next 10 years, the American semiconductor company experienced CAGR of 51%, reaching an all-time peak of $74.88 (adjusted for stock splits). However, this growth was not sustained, as quickly as the dot-com bubble brought substantial growth within this industry, after bursting, a substantial part of this value vanished. Intel Corporation’s stock would fall by close to 80% in the following 2 years, and even after the stabilizing of the Nasdaq, Intel’s shares continued to underperform the market. Fast-forward 10 years, and Intel’s has been able

to benefit from the global rise in demand for semiconductors reflected in its stock price, as a result of changing consumer preferences and consistently rising demand for computers, phones and other electronical devices. Furthermore, as the growth in AI, Cloud Storage and Fintech, to name a few, increase the need for hardware to support these industries’ growth, both from a quantitative and qualitative standpoint.

Price Performance

Source: Bloomberg; Note: INTC US Equity - Intel Corp., SOX Index - Philadelphia Stock Exchange Semiconductor Index; S5INFT Index - S&P 500 Information Technology Sector GICS Level 1 Index


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That being said, Intel is yet to reach its dot-com peak of $74.88, and with the emergence of Advanced Micro Devices (AMD) and Nvidia Corporation, the benefit of this global rise in demand for semiconductors has been shared, weakening Intel’s dominance in this market along with its growth. Intel grew by 92% in the last 5 years compared to AMD and Nvidia, who grew by 1674% and 1599%, respectively in the same time frame. Whilst currently there is a semiconductor global shortage, the market sell-off of March 2021 hit this industry particularly bad, as Intel fell by 15% in the month of March after reaching its 5-year peak of $68.23. As mentioned previously, Intel has resorted to a total of 13 stock splits, all occurring between 1973 and 2000, and announced in October 2020 its intentions of a stock buyback program of $20bn lead by the ex-CEO, Bob Swan.

History and Development The founding of Intel is one of the legendary stories of Silicon Valley. Intel was established in 1968 by Robert N. Noyce, cofounder of the integrated circuit, and Gordon E. Moore, a colleague of Noyce’s from Fairchild Semiconductor, to make semiconductor memory more practical and affordable. The pair quickly won the backing of venture capitalist Art Rock, who raised $2.5 million in less than two days. Because the name Moore Noyce was already trademarked by a hotel chain, the two called their startup Intel, short for “integrated electronics.” In 1980, the Intel 8080 was chosen as the central processing unit of IBM’s first personal computer. In 1985, Intel introduced its nextgeneration Intel386™ microprocessor and, in 1993, the company’s focus on R&D and manufacturing expertise resulted in the renowned Pentium microprocessor, whose descendants power performance-intensive applications today. Business Units

The company manages its business through 5 main operating segments: Client Computing Group, Data Center Group, Internet of Things Group, Nonvolatile Memory Solutions Group and Programmable Solutions Group.

Source: Bloomberg

Intel’s Client Computing Group (CCG) includes platforms designed for end-user form factors, focusing on higher growth segments of 2-in-1, thin-and-light, commercial and gaming, and growing adjacencies such as connectivity and graphics. The Data Center Group (DCG) includes workloadoptimized platforms and related products for compute, storage and network functions. It also makes chips for sever-platforms and related products designed for the enterprise, cloud, government and communication infrastructure markets. In 2021, the DCG operating segment includes the results of the Intel® OptaneTM memory business. The Internet of Things Group (IOTG) develops high-performance compute for targeted verticals and embedded applications in market segments such as retail, industrial, healthcare, and vision. In addition, Mobileye is the global leader in the development of computer vision and machine learning-based sensing, data analysis, localization, mapping and driving policy technology. The Nonvolatile Memory Storage Group (NSG) includes development of storage solutions using innovative Intel® 3D NAND technology, primarily used in SSDs - Solid State Drivers being a new generation of storage devices used in computers. In 2021, the NSG operating segment no longer includes the results of the Intel Optane memory business. The Programmable Solutions Group (PSG) offers programmable semiconductors, and related ggggggg 12

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products for communications, cloud and enterprise, and embedded market segments, including communications, data center, industrial and military. Intel makes most of its products in its own manufacturing facilities, which allows the company to control the process for quality, speed and flexibility. For some communications, connectivity, networking, field programmable and memory components, the company outsources manufacturing to third parties. Geographic Reach

Intel is based in California and has 10 manufacturing sites, which includes six wafer fabrication facilities, three assembly and test facilities and the newly-added Costa Rica site. These facilities are located in China, Malaysia, and Vietnam while wafer fabrication is located in Arizona, Oregon, New Mexico, Ireland, Israel, amongst other countries. Sales are distributed geographically, with customers in China (including Hong Kong) generating around 30% of Intel’s sales, followed by Singapore and US customers, over 20% each, and customers in Taiwan who contribute with nearly 15% of revenue. Sales

Intel sells its products primarily to original equipment manufacturers (OEMs), cloud service providers and original design manufacturers (ODMs). In addition, Intel products are sold to makers of industrial and communications equipment. Its customers also include those who buy PC components and other products through distributor, reseller, retail, and OEM channels. Intel’s worldwide reseller sales channel consists of thousands of indirect customers, who are system builders that purchase microprocessors and other products from distributors. The microprocessors and other products are also available in direct retail outlets. Intel’s three largest customers account for nearly 40% of its revenue, with Dell Technologies contributing with more than 15% of sales, Lenovo Group with more than 10% of sales and HP Inc. contributing with around 10%. 2030 Goals for Corporate Responsibility

In May 2020, Intel launched its 2030 strategy and goals, which call for continued progress in corporate responsibility for the next decade – from achieving net positive water use, 100% green power and zero waste to landfills across Intel's global manufacturing operations to doubling the number of women and underrepresented minorities in senior leadership roles and scaling the impact of supply chain human rights programs. The company has created a global corporate strategy: RISE, to create a more responsible, inclusive and sustainable future enabled by technology and collective actions. This strategy can serve as a blueprint for large technology companies to help alleviating social problems worldwide. A smoother transition to the future of work and creating a cleaner environment for all, meaning that a better future can be secured. At the same time, it is the perfect opportunity for companies to invest in technology for good initiatives around the world. Also, Intel joined the XPRIZE Pandemic Alliance, aimed at accelerating solutions for Covid-19 and future pandemics. Key Topics 1. CEO Needs Turnaround





Intel’s new CEO Patrick Gelsinger is set to reinvigorate the chip manufacturer by expanding it as a service to cloud customers and its own rivals, which will depend on his execution prowess. If the challenges were overcome, it could push the chip giant’s profit growth beyond the low-single digits after 2021, though margins may stay mixed. Gelsinger is likely to focus on execution, especially in manufacturing, with the expanded foundry business amplifying that commitment. As stock sentiment improves, Intel’s ability to deliver may have little room for disappointment. Its “tiled” chip approach will refocus performance at the system level and it can highly customize chip solutions for workloads, especially for cloud customers. With this, direct comparisons between AMD and Intel stock keeping units may become more difficult. Intel’s aggressive approach to setting up a foundry services business may appeal to US cloud customers such as AWS and Microsoft, and fabless chipmakers such as Apple, Qualcomm, AMD and ggg 13

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Nvidia. Basically, foundry services are the manufacturing and testing of products, including semiconductor wafers and die, and related services provided to a customer. This approach will also set up a regional counterbalance to eastern Asian foundries Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung. Intel’s timely expansion will also be assisted by US and EU government agencies. The company’s $20bn capital spending to expand capacity in Arizona, the availability of all its intellectual property, and manufacturing expertise to help customers make chips may prove attractive. However, this new business may advance competitors’ capabilities, and pinch its own gross margins while expanding its capital outlays. Intel’s launch of third-generation Xeon Scalable products, code-named Ice Lake, will test whether it can slow server Central Processing Unit (CPU) market share loss to AMD. Intel claims a 46% performance improvement vs the prior generation, but real cloud and corporate IT workload performance at the system level over the next few quarters will be more telling. The product is likely widely deployed at Azure and other clouds, and available via server partners like Dell. Server CPU share over the next few quarters amid stronger cloud and corporate server volume will show whether Intel can steady data-center sales growth. 2. Intel’s Manufacturing Stagnation

The chip maker’s decision to tactically outsource some components in 2021-22, yet make the bulk of its 2023 products internally may pose multiple challenges. TSMC and Samsung may be ahead of the 7-nanometer node by then, widening the performance gap vs Intel. This outsourcing strategy may also pose challenges in securing capacity, and in R&D and capital-spending allocations. Moreover, the outsourcing of chips based on x86 architecture - Intel’s critical flagship products - will be harder and can lag behind those of AMD, due to process-technology challenges. These chips are harder to outsource given Intel’s long history of making them in-house. In addition, temporary or permanent outsourcing by Intel may require a different R&D strategy than the company has historically followed. Relating to Samsung and TSMC, their progress is transistor-node shrinkage has come from a

disciplined focus and a high-capex model, amid others’ hesitancy to spend as much. TSMC is the market leader in advanced chips, accounting for 51% of sales and 50% of capacity. Chinese foundries, heavily subsidized by the government, are unlikely to establish themselves as alternatives in the leading-edge notes. Samsung’s technology in node shrinkage is good but its capacity is 31% that of TSMC. Regarding TSMC, if the incoming CEO holds to a strategy of making 7-nm chip in-house, it may consider Intel to be a tactical, short-term, lowervolume customer when compared with the likes of Apple, Qualcomm, Nvidia and AMD. 3. The Need to Accelerate Modular Approach

Intel’s long-term chip roadmap must be accelerated but crisply executed, as processors need to be customizable systems-on-a-chip with compute, graphics, AI, memory and programmable logic blocks. They must be assembled flexibly and quickly for the computing workloads of cloud customers. The company’s manufacturing likely needs a consistent, structural and long-term overhaul. The company may satisfy some investors by quickly outsourcing all leading-node capacity to TSMC but this may not be in the long-term interests of all stakeholders. Rapid outsourcing can undermine long-term manufacturing, adding volatility to R&D, capital expenditures, cost of goods sold, gross margin, headcount and depreciation. It may also disrupt the pace of the node transition. Also, tactical outsourcing by product rather than node may cause irregular cost spikes. On another note, despite its focus on computing, Intel has strong positions in other sectors. This can widen its customer base if it is able to resolve manufacturing issues. Intel’s hold on PCs and servers is the strongest, with 2019 sales of nearly $58bn and 5% annual growth over the past 5 years, but it has expanded in data-center gear for networking and storage, and in autos. 4. Intel US Can Find Long-Term Cures to Recurring Chip Shortages

Amid short-term chip shortages for everything from cars to smartphones, Intel could reframe its potential by emphasizing to the US government its hh 14

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role as a counterbalance to East Asian foundries, for the sake of national security and American innovation leadership. Intel may seek to widen its manufacturing scale and variety, offering capacity to peers while resolving its own issues. Intel’s efforts to reenergize chip manufacturing while also increasing outsourcing to Asian foundries could draw interest from US commerce and security agencies and from trade groups. If governmentsubsidized expansion was proposed as a way to strengthen US chipmaking capabilities and create high-paying jobs, US agencies might fast-track expansion by Intel and peers. It could be framed as a national security matter, given Intel’s role as a key chip supplier of government products. Apple,, Google, AMD, Qualcomm and Nvidia are probably all interested in financially backing and securing advanced manufacturing capacity in the US. Consensus among these large peers will shape the outcome of any US chipmanufacturing expansion. A foundry effort by Intel would need to be separate from its own design operation. Apple could potentially be a tough customer, given its exacting manufacturing requirements and timelines, high-performance chips and roadmaps, and exclusive capacity allocation at low costs. However, along with cloud peers Google and Amazon, Apple may be willing to share the capital expenditure burden with Intel in return for more capacity in the future.

News and Deals At the end of 2015, Intel announced the completion of the Altera Corp. acquisition, a provider of field-programmable gate array (FPGA) technology. This acquisition complements Intel’s product portfolio and enables new classes of products in the high-growth data center and IoT market segments. In April 2019, the semiconductors’ company acquired Omnitek. Based in England, Omnitek is a leading provider of optimized video and vision solutions. Its technology enables customized highperformance vision and AI inferencing capabilities for customers across a range of end markets. Omnitek’s Intellectual Property (IP) addresses demanding application requirements in areas such as video conferencing, projection and display, medical vision systems, and more. In late 2019, Intel Corp. announced its acquisition

of Habana Labs, an Israel-based developed of programmable deep learning accelerators for the data center for approximately $2bn. This deal strengthens Intel’s AI portfolio and accelerates its efforts in the nascent, fast-growing AI silicon market, which Intel expects to be greater than $25bn by 2024. Habana remains an independent business unit and continues to be held by its management team at the time of the acquisition. This combination gives Habana access to Intel AI capabilities, including significant resources built over the last 4 years with deep expertise in AI software, algorithms and research that will help Habana scale and accelerate. In 2020, Intel acquired Moovit, a mobility-as-aservice (MaaS) solutions company, for approximately $900m. The addition of Moovit brings Intel’s Mobileye closer to achieving its plan to become a complete mobility provider, including robotaxi services, which is forecast to be an estimated $160bn opportunity by 2030. In October 2020, it came to public knowledge that Intel had agreed to sell its NAND flash-memory business to market rival SK Hynix for $9bn. The sale would include the transfer of Intel’s SSD business, NAND architectures, and production facilities in China. However, Intel arranged the deal such that it would still be able to use the China production facility until 2025. The companies plan to gain regulatory approval for the sale by 2021. With this transaction, SK Hynix hopes to gain the scale needed to compete against Samsung in the memory business. And Intel will shed legacy business as it carries out its makeover plan to invest in high-margin, high-growth markets - part of a multiyear transformation effort. During the first quarter of 2021, Mobileye, an Intel company, and Udelv, a Silicon Valley venturebacked company, announced that Mobileye’s selfdriving system will drive the next generation Udelv autonomous delivery vehicles, called “Transporters”. The companies plan to produce more than 35,000 Mobile-driven Transporters by 2028, with commercial operations beginning in 2023. At the moment of writing of this article, the chipmaker is seeking around €8bn in public subsidies towards building a cutting-edge semiconductor manufacturing site in Europe.

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Performance Analysis Regarding Intel’s Income Statement, between 2017 and 2020 it has seen a consistent growth in revenues, from $62.7bn to 77.9bn, driven primarily by growth in demand for notebook PCs and DataCentric Businesses (DCG) which offset the falls in Desktop PCs and Application Service Providers (ASP). Intel’s focus in terms of future revenue has also changed, once benefiting from the growth in the PC market then followed the mobile and cloud era, its new focus will be towards distributed intelligence, specifically AI, 5G network and the intelligent and autonomous edge, outlining its targets towards future revenue sources rather than previous revenue streams. On the other hand, whilst Net Income rose substantially between 2017 and 2018, from $13.5bn to $20.6bn, it stagnated between 2019 and 2020, at around $19.5bn, implying a consistent reduction in Net Profit Margins since 2018 to its current value of 25.1% explained by a rise in depreciation and cost of golds sold.

Source: Bloomberg

timeframe, as the rise in DCG and PC-Centric segments the two largest drivers for the rise in Intel’s Operating Cash Flows. Moreover, the increasingly negative Investment Cash Flows are a testament to the company’s intent on investing in R&D, a key characteristic within this sector, rising by 32% (in absolute terms). Whilst Financing Cash Flows decreased further in 2018 and 2019, as a result of higher debt and stock repurchases, they increased to -$12,9bn in 2020 from -$17.6bn also taking into account the effects of the pandemic.

Source: Bloomberg

In an inversed fashion to Net Profit Margins, Debt-to-Assets fell to 21% in 2018 before rising in 2019 and 2020 to 24%, as rise in Debt outpaced growth in Assets, outlining a tendency to increase dependency on debt as a source of financing. It is also worth noting that whilst Total Debt rose by $7bn between 2019 and 2020, Net Debt fell by $4.58bn to a value of $7.88bn, highlighting Intel’s growing ability to pay off its financial obligations with cash and cash equivalence, although it is not able to do so completely.

Source: Bloomberg

Industry Overview Intel Corporation operates in the semiconductor industry, encompassing in broad terms four main product categories: memory or storage chips, microprocessors, commodity integrated circuits and complex system of chips (or SOC), which are all 16

NIC Undergrad Review

hardware components used in a variety of electronic devices. Founded in 1968, Intel is one of the oldest and largest companies in this sector, although the intensity of rivalry has increased substantially in recent years, as the need for these hardware components has incentivized large scale R&D investments and reduction in manufacturing costs to “steal the competition”. The current situation of the industry is highlighted by the existence of a global shortage in chips, whereas demand outweighs supply. This initially was as a result of temporary delays in supplies as several manufactures closed when the pandemic began, but as production recommenced, demand continued to surge as a result of altering consumer preferences caused by the pandemic, escalating the situation to a breaking point. This widespread shortage hit the likes of Apple and Sony, delaying and reducing the production of the iPhone 12 and PlayStation 5 respectively but also car manufactures such as Toyota and Volkswagen. In theory this would imply a rise in the price of the respective chips which would rise profit margins. However, the supply constraints are so significant that it is actually posing more of a threat to Intel and its competitor’s then potential benefits. President Joe Biden recently addressed the situation in February, seeking $37bn in funding for legislation to augment chip manufactures in the US, which can benefit Intel who in contrast to peers, refused to outsource the bulk of its chip line production.

In terms of market characteristics, given the intensity of rivalry present, firms compete both in prices and performance, which in turn leads to lower prices and higher investment in R&D. Regarding prices, firms such as AMD and Nvidia have been able to gain a competitive edge on Intel through the outsourcing of the majority of its production to companies such as TSMC, enabling them to focus more on the design and creation of the chips rather than their actual production, something Intel has been reluctant to do. Investment in R&D is also a key component, as new technologies make past chips obsolete for those valuing high-end performance, leading to significant price reductions in older models. Whilst Intel invested close to $40bn in the last 3 years in comparison, AMD and Nvidia invested $7.1bn and $5.6bn respectively, despite this, AMD and Nvidia outperform Intel in the CPU and Graphics Processing Unit (GPU) markets respectively. This hints that the scale of R&D is not as relevant as the quality and focus of this spending, which have harmed Intel significantly. Another shift which may present lasting effects is Apple refusing to use Intel processors in favour of its own M1 chips for its Mac, MacBook and iPad Pro line. Apple is the largest chip buyer in the world, and its decision to design and use its own processors can start a trend of other tech giants to do the same, and in doing so have greater control over the quality of their products.

Price Performance of Intel and its Peers

Source: Bloomberg; Note: INTC US Equity - Intel Corp., 005930 KS Equity - Samsung Electronics Co. Ltd.; NVDA US Equity - NVIDIA Corp; AVGO US Equity Broadcom Inc.; QCOM US Equity - Qualcomm Inc.; AMD US Equity - Advanced Micro Devices Inc. (AMD)

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Given the wide scope of companies operating in this sector, the selected peers of Intel are shown in the table below. All the selected companies are headquartered in the US, operating in the semiconductor industry but with some variability in size. It is also important to note that in terms of market capitalization there is a large disparity in absolute terms from, for example, Nvidia and AMD, however, given their dominance in their respective segment of semiconductors (GPU and CPU, respectively), they were included. However, a well-established competitor, the South Korean Samsung, was not included, despite its presence in the market of semiconductor being indisputable, as the difference in regulatory and legislative rules do not resemble those applied to the other peers in the US, including Intel, hence its omission. It must also be noted that of the competitors present, in terms of sustained market capitalization, only Qualcomm Inc. resembles Intel in the sense that it has not seen an amplified growth in the recent years, in contrast to Nvidia, AMD and Broadcom which have surged in the recent 5 years, as a result of the rise in demand for semiconductors.

Valuation Overview As of April 30th, 2021, Intel’s stock closed at $57.53. Applying a comparable analysis in conjunction with the football field chart, we can compare Intel’s current valuation with that of its peers. Overall, we can identify that Intel seems to be substantially undervalued, even though it is one of the largest players in this industry. In terms of Price-to-Earnings (P/E) and Price-toBook Value (P/B), Intel falls well below the 25% or the first quartile mark, indicating undervaluation. Taking a closer look when compared to its closest peers, Intel’s P/E stands at 11.1 and P/B stands at 2.92, whilst its peer average is 51.8 and 16.9 respectively, implying this is not only applicable for the industry as a whole but also its peers. Furthermore, in terms of Enterprise Value to EBITA (EV/EBITDA) or to Sales multiple (EV/Sales), Intel remains significantly below the first quartile, and at 5.48 and 2.56, respectively, it also remains substantially below that of its peers, whose average was 40.4 and 9.6 respectively. This further supports the argument that Intel is currently undervalued whether that be against the industry or its closest peer. It must be noted however that whilst these metrics account for financial performance of the companies in this sector, there are other factors, such as lack of confidence in current administration, lack of quality in products or other external factors which could justify the current price (only reflected in its future sales and financial statements, even

though investors are accounting for that in its current price). Nonetheless, based on these metrics and comparables, one can argue that Intel seems to be substantially undervalued, although this is an industry which is typically traded at a premium given its high growth potential. As mentioned previously, one must not rush into conclusions as pricing may account for other idiosyncratic factors which this analysis does not encompass. However, based on this valuation, Intel seems in fact undervalued with respect to the industry and its peers.

Source: Bloomberg

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Risks There are several risks affecting Intel which could materially and adversely disturb the business, financial condition, cash flows, and results of operations, and trading price of the company’s common stock. Even though there are many risks and many scenarios to be considered, in this section, a few important factors are mentioned. Firstly, there is the question of changes in product demand which can adversely affect the company’s financial results. Intel’s products are used in different market segments, and demand for its products varies with or among the market segments served by its PC-centric and data-centric businesses. It is difficult to forecast these changes and their impact, for instance, it was clear the negative Covid-19 driven demand impacts in several areas of its business during the second half of 2020. Changes in demand for Intel’s products, particularly in their client computing and data centered groups can reduce revenue, lower gross margin or require the firm to write down the value of its assets. Regarding competition, the introduction of competitive new products and technologies, aggressive pricing and other actions taken by competitors can harm the demand for its products. For example, Intel’s DCG platform Application Service Providers (ASPs) were impacted by the competitive pricing environment during 2020. Additionally, a number of business combinations and strategic partnerships in the semiconductor industry have occurred over the last several years, and more could occur in the future. An example of this, in 2020, was the Nvidia’s announcement of having agreed to acquire ARM Holdings plc. A last point worthwhile mentioning regarding changes in demand is the investment in new businesses, products and technologies which are inherently risky and do not always succeed. On another note, the Covid-19 pandemic has affected significant portions of Intel’s business and could have a material adverse effect on the company’s financial condition and results of operations. The pandemic has resulted in authorities imposing, and businesses and individuals implementing, numerous measures to try to contain the virus, such as travel bans and restrictions, lockdowns, social distancing orders and shutdowns. These measured have impacted and may further impact Intel’s workforce operations, the operations

of its customers, and those of its respective vendors, suppliers, and partners. Additionally, apart from the demand which can also be affected by the current pandemic, Covid-19 has led to increased disruption and volatility in capital markets and credit markets, therefore, unanticipated consequences of the pandemic and resulting economic uncertainty could adversely affect the company’s liquidity and capital resources in the future. On the topic of cybersecurity and privacy risks, companies in constant contact with technology and whose products and/or services depend on technological development are constantly at risk. Due to the widespread use of Intel’s products, the firm is a frequent target of computer hackers and organizations that intend to sabotage, take control of, or otherwise corrupt its manufacturing or other processes, products and services. Intel is also a target of malicious attackers who attempt to gain access to its network or data centers, or those of its suppliers, customers, or end users. For example, in the last quarter of 2020, Intel’s Habana Labs subsidiary’s network was breached, resulting in unauthorized third-party access of confidential information. Moreover, as a result of the Covid-19 pandemic, remote work and remote access to Intel’s systems has increased significantly, which also increases its cybersecurity attack surface. Theft, loss, or misuse of personal data about the company’s employees, customers, or other third parties could increase Intel’s expenses, damage its reputation or result in legal or regulatory proceedings.

Outlook In 2020, Intel recorded a revenue of $77.9bn, with 49% from data-centric businesses, amid the effects of the Covid-19 pandemic. The dynamic of work and learn from home resulted in strong demand for notebook PCs, while demand for desktop PCs weakened. Still in the topic of the current pandemic, Intel has taken an active role in supporting essential workers, hard-hit business and students of all ages with Intel-funded projects led by employees along with its global customers and partners, through the Pandemic Response Technology Initiative. This initiative comes as an extra sign that Intel is highly committed to its 2030 Corporate Responsibility Goals. 19

NIC Undergrad Review

2020 Highlights; Source: Intel Corp. 2020 Annual Report

In the upcoming years, Intel will face some challenges, from the production shift to outsourcing, to the increasing shift to 5G and AI technology developments. The chipmaker’s new CEO will have some hard work ahead to turnaround parts of the business in order to gain back Intel’s market dominance and overall results compared to its peers. Another important point worth mentioning is the pressure Intel has regarding its investors and prospective shareholders as it has underperformed the industry and its gap with other peers has only widened. And even though the company seems to be undervalued, the quality of its products and the lack of confidence in the past management team discouraged investors, which CEO Gelsinger will be trying to bring back to the company. Also, an important topic to keep in mind for the next months is the Biden Administration’s actions regarding the funding legislation to boost chip manufacturing in the US, most likely benefiting Intel itself. We are all living under uncertain times regarding economy activity and company’s performance, and this is easily reflected in the future of small and big players in the technology industry like Intel. Even though the company has the reputation to succeed and attract new clients, it has some internal battles to manage until it meets what it has once promised and delivered to its clients and collaborators.

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NIC-UD Fund: Monthly Performance Equity markets are on the rise as latest economic data brings hope to investors

João Pedro Coelho

Global Markets As lockdown measures have been lifted all around the world, new vaccines have been approved and daily new Covid-19 cases have been declining, optimism was the key word for April and investors started to put their eggs in riskier baskets, following a “beat the forecasts” behavior, surprising earnings reports appeared during April. As economic normalization is around the corner with positive economic data being released, investors are looking at long-term value investments as the way to follow, which resulted on a very positive month for global equities. Not so optimistic was the bond sell-off. In 2021, fixed income markets have suffered fast changes and analysts ffff

predict that the bond markets may remain in a state of flux for the remainder of 2021. One of the consequences of this market moves is the necessity of a more risk-aware asset management of fixed income allocations, which pushes investors towards equity markets. The optimistic trend is also affecting commodities markets as oil reached a six-week high, as demand forecasts continue to be on a positive note and OPEC agreed to increase oil production to 350,000 barrels a day in May and June. April has left positive notes for the rest of the year as investors are betting on economic recovery and coronavirus dust settling down.

Current Positions

Only one addition was made to our portfolio this month, Enterprise Products Partners L.P., this addition is aligned with our goal of diversifying our portfolio. This extremely important diversification allows us to capture different timing growths while minimizing risks associated with specific industries. The cash position is currently representing around one fifth of our portfolio, mainly due to the reduction of the Walt Disney Company and Gilead Sciences positions. We will continue to allocate this cash in new securities, always following our long-term value investing strategy. Nº

Positions Weight on Total Equity

1 2

7,46% 5,09%


13,03% 3,69% 3,92%







4,26% 2,97%


Entertainment US Pharma US Internet US Utilities US Gaming ETF Renewables US Electric Batteries ETF Gold Miner Consumer Products EU Pharma Retailer Chinese Govt Bonds Aerospace & Defense UK Tobacco UK Oil & Gas US Cash



Streaming/Entertainment US Equity

Current Price

Open Price









US Equity




Social Media/Internet

US Equity





US Equity





US Equity




EV Battery





Consumer Products

EU Equity




Gold Miner

CND Equity




Pharma Retailer

US Equity




Sovereign China Bonds

Bond ETF




Aero & Defense

UK Equity





UK Equity




Oil & Gas

US Equity



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NIC-UD Share Price (Inception Cumulative Returns) 6% 6,5% 5% 6,0% 4% 5,5% 3% 5,0% 2% 1% 4,5% 0% 4,0% 2/28/2021 4/1/2021

3/5/2021 4/6/2021

3/10/2021 4/11/2021

3/15/2021 4/16/2021

3/20/2021 4/21/2021

3/25/2021 4/26/2021

Benchmark Analysis Our fund ended April with a rise of nearly 1%, not being able to track the growth of other indexes, like the S&P 500, that has been rising in the last few months as the light at the end of the pandemic crisis tunnel is starting to get brighter, and the FTSE 100, that despite the fall in the third week of April, managed to still end up in a very positive note. The recent wave of optimism regarding economic recovery and the decrease of risk aversion on behalf of the investors resulted in a good month for most indexes. It is important to highlight the negative performance of the Nikkei 225 and the Shanghai Composite, declining approximately 2% and 0.6% respectively. This negative performance can be explained by the current pandemic situation in Asia. While India is going through a storm with catastrophic consequences, Japan is also struggling to contain a possible resurgence of coronavirus infections. New strict measures in Japan are fading away the inherent economic recovery. The optimism observed in Europe and the US is not having much impact in Asian markets.

Monthly Performance 10% 8% 6% 4% 2% 0% -2% -4% -6% ETF Stock Stock Stock Stock Stock ETF Stock Stock Stock ETF Stock Stock #1 #1 #2 #3 #4 #5 #2 #6 #7 #8 #3 #9 #1 0

Portfolio Returns vs Benchmarks 5%




3% 2% 1%



1,42% 0,73%

0% -1%


-2% -3%

-1,96% Portf oli o MSCI S& P 500 (Share World I ndex Price)

FTSE 100 Euros toxx Nikkei 225 Shanghai 50 Com pos ite


Corporate News In the last day of April, Disneyland Park reopened to the public, along with Disney California Adventure Park. This long-waited reopening is extremely important for the company and to all Disney fans that may return to two of the best amusement parks in the world. Danone released Q1 sales on the 20th of April. The company released poor results of €5,657m. Interim Co-CEOs stated: “Our first quarter landed in line with expectations, and we continue to expect a return to like-for-like sales growth in the second quarter, and to profitable growth in the second half of 2021.”. Facebook registered an increase in total revenues of 48% when compared to the Q1 of 2020, and a growth of 10% yoy on its Monthly Active Users (2.85bn). Facebook founder and CEO, Mark Zuckerberg stated: “We will continue to invest aggressively to deliver new and meaningful experiences for years to come, including in newer areas like augmented and virtual reality, commerce, and the creator economy”. 22 NIC Undergrad Review

New Positions $25

Enterprise Product Partners Share Price Walgreen BootsEnergy Alliance Share Price Nextera Share Price

$80 $60

Enterprise Product Partner Ticker: NYSE:EPD Date: 12/04/2021 Open: 23.23$ Sector: Natural Gas Industry: Oil & Gas

$20 $55 $70 $50 $15 $60 $45 $40 $10 $50 $35 $30 $40 $5 $25 $30 $20 $0 02/jan/20 01/mai/20 01/mai/20

02/mar/20 01/jul/20 01/jul/20

02/mai/20 01/set/20 01/set/20

02/jul/20 01/nov/20 01/nov/20

02/set/20 02/nov/20 01/jan/21 01/mar/21 01/jan/21 01/mar/21

Investment Proposition As the transition to renewables at full steam is still a distant reality, natural gas will be the key for the next few years. Enterprise Products Partners L.P. (EPD) is the leading North America provider of midstream energy services. EPD operates in the midstream sector of the oil and gas industry, which comprises transportation, trading, processing of oil and natural gas. Midstream companies have largely transitioned to living with high levels of cash flow. This new, more conservative financial strategy improves the sustainability and health of midstream companies without significant future “legacy” asset declines. We strongly believe this was an undervalued stock, perfect for value investors.

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