To wrap up the year 2024, the major EuroStoxx 600 and S&P 500 indices in Euros dropped by -0.46% and -0.44% respectively between November 30th and December 31st. Only the Nasdaq showed an increase of +2.52% in Euros (+0.39% in Dollars) for the month of December, driven by stocks like Broadcom, Tesla, and Alphabet, with few significant declines.
It didn’t take long for the enthusiasm for American stocks to calm down a bit. The strong upward movement in November, to celebrate Trump’s election, was particularly strong for what was ultimately just an election and had no direct impact on corporate profits. Investors can now look ahead to 2025 more calmly and wonder what this new year will bring them.
The most significant event in the European stock market over the past month was the announcement from the Danish company Novo Nordisk about Cagrisema, its latest molecule for treating obesity. This topic is worth discussing as it holds valuable lessons for investors. For the past few years, Novo has been a pioneer in the development of the anti-obesity molecule “GLP-1”, with the drugs Ozempic and Wegovy. Their popularity in the United States has led to a strikingly rapid stock market performance for Novo, from 2021 to 2024, for a pharmaceutical company. While Novo is undoubtedly a leader in the field, the competition has not been idle and Eli Lilly quickly positioned itself in the same segment with Mounjaro. Novo had to try to stay ahead with a new product, Cagrisema, which was supposed to offer weight reductions exceeding 25%. And that’s when the disappointment came because the phase 3 tests “only” showed average weight losses of 23%. This was enough for a severe stock market sanction to hit the stock on Christmas Eve, with it losing up to 20% in the session on December 20th. After reaching a peak of nearly 1000 Danish crowns earlier in the year, the share price has now dropped by a third.
We did not hold Novo in any of our portfolios in recent years. So we were spared from this bad news, but obviously, we also did not benefit from the exceptional performance of the stock previously. A company that innovates and becomes a pioneer in a completely new market will often offer excellent stock performance to its shareholders, at least initially. However, as the market accepts this new situation, it will become increasingly demanding. The nature of capitalism is such that a new rapidly growing market will inevitably attract competitors who will try to grab a share of the pie. For a stock to continue its path to the top, it must be able to maintain its leadership and always stay ahead of its pursuers. This seems to be lacking in Novo now and it explains the heavy penalty for clinical results that were still satisfactory in absolute terms.
In December, the Clartan funds had relatively normal performance given the context. Valeurs and Ethos remained stable, Europe increased by +1.35%. Flexible decreased by -0.4% while Patrimoine remained stable at +0.1%.