«Among balanced funds, only Monocle stand out from the crowd.»

Les Echos, 1st French Business Newspaper, November 22d, 2018







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Monocle Fund Part A

July 17, 2020
 YTD:                  +1.75%

Dear Investors,

As of July 17, Monocle (part A) is at +1.75% over 2020.

2019: +6.09%
2018: +0.11%
2017: -1.25%
2016: +6.91%
2015: +7.32%

Netflix released its results last Thursday. The conditions were met for the company to have the best possible quarter thanks to COVID: more subscribers, less marketing expenses ($200M reduction) and less production expenses ($800M reduction). So the free cash flow generated on this quarter, namely +$900M, must be seen as a maximum. Indeed, anyone who did not subscribe to Netflix during the lockdown will probably never subscribe to Netflix. Consequently, this $900M, or $3.6 Bn on an annual basis, should be considered as a maximum. As Netflix's market capitalization is $215 billion, the multiple is 60. This level of multiple, on the best possible results, is an aberration.

Note: as of December 31, Netflix had 8600 employees.

Snapchat posted earnings last night. The company is valued at $36 billion, which is the sum of Renault, Accor, Publicis and Unibail. The results: over the 1st quarter, revenues were up sharply (+43%) to $460M compared to last year. It's slowing down in the second quarter to $450 million, down sequentially and up only +17% year-on-year. On the other hand, we note a certain stability in the net income: in the first quarter, a loss of $305M compared to $320M last year; in the second quarter, a loss of $325M compared to $260M last year. Obviously, a company whose business model consumes $300M/quarter needs supportive capital markets. The company therefore issued $850M of debt at the end of April. The issue was presented as a "strategic" move by its CEO Evan Spiegel. I do agree: when you burn $100M per month, it is certain that debt issuance is definitely strategic.

Note: as of December 31st, Snapchat had 3200 employees.

Tonight publication of Tesla and Microsoft. We don't own any of these portfolio companies, but their impact on the market is major. So we're watching carefully what comes out.

Yours sincerely


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