«Monocle Fund is now ranked best fund in the Quantalys Flexible Prudent Fund category.»

Jean-Paul Raymond, founding partner of Quantalys, Quantalys Inside - December 1, 2020








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Monocle Fund Part A

Etoile Quantalys
Notation Quantalys

February 26, 2020

Dear Investors,

As of February 26, Monocle (part A) is at +0.30% over 2021.

2020: +6.44%
2019: +6.09%
2018: +0.11%
2017: -1.25%
2016: +6.91%

For some companies, the pandemic impacted more than positively their results. Their share prices followed.

This effect is now over.

Operating figures are certainly higher than before, but growth is coming down. This is the "slow down". And the multiples will have to do the same.

Example with Zoom, one of today's stars.

The company has just published its results and forecasts for 2021. Here they are : Graph
Chart produced by Binocle Ltd.

The blue curve shows the evolution of Zoom results. The grey one shows the growth from one quarter to the next (what to focus on).

With the arrival of the pandemic, Zoom has experienced crazy growth. Now it's over and their forecast for 2021 clearly shows it. We're going from very high growth to low growth.

Repercussions on valuation? Zero...

Analysis: over the last quarter, Zoom earned (before tax) $250M. So, on an annual basis we arrive at about $1.0 billion in net income (with a little growth and adding taxes). If we pay this 40 times the results - let's be generous (Pfizer costs 10 times the results) - it's worth $40 billion.

Tonight's Zoom is worth $130 billion.

This additional $90 Billion is based on the market's belief that: 1) Zoom will continue to grow (although it is fair to say that everyone who should be on Zoom is already on Zoom); 2) Zoom will succeed in defending its current business (the competition is tough...); 3) and/or Zoom will develop a new service twice as great as the first one. Very optimistic.

The other scenario is that the stock will drop to this $40 Bn value, that means a 70% drop in the stock.

Have a good week,


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