Les Billets de Monocle


20 May 2021

For the fund, the acquisition of M6 by TF1 is excellent news. TF1 was already a good case for us - the dividend represents a yield of more than 7% on our entry price - but with this acquisition, this dividend will be more important and its growth rate higher. The stock gained 7% on this news and the line now represents 3.5% of the fund.

In the markets, three pieces of information I'll leave you to ponder:

1) COATUE, the New York hedge fund headed by Frenchman Philippe Lafont, is little known to the general public. However, it is one of the first players in the tech sector, having participated in most of the great stories of the Nasdaq. Like all American hedge funds, COATUE must publish its "13F" report to the SEC every quarter, which lists all its equity positions. Here is the evolution of its positions compared to the end of 2020: SHOPIFY -40%; ZOOM -50; NETFLIX -35%; PAYPAL -57%; UBER -36%; SQUARE -36%; TESLA -24%; DISNEY -44%. When an industry specialist cuts its lines so significantly, it seems pretty telling to me.

2) William Barnett is also little known to the general public. He is an 80 year old American economist who spent most of his career at the FED. His main subject of study is the measurement of money supply, for which he explains that the methods defined in the 1950s are no longer valid today because the definition of what should be included in this money supply has evolved. He developed a new method of measurement, called "divisia", which has been adopted by most central banks. He is therefore very well known on the measurement of money supply and only on this subject: he refrains from any comment on monetary policy.

At least, that was true until last week. On May 5, Barnett published a paper in which he explains that the response of central banks has led to a massive increase in money supply (+24% in one year) and that therefore " the risk to the economy is inflation". The latest inflation figures were de facto very high (+4.2% in one year in the US) and yet the FED argues that this is "transitory" and that we should not worry. However, this position will be more difficult to maintain if bigwigs like Barnett say that the risk is real. In any case, even before the FED moves, the markets will react: rates will rise, which will put pressure on bonds, stocks and companies with a lot of debt (and beware: in the lot there are many Tech companies that have started to issue debt to compensate for their lack of cash flow generation).

3) Schwab, the U.S. brokerage, has released its monthly statistics. In 2019, Schwab was opening an average of 60,000 new accounts per month. In March 2020, with the arrival of the pandemic, this figure rose to 215,000: all casinos were closed, except Wall Street. The rate of account openings remained steady throughout the end of the year, averaging 150,000 per month. And at the beginning of 2021, with the arrival of Biden and the stimulus, the numbers exploded: 905,000 in January, 989,000 in February (February is the Gamestop affair and the two events are undoubtedly linked). Now what happens next? March +379.000. Still very high but nothing to do with January and February. And then there is April: -25,000 where Schwab ends the month with fewer accounts than at the end of March. This has not happened in years. In any bubble, there is a Ponzi scheme phenomenon: you need the continuous arrival of new buyers to outbid the shares held by the first arrivals. But at the moment when no more new buyers can be found, the bubble bursts. It's now.

Have a great week,


This presentation is a promotional document. The content of this document is communicated by and is the property of Monocle Asset Management. Monocle Asset Management is a portfolio management company approved by the Autorité des Marchés Financiers under number GP-20000040 and registered with the ORIAS as an insurance broker under number 10058146. No information contained in this document should be construed as having any contractual value. This document is produced for information purposes only. The prospects mentioned are subject to change and do not constitute a commitment or a guarantee. Access to the products and services presented here may be subject to restrictions for certain persons or countries. Tax treatment depends on individual circumstances. The fund mentioned in this document (Monocle Fund SICAV) is authorized for marketing in France and possibly in other countries where the law permits. Before making any investment, it is advisable to check whether the investor is legally entitled to subscribe to the fund. The risks, costs and recommended investment period of the funds presented are described in the KIDD (key investor information documents) and the prospectus, available free of charge from Monocle Asset Management and on the website. The KIDD must be given to the subscribers before the subscription. Past performances are not a reliable indicator of future performances. Monocle Asset Management cannot be held responsible for any decision taken or not taken on the basis of information contained in this document, nor for the use that could be made by a third party. The investor may lose all or part of the amount of capital invested, as the funds are not capital guaranteed.

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