Les Billets de Monocle

We Look Closer – Le cas Orpéa

27 October 2022

Performance is built both by making good operations and by avoiding bad ones.
You probably know our motto "We look closer": analysing every detail that may be relevant to our investment cases.

We have applied it to Orpéa.

Following the accusations made at the beginning of the year in the book Les Fossoyeurs, Orpéa mandated two external firms, Grant Thornton and Alvarez & Marsal, to conduct an independent evaluation.

The summary report comes out - I say synthesis because the detailed report was never published. we look into it.

From the very first pages, we read "The Oracle databases of seven applications, ..., falling within the scope of our investigation, backed up between November 2019 and February 2022, have not been retained by the Orpéa Group. ... We cannot guarantee that no data, whether voluntary or involuntary, has been deleted from these databases. During our work, it is therefore possible that operations or transactions deleted from the information system have not been brought to our attention. … ».

This does not look good. The data in this report and this incredible story of not keeping data prevents us from going any further.

The bond line we just entered is out in full at our purchase price.

As an investor, we are interested in the dossier from a financial and societal point of view, but without clarification, the dossier remains uninvestable.

We are continuing the follow-up.

At the end of September, we will participate in the presentation of the results for the first half of 2022. A presentation without video, questions can only be asked in writing.

The new CEO, Laurent Guillot, is not reassuring, very bad in form. The situation is not improving. The covenants* may not be respected, a restructuring of the debt seems very likely.

We abstain. Too much risk.

On Monday, the AMF suspended the listing of Orpéa shares. Two days later, the quotation resumed: the share opened at -30% and the debt that had been sold at around 80, was quoted at 25.

The company announced large asset write-downs (currently €2.5 billion), the opening of a conciliation procedure to renegotiate its debt with its creditors and a transformation plan.

For the details of the transformation plan, we must wait for the presentation scheduled for 15 November.

Stay tuned.

*The covenants are clauses integrated into loan contracts requiring the borrower to respect financial ratios. Non-compliance may lead to early repayment of the loan.

Market and Portfolio Focus


Over the week (from 14/10 to 21/10), the fund recovered +0.4%.  The NASDAQ was up +5.8%, but with no real change in fundamentals. The publication of the results of the 3nd quarter continues this week with technology stocks. The market is very volatile and caution remains the order of the day.


On the equity side :

The Activision line has been increased to around 4% of the fund, a nice potential +25% on the Microsoft offer which should be finalised in 6-8 months. The Pfizer and Biontech lines have been reduced and now represent 7.4% and 2% of the fund respectively. Their valuations still seem very low compared to the operating results generated.

On the bond side :

Arcelor Mittal 2039 : The line has been gradually strengthened and now represents 1.5% of the fund. A nice return of 7.5% in dollars for a company that is very well managed.

Levi’s 2027 With a yield of 6% in EUR, a strong balance sheet and a very good brand, the line has been increased to 3% of the fund.

Hapag Lloyd 2028 The position with a yield of 5.5% in EUR was increased from 1% to 1.5% of the fund.

Korian 2028 We have started to build up a position (1% of the fund) in this French retirement home manager. An attractive yield of 8% in EUR with good visibility of the operational business due to its strategic and political nature.

Ceconomy 2026 We have built a line of 0.5% of the fund, a yield of 18% for this debt of the German company specialising in the distribution of consumer electronics, which we believe is less risky than what the market is valuing it at.

Kind regards,



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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