Winning by not losing
21 August 2023
Investing is a long-term game, and to win it, you need to be there at the end of the game.
At Monocle, we follow Carl Jacobi's advice ("Invert, always invert!") and behave in a way that ensures the long-term future of our portfolio, rather than maximizing short-term results. After all, our primary role is to preserve the capital entrusted to us.
So we make a point of avoiding "direct mistakes": sizing errors, unfounded valuations, dishonest management... In short, we avoid making blunders that would put us among the contenders for the Darwin Awards for investment: winning by avoiding losing.
Our current positioning reflects this philosophy. It's defensive, not because we want to be ex-ante, but as a consequence of our process: if we don't find a satisfactory investment, we don't invest (the importance of knowing how to be patient and disciplined, as we wrote a few weeks ago).
In practical terms, this is reflected in our portfolio, particularly on the equity side. We are invested in 4 companies with different profiles:
- BioNtech, which we mentioned in last week's article;
- Galapagos, which has a negative enterprise value, i.e. the cash it holds on its balance sheet is greater than its market capitalisation;
- Pershing Square, whose discount to listed assets is 35%, and which the management, rational in our view, is working on reducing;
- Capri, in the process of being acquired by Tapestry for $57/share.
Each of these lines, which are largely uncorrelated, offers us a wide margin of safety in relation to their intrinsic value. Most of the rest of our portfolio is also conservatively invested.
We are aware that we are out of step with the rest, and undoubtedly 'short social acceptance', to use Matthew MacLennan's expression. But as Charles wrote last week, this positioning allows us to take it easy and prepare ourselves to seize the opportunities that the current environment is sure to offer us.
Disclaimer
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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