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.
