This is also what steered our investment decisions earlier this year, when the market was at its peak before the Iran War. AI euphoria was pervasive, the market was at all-time highs, and investors were expecting rate cuts. Naturally, sexier, high-growth tech businesses were restrictively expensive across the board.

At that point, instead of forcing those expensive stocks, we shifted our focus to simple, boring, and consistent businesses that were ignored due to AI euphoria.

We picked Tasmea with that mindset, and it’s been one of our best-performing positions this year, alongside Nebius and AMD, which we bought in early 2025.

In my Tasmea write-up, I said it could double within the next 12 months. We are almost there, and it’s been only 6 months since my write-up:

It performed incredibly despite not being a tech stock in an environment where investors only wanted tech companies with AI exposure because its fundamentals and prospects were undeniably strong. The execution we saw so far validated this.

This is a clear example of the market creating opportunities somewhere else when everybody focuses on specific sectors and names.

I think we are going through a similar period again.

It doesn’t take a genius to see this:

• The market is at a near all-time high despite war and a jump in inflation.

• Valuations are high as the S&P 500 forward P/E is at 21 and shiller P/E is at 35.

• Stocks that can be even remotely connected to the AI boom go up 30% overnight.

It’s again time to shift our focus to simple, boring, and consistent, as the concentration of the current rally on the AI theme has created opportunities in other, less sexy corners of the market, opportunities like Tasmea.

Today, I am introducing you to one such opportunity:

• 40% annual revenue growth since 2021.

• 90% annual income growth in the same period.

• Insiders still own around 15% of the company

What’s even better is that it’s trading at just 13x this year's EBITA while guiding for +15% annual growth in the long-term.

Stock can easily double over the next 12-18 months if the management delivers on medium-term targets, and it could be even faster, like Tasmea, if they keep up exceptional execution.

It’s a true gem in an environment where almost everything is priced for perfection.

So, let’s cut the introduction here and dive deep into this hidden gem.

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🏭 Understanding The Business

One type of business, when done right, has consistently outperformed the market.

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Our portfolio reached all-time highs, one position became a 10x-bagger, while another became a 5x-bagger, and we had opened these positions just a year ago in 2025.

Result? Our margin of outperformance reached 30%, and TTM performance reached 58%.

Just as I was thinking that it couldn’t get any better, it got better.

A high conviction position we opened earlier this year has officially doubled after going up ~20% on Monday. I got many kind messages for this from our readers, and I want to take this as an opportunity to thank everybody who sent these messages.

This is, of course, great, but it’s not without challenges.

As a result of their stellar performances, many positions in our portfolio have now gone well beyond their fair values, leaving us with limited & speculative upsides and pretty stretched downsides.

And this comes at a time when stock valuations are at all-time highs:

So, it’s challenging to find new, undervalued positions in which we can put proceeds from our overvalued positions. Yet, they exist.

Interestingly, I see many more opportunities than I would normally expect to see when the market is at this valuation.

This is because the incredible market performance since 2022 has created an insane amount of FOMO. Yet, people are also aware that valuations across the board are high, and we may be nearing the end of this cycle. Thus, everybody is trying to find stocks that can go up +100% in a short period of time.

That fundamentally changes the game from one of valuations to one of predicting what people will concur to buy next, and narratives are the vehicles creating these concurrences.

As a result, names that have positive narratives behind them go up no matter how high their valuations already are, and names that don’t have these narratives or have weaker narratives lag in price regardless of their quality and low valuations.

This is illustrated by the fact that the S&P 500 without AI is actually lower since the start of the Iran War:

This means the breadth is actually very low, and higher valuations are a making of a handful of high-flying stocks, not a market-wide phenomenon.

This is why there are still very high-quality businesses trading at attractive prices.

Today, we’ll reposition the portfolio to capitalize on these opportunities by:

• Exiting two well-performing positions that have become pretty overvalued.

• Buying two high-quality undervalued positions instead.

This way, a substantial part of the portfolio will have its profile change from “limited upside-stretched downside” to “limited downside-high upside.” So, we’ll have a better shot at beating the high bases set by those well-performing positions and keep advancing the portfolio performance in the remainder of the year.

I’ll be explaining the trades below, and you’ll also find the link to the portfolio spreadsheet at the end of the write-up. I’ll be updating it after I execute the trades.

So, let’s get started.

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Here are the exact trades I am making:

Let’s start with one of the most obvious trades I currently see in the market.

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Portfolio is now up 58% over the last twelve months against 28% of the S&P 500!

I’ll be straightforward—it’s been an amazing month for our portfolio.

One position we entered last year has officially become a 10-bagger, while another position we took around the same time has returned 5x so far, and all this happened in just 14 months.

One position we took earlier this year is already up by 75%, and another one is up 30%. A position I took just last month is also up by 25%. This is supported by strong performance from our existing positions. One position in particular, which had been down for a long time, has recovered substantially, removing a long-standing drag.

Result? YTD performance has reached 21% and annual performance 58%.

No leverage, no chasing so-called bottleneck themes, no position bigger than 15%.

Pure stock picking alpha.

I am very proud of and happy with this. Obviously, this is an incredible performance as we are on the course to outperform the market by wide margins for the 5th consecutive year.

However, what’s more important than the returns themselves is that our strategy continues to work as intended. This is our main long-term asset.

If you have been following this publication for a while, you know that I frequently touch on the concept of base effects. It’s because I see it as the main challenge to consistent outperformance.

The mechanic is simple.

When positions find or exceed their fair value, two things happen:

• Portfolio goes higher, obviously.

• Downside risk surpasses upside potential.

This is because fair value exerts a gravitational pull on stocks. The more overvalued they become, the stronger this pull is.

As a result, when positions in the portfolio hit or exceed fair value, they create a very high base of performance, which is hard to exceed with existing positions due to that gravitational pull.

At that point, you have two options—sell or stay.

Most investors decide to sell. For us, selling has a high threshold because of two reasons:

• Great businesses surprise on the upside (and we only own great businesses).

• Proceeds should be put in a new position, which exposes us to a new risk.

Thus, we don’t easily sell due to overvaluation. We make valuation-based exit decisions only if a position becomes egregiously overvalued. At fair value, we always keep, and we may trim between overvalued and egregiously overvalued.

Once we exit or trim a position due to overvaluation, we need to redeploy that capital into something with more upside potential than downside risk, so that capital can exceed its prior high watermark—and, over time, so can the whole portfolio.

That’s obvious, and the urge to beat the base effects is natural to investors. What’s not obvious is that they want to keep performance in a straight line, which leads them to reallocate capital to positive momentum stocks. Yet, due to that positive momentum, upside is often already shrunk for those stocks, and downside is already stretched.

We don’t do that. We make our reallocation decisions purely based on the raw upside potential and downside risk, not momentum.

We seek and find high-quality & high-potential businesses ignored by the market for this reason or that. Investors generally pass on these businesses as they don’t believe they can generate quick returns within 1-2 months. This allows us to create meaningful alpha by taking a bit longer view.

Among those prospects, we are willing to invest in only those with long-term durability, as it’s what limits the downside. Then, we pick the ones with the highest upside potential so that we can consistently get above-market returns from the positions even after short-term opportunity costs.

I call this period when their performance is below the opportunity cost “incubation period.” When they are in this period, they tend to lag the rest of the portfolio, or even create some degree of drag, while existing positions carry the performance.

Over time, existing positions flatline as they reach their full valuation, the market recognizes the true value of new positions, bumps them up, and they come out of incubation, driving the performance upward again. We repeat this process by exiting/trimming positions that reached full valuation and incubating new positions in their stead.

Thus, when zoomed out, our portfolio cycle resembles the following (excluding systemic drawdowns):

AMD is a recent good example of this.

We bought it earlier last year for around $100 per share. At the time, its data center segment had missed expectations, and the market dumped it. We thought it would be temporary, as customers would inevitably diversify away from Nvidia and AMD, which were priced as they would never get another percentage of market share in data center GPUs.

It first declined to $80 levels before turning up. This was the incubation period. Once it delivered on its targets and announced GPU deals with major AI labs and hyperscalers, the market recognized the potential. It is now a 5x position for us.

This is the strategy we deploy with discipline to beat the base effects and generate consistent outperformance, and it has worked incredibly well for us so far:

💥Our portfolio is outperforming the market by 30%!

The following transactions took place in our portfolio in May:

• Trimmed 2 positions.

• Opened 2 new positions.

As our portfolio has widely outperformed the market, many of our positions have either reached or are about to reach their full value. Thus, we’ll have to exit/trim these positions and put the proceeds in new opportunities.

In the previous updates, I had provided my outlook for each company in the portfolio. Below, I’ll provide an outlook for our new positions, share overall portfolio commentary/strategy going forward, and also talk about the particular trades I am planning, i.e., stocks I am thinking to exit/trim, and those I want to buy.

Let’s dive in!

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📊Here Is Our Full Portfolio!

As of today, we have 20 holdings in our portfolio.

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We finished last year up 44% while S&P 500 delivered 17.9%. We are currently up by 57% over the last twelve months against just 26% of S&P 500.

I am not telling this to brag; I am telling this because I will explain how we have achieved this so far, as this is one of the questions I receive frequently.

As the market is at an all-time high, and attractive opportunities are getting rarer, I think this is a very good time to talk about the fundamentals, to understand where investment returns come from and how you generate them consistently.

Before getting into the meat of it, I have to say we practice a very specific way of investing. We have one goal—to outperform the benchmark over the long-term.

We don’t target a specific margin of outperformance. We just have a strategy that is optimized for long-term outperformance, and margins are just a byproduct. We may outperform by 5% or 35%, it’s a byproduct, nothing we shoot for. We apply the strategy, and the market decides the final performance.

Let’s call that margin of outperformance alpha.

If we were an investment firm and were about to teach how to generate that alpha to a junior portfolio manager, we would do it in four main steps:

• Where to look for alpha?

• How to spot a potential alpha?

• How to enter positions and size them to capture alpha?

• When and how to exit positions to lock in alpha before it erodes?

Thus, I’ll follow this same structure here as well and provide examples from my own investments when relevant.

Let’s cut the intro here and get to the meat of it!

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Where To Look For Alpha?

You can do a quick research about the sources of alpha in the market, and I guarantee you’ll find hundreds of alternative interpretations. As someone who has spent more than a decade in the industry, I have already done this, and I guarantee that 99% of what you’ll find is noise.

After years spent reading and researching about this, I can say Michael Mauboussin provides the most comprehensive yet simple explanation I have seen.

He flags four sources of alpha—informational, technical, analytical, and behavioral:

However, this doesn’t automatically mean you can capture all these sources of alpha.

Think about information edge.

Thanks to the current technology, the sophistication of the capital markets, and investment research firms, all publicly available information is immediately priced into the stock, provided that the company gets even some institutional coverage.

Thus, there are only two ways to have an information edge:

• You are an insider

• You look at obscure stocks nobody follows

If you are an insider ot have an insider tip, you can’t trade on it, so rule that out. If you are operating in the land of obscure stocks, information discovery is a double-edged sword. Yes, you may discover something that others don’t know, but you may also never know things that would prevent you from investing if you knew.

So, in modern capital markets, information edge is largely irrelevant for investors.

What about the technical edge?

The technical edge is more real in the current markets compared to the information edge, but it’s excruciatingly hard to capture if you aren’t an institutional investor.

If you bank on a technical edge, you must have hundreds of pre-defined models to trade the inconsistencies before the opportunity window closes. You lose it if you stop to take a look at fundamentals. You must have models doing it on autopilot and it only gives you marginal gains as all institutions are doing it, narrowing the opportunity.

So, it exists, but it’s probably irrelevant for you if you aren’t an institutional investor.

Let’s turn to analytical edge, then, does it exist?

Analytical edge is basically you look at all the same information and technical set up every other market participant looks at, and you interpret it differently than the consensus.

Analytical edge is real because it’s your prerogative to determine what the material you are looking at means. It may be due to your personal background, knowledge base, biases, etc, but it’s always possible to look at the same material and have a different interpretation.

Aswath Damodaran famously valued Uber at $6 billion in 2014, assuming it would be an urban car-share company. Then Bill Gurley argued that its platform allowed Uber to expand to almost all verticals in mobility services. Then, Damodaran made valuations based on different views of the company:

As you see, looking at the same material, you could pick any one of these paths for the company. Damodaran, as a value-oriented financial mind, picked an urban car service scenario, and Bill Gurley, driven by his own background, picked the broader mobility services. At the end, Gurley came out right, and Uber is a $150 billion company now.

This shows you how important and decisive an analytical edge can be. It’s real, it doesn’t require much dwelling on details and it’s your prerogative.

When looking at this, most people think they needed to make the mobility services, strong network effects, double the market size assumptions to make money on Uber. No, it was way simpler than this. It was okay if you just thought it could easily expand beyond urban ride-hailing, while it was valued as just urban ride-hailing.

You didn’t need to know the peak optionality. You just needed to assess whether some optionality existed and how likely it was. The rest would be discovered by time.

Time brings us to the latest source of alpha—behavioral.

You don’t need to think a lot to understand that behavioral edge is real. It flows naturally from the analytical edge that we just proved to exist via the Uber example.

Let’s say you were Bill Gurley in 2014, who thought Uber would be a global mobility service, and you've just discussed your thesis with Aswath Damodaran, who saw it as an urban ride-hailing business. You needed time to come out right.

At the end of 2014, Aswath would look right, and even at the end of 2015, Aswath would still look right. But in 2023, Aswath would be ridiculed for his shortsightedness, and you would be praised for your correct analysis of the business opportunity. You needed to give time to the thesis to exploit your analytical edge.

Indeed, Uber took a decade of gradual expansions to reach the stage it is today:

If you weren’t patient, didn’t control your emotions, you wouldn’t exploit your analytical correctness. Analytical edge is meaningful only when it’s coupled by behavioral edge.

So, there are only two sources of alpha you can capitalize on—analytical and behavioral.

Analytical edge is the differentiator, and behavioral edge is what allows you to exploit that analytical advantage.

The natural next question is, where can you find the situations you may have that initial analytical edge? Where do you find that first potential alpha? You force it? You randomly turn over rocks?

No. It’s simpler.

How to spot a potential alpha?

Howard Marks is one of the greatest investors alive. He tells a striking anecdote:

He was talking about the state of the market with his son, who is also an investor. His son says, “Dad, you say don’t make market calls, but all your market calls have been correct so far.” Marks responds, “yes, because I have only made a few of them.”

Indeed, Marks called the market three times in the past 20 years, and he was correct in all of them:

What do you see in his calls above?

He only calls it when it’s at extremes. Low or high, when you call it at the extremes, your chances of success are way higher.

You may say something about the future direction of the market at 20x earnings, and it can go both ways. Going up to 22x earnings and dropping to 18x earnings are equally likely. But at 28x earnings, going down is much more likely, as the market has never traded above 28x earnings for more than several months in its whole history.

That also applies to seeking analytical alpha, an initial edge in individual equities.

When things go to extremes, an opportunity for analytical alpha arises. Remember Damadoran’s Uber valuation.

If Damodaran thought it was an urban car service with strong local network effects, which yielded around $7 billion. If Bill Gurley thought it was a logistics business with local network effects, that would yield ariund $14 billion valuation and analytical alpha wouldn’t be that big. He thought it was a mobility services business with global network effects, which yielded an over $90 billion valuation.

That tells you where to look—you have to look at things having swung to extremes.

As a long-only investor, I only care about extremes on the downside. There are two types of this extreme:

• Extreme underappreciation of the current business

• Extreme underappreciation of the potential.

These are the two types of extremes we capitalize on, and each one requires different disciplines. Let’s start with the first one, i.e., the extreme underappreciation of the current business.

Let’s start with a recent example: UnitedHealth.

It’s the dominant health insurer in the US, having grown revenues by around 10% annually in the long term. Its 10-year median P/E is 22:

On June 17, 2022, it was trading at $452 per share and 24x earnings.

What would it do next, provided that you knew nothing would change in the fundamentals of the business? You couldn’t have a strong opinion.

Indeed, it went to trade on 28x earnings a month later, but down to 20x earnings a year later. Both directions were equally possible, and the stock was driven largely by noise rather than definitive signals.

Fast forward to August 2025, and it was trading at 10x earnings.

Where would it go, provided that you somehow knew business fundamentals would remain intact in the long-term? This time the answer would be easy: Up, up, up.

As you see, in these types of extremes, the key phrase is “provided that you knew fundamentals would be intact.”

There is no way to know this definitively, but you maximize your chances when you pick a business that has some durable competitive advantage. If the business has this, fluctuations in performance tend to be temporary, and the stock is more likely to revert to its long-term median over time.

The core skill here is understanding competition dynamics—i.e. what makes a business durable?

This is a skill you need to develop, but principally, you can apply the “extremes” model here as well. Strongest competitive positions are obvious, like Costco (insane scale), Amazon (scale + network effects), Apple (brand+ecosystem), UnitedHealth (vertical integration at scale), American Express (brand+network effects), etc.

When businesses like these with durable competitive positions swing to extremes, you have a chance to assume that fundamentals will likely stay intact and the stock will revert to the median.

The second type is when the potential is extremely underappreciated.

Here, the most recent example from my portfolio is AMD.

It announced Q4 2024 results in early February 2024 and delivered $25.8 billion in revenue. The market didn’t like it, the stock started to sell off, and hit $85 levels in April 2025 as the broader market also sold off due to tariffs:

At that point, this was the picture I was looking at:

• The stock was trading at 20x 2026 earnings and around 15x 2027 earnings.

• Annual server GPU spending was expected to reach $700 billion by 2030.

• AMD just had around 4% market share in server GPUs.

At that point, even if we assumed that AMD server GPU market share in 2030 would be just 5%, it would generate $35 billion in revenue just from server GPUs. In a more likely scenario, it could reach around 7-8% market share and generate $49-$56 billion just from server GPUs.

Assuming its $13.2 billion non-data center revenue in 2024 kept growing just 10% a year, it would reach almost $25 billion in 2030.

So, in the most conservative scenario, we were looking at a company that could triple its revenue in 5 years, trading at just 20x earnings. Even if we assumed stable margins and earnings multiple, that would be a 3x opportunity.

The market was underappreciating its potential without even considering the CPU demand boom thesis that we have today.

So, you didn’t need to be too visionary to foresee the CPU demand boom back then. It wasn’t a case, and it flew nowhere near my mind when I bought the stock in 2025. Its potential, based on the existing paradigms, was just extremely underappreciated.

So, these are the two cases of extreme dips we pursue:

• Extreme underappreciation based on the assumption of the continuity of the historical performance.

• Extreme underappreciation of the ability to capture future potential.

The critical analytical skill in the first case is competition, and it’s the market potential, growth, and assessment of capabilities in the second case.

Once you make these analytical decisions, the rest is behavioral. Whether you’ll be able to wait long enough, when you should exit, when you should double down, etc.

In this behavioral process, the first critical step is how to enter positions and decide on size.

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How To Enter Positions And Decide On Size?

Once you make an analytical decision at the extremes I mentioned above, you have an analytical assumption.

The keyword here is assumption.

The most frequent mistake I see is that people behave as if their assumptions are the base case and everything except that, especially the bad things, are deviations. This is why they generally take big initial positions, driven by the fear of missing an opportunity, and when their assumptions don’t play out, they lose big.

No, we have to be humble. We just have an assumption, and it may not play out. So, the most important thing is limiting the downside. How can we do it? We do it by playing as safely as possible.

If you initially start with a big position, you undermine the safety. This is why I almost always start with a small position. Around 4-5% in cases where a business’s ability to sustain performance is underappreciated, and with 1-2% when its potential is underappreciated.

From there on, we initially have three and eventually two options:

• Nothing is obvious. (This eventually evolves to one of the following)

• It’s obvious that assumptions aren’t playing out.

• Assumptions are obviously playing out.

When nothing is obvious, you keep holding until something is obvious, and make no decisions. When it’s obvious that assumptions were wrong, we exit fast. When they play out, we have two options:

• The market bumps it up to fair value. → We do nothing, let that small position run

• The market takes longer to recognize it → This is what we double down on

As you see, we are only interested in scaling the position when we get the confirmation of our assumptions from the business, but the market somehow fails to recognize value.

This is a very small subset of stocks, but they exist. And we operate here.

We don’t try to make money on everything; we are just interested in this subset. This allows us to make moves that are derisked by the signals given by the business itself.

An obvious example from my investments is SoFi.

I entered the stock in May 2023, at around $5 per share. At the time, the management had $0.50-$0.80 EPS guidance for 2026. Meaning it was valued at 6-10x 2026 earnings.

I thought this was too low, looking at the business fundamentals and its growth potential beyond 2026 and entered the stock.

From that time to September 2024, the business gave several signals of confirmation as it delivered only double beats of both analyst estimates and its own guidance.

The stock? It didn’t go anywhere:

This period allowed me to increase my bet while watching the solid execution and move towards the target step by step. The management has $0.60 EPS target for this year, and the market thinks it should be valued at 26x earnings despite increasing inflation and rate hike prospects.

The same thing happened with Amazon.

We had the cloud acceleration thesis since the beginning of 2024, and it actually played out as Amazon’s cloud revenues accelerated every quarter starting from Q1 2025, yet it dropped down below $200 twice anyway.

This was the perfect setup to keep betting on a scenario that actively got derisked:

In short, you should be aware of the fact that your presumed analytical alpha is just an assumption until it actually materializes, even though you maximize the chances by betting on the extreme cases.

If and when it materializes, the market recognizes it pretty fast in most cases, but in some small number of cases, it behaves pretty lazily. These are your chances to grow your bets with less risk, as you already receive some confirmation.

We are only interested in those cases.

The last step is determining when we capture that alpha for good, lock it in, and exit the position.

When And How To Exit Positions?

This is not about exiting an assumption that didn’t work. The right time to exit a position that didn’t work is right away, at the moment you understand it.

This is about an assumption that was validated, a thesis that actually worked.

We exit such positions in three cases:

• When there is a better opportunity.

• When the thesis starts cracking.

• When it becomes egregiously overvalued.

The first one is pretty intuitive.

As I said, validated assumptions are divided into two groups:

• Those that the market bumps up right away

• Those that are rerated with a lag

And we are only interested in doubling down on the second group, which is a small subset. Thus, as we always start with small positions, over time, we are left with many small positions that are fully valued by the market and each making up 1-2% of our portfolio. So, these positions lack the ability to considerably move the needle for us.

We exit those positions to bet on new assumptions and grow the positions where the thesis has been validated, but the price lags.

A recent example from the portfolio is InPost.

We bought it for around EUR 10 and exited after it appreciated by 50% after it got an acquisition offer. It was 5% position, already appreciated by 50%, the acquisition was on the table, and it could fall back to old prices if the acquisition talks collapsed.

At that point, it made much more sense to exit it with profit and allocate it to other positions for better optionality rather than a potential rise in the acquisition price because it wouldn’t double, and anything less than that wouldn’t be material for us, given the position size.

The second case is when a working investment thesis starts to crack.

A recent example of this from our portfolio is Hims & Hers.

I bought this at $15 and rode it to $60s and didn’t sell even when it hit $70. Because the thesis didn’t crack. Then I sold it at a lower price, at $50 per share, because the thesis started to crack as the business posted its first QoQ decline, and margin pressure was obvious:

What changed? It stopped selling GLP-1 to broad audiences under the FDA’s 503B exemption, which applies when there is a shortage. After the shortage was resolved and it stopped selling to the broader public, we saw a significant slowdown. And there emerged a bigger threat of a lawsuit from Novo Nordisk, as Hims was still selling it under the personalization exemption.

There was no way it would reaccelerate the core business enough to compensate for all the revenue loss from GLP-1s. We saw this as growth declined to 3% in Q1 2026, and the stock declined to $20 levels.

The third case is when a position gets egregiously overvalued.

What I mean by this is that more than even the most optimistic future assumptions are currently priced into the stock.

Let’s go through the Nebius example, as I often get asked when I could completely exit Nebius.

It is committed to deploying 5 GW of Nvidia systems by 2030. There will likely be some missteps, but let us assume 5 GW will really be deployed because we want to see the optimistic outcome. Based on the current GPU/hour rates, 5 GW can translate to $50 billion of revenues. Assuming a standard 4x sales multiple, Nebius can be valued at $200 billion.

Discounting it back to today at 10% gives us a $124 billion business. If it reaches beyond this valuation, it means the most optimistic projections are already priced in, and there is nothing to gain by holding the stock. That’s when I would be willing to completely sell out.

This means double the current price:

These are the cases we exit, and if we don’t see one of these, we stay in the position.

🏁 Last Words

The market is at an all-time high, and it’s hard to find opportunities. Yet, I see that many people are forcing themselves to find opportunities to bet on.

That generally doesn’t end up well.

The best opportunities are often obvious, and they become obvious when we are at extremes. This is how we outperform the market.

The recipe is simple:

• We believe only the edges we can bank on are analytical and behavioral.

• Analytical edge can be banked on when we are at extremes.

• We start small and double down only on a small subset of bets that got validated, but the stock price lags.

• We stay in the position unless there are way better opportunities, an investment thesis starts cracking, or it becomes egregiously overvalued.

It’s not sexy, but systematic implementation of this pays off. It has paid off for us so far, and I am confident that it’ll continue this way.

Hope this helps.

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Thanks for reading Capitalist-Letters!

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👋🏽👋🏽See you in the next issue!

Twitter and Substack are inundated with people posting about semiconductor stocks or AI-cloud stocks that can run further or about the next so-called bottlenecks..

We have also made a lot of money on these themes.

I was one of the first people who wrote about Nebius on Twitter and this platform, and my early shares have now made 11x. Another banger was AMD. We bought it earlier last year, and it’s now a 5-bagger for us.

However… The space has become too crowded recently, as all the people who missed those bangers since 2023 have flocked to the market over the last few months.

I am not saying this just for retail; it applies to many professional managers as well.

So, for most investors in the market, the current modus operandi isn’t finding businesses whose stocks are undervalued compared to their fundamentals, but trying to find stocks that may move higher due to the hype over their business or products.

Too many people are acting this way that it creates many opportunities in non-AI companies, even though they are already very well known. Some of those businesses are performing incredibly, but simply not enough money is flowing into their stock to bump up their prices to the levels they deserve.

DoorDash is one of these ignored businesses performing very well.

Take a look at this:

Its revenue is now almost 7x what it made in 2020, yet the stock has gone nowhere.

Of course, it was pretty overvalued when it made its IPO during the COVID bubble. However, it’s grown its way out of its overvaluation. If the market hadn’t been fixated on AI, it would have already re-rated DoorDash here and bumped up the price. This hasn’t happened. Market doesn’t care because it’s not AI.

This makes DoorDash an incredible opportunity for those who:

• Want to deploy capital outside of speculative AI names.

• Are seeking a foundational anchor for their portfolio.

• Don’t want to play momentum & demand game.

It’s simply an old school bet—high growth, giant moat, attractive price.

So, let’s cut the intro and dive deep into why I think DoorDash is a great opportunity now and what you can expect from it going forward.

What you’re going to read:

1. Understanding The Business

2. Competitive Analysis

3. Investment Thesis

4. Fundamental Analysis

5. Valuation

6. Conclusion

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🏭 Understanding the Business

After graduating from law school and before I took an analyst position in an investment firm, I started as a lawyer in the Bay Area.

Before settling into the competition department, I spent some time in the Venture Capital department and made many friends in the industry. One of those friends was working in a reputable firm that makes dozens of investments every year.

A topic we often discussed was how they picked their investments. He told me that their simple principle was “investing in solutions, not in products.”

They simply wanted the company to solve a critical problem that people having the problem would readily pay for, rather than making a product that requires you to make people desire it through marketing.

I asked how they understand whether something is a real problem. He said, “we love it when the founders themselves have the problem.”

This was simply the investing thesis of Silicon Valley after the Internet revolution.

Indeed, look at the great companies that emerged in the post-dotcom and pre-AI period, essentially from 2000 to 2022, you’ll see the same pattern pretty often:

• Uber: Founders had an unpleasant experience of trying to find a cab.

• AirBnB: Founders wanted to rent out their free couch to pay their rent.

• Dropbox: The founder was sick of his USB. He wanted remote access to his files.

All these companies grew quickly because the problems founders had were shared by millions of other people across the world. When they offered the solution, the world jumped on it.

DoorDash is one of those businesses inspired by a problem its founders had.

It was 2012, and co-founders Tony Xu, Evan Moore, Andy Fang, and Stanley Fang were still students at Stanford University, living on the campus. They noticed a pretty basic problem when they wanted to order food—none of their local favorites were delivering to the campus.

When it came to delivery, options were limited to the established giants that had their own delivery networks, like McDonald’s and Domino’s. Their local favorites couldn’t offer delivery because their volumes were often too low to operate profitably while paying for a deliveryman, car/motorcycle, and fuel.

At the time, they were taking a class in entrepreneurship where they had just learnt the concept of decoupling the customer value chain. It basically refers to breaking apart the traditional sequence of activities customers go through with an incumbent business, then taking one specific step and offering it as a value-added service.

Take Netflix as an example.

In traditional TV, value-creating activity for the audience is watching the show they want. Having to watch ads doesn’t create any value for them. Netflix saw this, broke the value chain, and offered a valuable part as a standalone service that customers want to pay for to get rid of the ads.

They reasoned that delivery wasn’t a value-creating activity for low-volume restaurants, but it was for customers, so it could be decoupled. A restaurant shouldn’t need to offer delivery by itself; delivery should be a different service, and customers would be willing to pay for it.

They took menus of their favorite Palo Alto restaurants, made a simple HTML website, and published it to test the idea. They didn’t have an online order process. You had to call the number on the website to place an order. The founders would go to the restaurant, buy it themselves, bring it to you, and take the payment.

They named it Palo Alto Delivery:

It was an instant hit.

They received their first order within 30-45 minutes after they published the website. Orders grew so fast that soon the founders couldn’t catch up and hired other students for delivery, creating the primitives of their current business model.

This early success prompted other local restaurants to join the system and increase their sales, which required more delivery guys and a better payment system. To meet this demand, they streamlined their onboarding to allow restaurants and third-party deliverers (it calls them dashers) to join DoorDash at will.

After these modifications, they re-designed their model to link all three parties, customers, restaurants, and deliverers in an interdependent way. It charges fees to both customers and restaurants per order, from which independent deliverers get paid, and DoorDash generates its top-line revenue.

This model essentially decoupled the delivery as a value-creating activity in and of itself and embedded it into a self-sustaining network. And this is exactly what DoorDash is—it’s a network of three interdependent parties:

You can basically read it as a centralized delivery network where sellers and end customers pay for delivery and platform maintenance. Founders saw this and instantly understood that they could leverage this model basically to deliver anything in any geography, not just to deliver food in the US.

So, as the platform grew, they leveraged its power to enter new verticals and geographies:

• 2019: Officially completed its expansion to all 50 US states.

• 2020: Launched grocery and local convenience delivery.

• 2021: Acquired the European delivery company Wolt and launched its ad business.

• 2024: Launched a commerce platform, allowing branded delivery service and apps.

• 2025: Acquired Deliveroo, a delivery network focused on the UK and Ireland.

Do you see what it did?

It used its core DoorDash platform to expand into other delivery verticals like groceries. It used its growing capital base to expand internationally by bolt-on acquisitions. It then used this expanded delivery platform to launch complementary businesses like commerce and ad platforms.

It’s essentially become an ecosystem of complementary businesses, feeding from a central platform that is a multi-sided network:

This is what DoorDash is and how you should see it.

If you draw the definition of what it does rather than its natural character, you’ll miss the strength of the business and endless opportunities waiting for it. It’s an ecosystem business, centered on a core multi-sided platform.

The importance of seeing the business this way cannot be overstated, as this is what gives DoorDash its immense competitive strength, which is one of the core elements making it an amazing investment opportunity.

🏰 Competitive Analysis

If you have been following this publication for a while, you know that competitive strength is at the core of our investment philosophy.

The reason is simple.

Investors make money when the intrinsic value of a business increases over time by more than what the market is pricing in today.

That increase in intrinsic value is driven by growth in earnings. The less competition-resistant the business is, the less likely it is to grow earnings by more than what market prices today, as competitors will come in and steal excess profits.

Competition here is used broadly. It includes actual competitors in the same product market, and alternatives that may emerge over time due to technological development.

Naturally, if you get the competition part right and are willing to wait patiently, you’ll almost certainly end up making money, provided that you don’t pay excessive prices for the initial acquisition of shares.

So, the competitive strength of the business is the first thing we look at.

As somebody who spent his early career as a competition lawyer, then focused on competitively strong businesses in his career as an analyst, and is in the process of taking his PhD in competition economics, I have probably evaluated the competitive dynamics of thousands of businesses and business models.

I can say that one model is basically undisputed—multi-sided platforms.

The reason is simple. Multi-sided platforms can house both direct and indirect network effects at the same time:

The mechanic is pretty simple.

For some products, the value customers get out of them increases with the number of people using the same product. This is the textbook definition of direct network effects. The classic example is the telephone. The value of it increased as the user count grew.

This already creates a very strong competitive position. Think about WhatsApp. People don’t switch away from it even though there are other free apps, because everybody is already on WhatsApp.

For some smaller group of products, called platforms, there is not just one but multiple different groups of users. In these models, growth in one user group increases the value for the other and drives growth of that group. This is called indirect network effects.

The classic example would be brick-and-mortar shopping malls. As the number of stores in the mall increases, it attracts more shoppers and vice versa. However, without shoppers, an increase in the number of stores doesn’t automatically drive further growth in the store count.

Most businesses don’t benefit from any type of network effects, and among those that have network effects, 99% has either one or the other. Having both is a pretty rare phenomenon.

If you have one of them, it can give you a very strong competitive position.

If the network has reached the tipping point, it becomes very hard to unseat it. What’s the tipping point? It’s the network size beyond which it’s more advantageous for every user to join that network rather than others.

Think about Facebook. The tipping point was when any potential user had more friends on Facebook than on any other comparable network. After that point, everybody effortlessly joins the network, growth jumps, and sustains until saturation:

As the network beyond the tipping point offers more objective value to any potential customer, it’s very hard to steal users from that network, thus very hard to compete with it and disrupt it.

Now, imagine a platform that has both direct and indirect network effects, both beyond the tipping point. It would be virtually impossible to disrupt it.

That’s DoorDash.

Its network has three sides—sellers(restaurants/local businesses), dashers, and customers.

As the sellers in the system grow, it attracts more end customers as they come with their customer base. Seller growth also propels further seller growth because other businesses don’t want to slide behind in competition and want to tap into that customer pool.

Customer and seller growth naturally drives network volume higher, which invites more dashers. The more dashers a platform attracts, the cheaper it becomes to deliver products, attracting more customers and sellers.

And this cycle of growth self-sustains, as all three networks here are beyond the tipping point since DoorDash is by far the biggest delivery platform in the world.

Every new potential customer will likely find more restaurants and better prices on DoorDash than competitors. For every prospective seller, there are more prospective customers on DoorDash than others. For every delivery guy, DoorDash offers more revenue opportunities than any other competitor.

Result? Every prospective customer, seller, and delivery guy is more likely to join DoorDash than the alternatives. This makes it almost competition-proof against other businesses.

On the technological disruption side, it’s equally strong. Delivery is a complex function that requires human-level coordination while picking up the package from the seller and dropping it off to customers home. There are thousands of sudden, impromptu interactions involved in the process,

AI and robots won’t be able to take on this complexity anytime soon. It’ll be decades before they can learn to even successfully navigate our streets that were designed for humans. Even when robots can fully replace human deliverers, DoorDash will be the best-positioned company to capitalize on it by deploying robot deliverers, as it already owns the distribution.

In short, DoorDash has one of the strongest competitive positions I’ve ever seen.

Even when a business benefits from a single network effect beyond the tipping point, it’s very hard to unseat it. DoorDash benefits several of them beyond the tipping point. It’s also resistant to disruption by AI, thanks to function complexity and its installed base.

Simply, it’s as close as any company can get to “undisruptable.”

As long as it has growth opportunities, this competitive strength will enable it to exploit it—and it has ample growth opportunities.

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📝 Investment Thesis

My DoorDash investment thesis relies on three pillars.

1️⃣ There is a huge runway for growth.

DoorDash is such an exceptional company that the degree of domination it has reached makes people think that it’s a mature business.

Indeed, this was the perception when I talked with friends about the investment opportunity in DoorDash. Those who never looked at it thought growth could be hard because it’s already everywhere.

They are right to think that way, as DoorDash controls 67% of the food delivery market in the US, per Consumer Edge:

Yet, it’s just a 13-year-old company that is still early in its growth story.

The global online food delivery industry is expected to reach ~$620 billion annual run-rate by 2030, while the quick commerce run rate is estimated to hit ~$380 billion in the same period, per Grand View Research.

Even if DoorDash can reach just 3-5% global penetration, which is plausible given its dominance in the $US, we are looking at a $30-$50 billion revenue opportunity, and this is excluding other revenues from the commerce platform and ad business.

It generated just $14.7 billion last year, and only 16% of it came from global markets.

Even if the real growth of these markets stops beyond 2030, DoorDash will still be able to grow fast by increasing its global penetration.

2️⃣ AI will drive significant margin expansion.

As I said above, DoorDash is still a very young network.

With network businesses, it’s endemic to see expanding margins since fixed costs are spread over a larger customer base as the network grows. Thus, when we value younger networks, we look at similar networks that are more mature and assume margins in maturity will be similar.

DoorDash currently has 6% profit margin, confirming the young network proposition.

When we look at more mature networks like Booking.com, we see that profit margins can go as high as 30% and the operating margin is consistently above 30% (ex-COVID):

Thus, a reasonable and conservative maturity net margin assumption for DoorDash would be between 25-30%.

However, these mature networks reached maturity when there was no AI. They achieved these margins while employing thousands of software engineers writing code by hand. The deployment cycle was months. Now, each engineer is probably at least 10x more productive, and deployment cycles are 10x shorter.

So, these platforms can probably be run by a fraction of the workforce they have today.

We are already seeing this as Meta announced it’ll lay off 10-13% of its workforce.

As a result, maturity margins will move higher. Valuation models will need to be updated to factor in perhaps +35% net margin rather than something between 25-30%.

The market currently doesn’t price this in, and models haven’t been adjusted to reflect higher margins in maturity, creating substantial optionality for marketplaces.

3️⃣ It’s inflation-proof.

Inflation has been a global problem since COVID, and it’s not going anywhere soon.

Most developed economies have taken inflation under control through interest rate hikes post-COVID, but it’s now ticking up across the globe due to several factors like reciprocal tariffs, the Iran War, and increasing energy costs driven by exploding power demand from AI buildout.

We are already seeing inflation tick up as headline inflation hit 3.8% in April and outpaced wage growth for the past three months:

I expect this to continue as the effects of the tariffs still haven’t fully kicked in, the conflict in Iran continues, and AI buildout keeps driving power demand.

In this environment, businesses that struggle to pass costs to customers will be hit while those with pricing power will be largely insulated, or even benefit from inflation.

DoorDash is one of the strongest companies in the latter group.

Its business model automatically passes costs to customers as it charges sellers a commission based on the basket total, and both % based platform fees and flat delivery fees to its customers.

Commission-based fees increase alongside inflation as the basket totals grow. Given the dominant position of its network, it enjoys giant pricing power, enabling it to hike flat fees above inflation.

Thus, inflation is often a tailwind for DoorDash rather than a headwind.

Even if high inflation leads to higher rates, rate hikes, and even recession, the shrink in order volume has proved to be temporary as delivery is a mega-trend.

In the 2010s, fewer people ate at home compared to the 2000s, and now even fewer people eat at home than in the 2010s. This won’t reverse, given that birth rates drop and family sizes shrink. These people often prefer ordering online rather than cooking for themselves.

We can easily see this by looking at the high inflation period in the aftermath of COVID-19. Even though volumes dropped a bit in 2022-2023, it quickly recovered, and companies like DoorDash have become even more profitable due to higher base prices.

In short, DoorDash is an exceptionally well-positioned business.

It still has a giant global market opportunity ahead, it can increase margins beyond what’s been standard for marketplaces due to AI, and it can turn inflationary pressures into incremental growth thanks to its massive pricing power.

I believe it will exploit all these opportunities going forward. Its capability to do so is proven by the exceptional execution since it has become public.

📊 Fundamental Analysis

➡️ Business Performance

I analyze hundreds of businesses every year.

When you look at the income statements, for some companies, you need to put in additional effort to understand what’s happened so far and where they are going, and for some others, it’s all crystal clear. You feel like you are just watching a masterful execution, similar to the way you watch a masterful movie.

DoorDash fits squarely in the latter category. Take a look at this:

It delivered 36.4% annual top-line growth since 2020 while achieving profitability. Most young growth companies experience a significant drop in growth while they transition to profitability, but DoorDash didn’t have it. It even accelerated. This further illustrates how exceptional a company we are looking at.

Headline numbers already look amazing, but if you look deeper, it gets even more impressive as you see the business has already validated one of the core pillars of my investment thesis.

Take a look at this:

As you see, its total orders grew by 31% annually since 2020. Gross order value (GOV) grew at 33% CAGR, closely following the order volume. Revenues, on the other hand, grew by over 36% annually in the same period, illustrating sheer pricing power.

We are looking at a business executing at an elite level and validating core pillars of the investment thesis at the same time. It rarely gets any better than this.

➡️ Financial Position

Two words are enough to describe its financial position—rock solid.

It’s impressive that DoorDash managed its balance sheet conservatively despite its insane growth, illustrating that its growth is almost solely driven by network effects and platform strength.

It currently has over $10 billion in equity against just $3.2 billion in debt, and its annual EBITDA can pay the debt in two years:

What draws attention here is the jump in its debt in 2025. This was driven by the $2.85 billion loan it received from JPMorgan Chase to finance its $3.9 billion Deliveroo acquisition.

If it weren’t for the Deliveroo acquisition, we would probably be looking at somewhere around $400-$500 million in debt with $1.5 billion in EBITDA, given that Deliveroo didn’t significantly contribute to DoorDash’s 2025 EBITDA, as it was making $16 million net profit at the time of acquisition.

So, its financial position is even stronger than it looks on the surface, which is already amazing. No red flags here.

➡️ Profitability & Capital Allocation

⏺️ Margins

Its margins tell the exact same story we laid out about DoorDash—a dominant platform business that has just transitioned from a startup to a young growth company:

Stable gross margins validate its competitive advantage, while rapid net margin expansion post-inflection indicates it has reached platform feasibility, where the cost to serve additional customers is way below the marginal revenue generated from them.

This is the perfect time to get into these businesses as they are still growing fast and the market doesn’t usually price them to the full extent, given that future growth and end margins are still uncertain.

The key is correctly evaluating the competitive strength of the business. If it really has durable unfair advantages, the uncertainty is way less material than the market thinks, making the discount an opportunity.

DoorDash has the characteristics that make its advantages durable.

⏺️ Return on Invested Capital (ROIC)

Its ROIC follows the young growth company trajectory as well. It hit the inflection point in 2025 and is currently standing at 8.6%.

This rapid expansion in a year signals that its ROIC will easily climb above 12%, the average for all American firms, and may continue to rise above 20% as more mature multi-sided platforms like Meta easily reach 25% ROIC. Uber is closer to DoorDash than Meta; it’s still growing fast, and its ROIC is already at 20%.

For a young company like DoorDash, the sales-to-capital ratio [revenue/(total debt+total equity-cash)] is more indicative of capital allocation performance.

As of the end of 2025, DoorDash’s sales-to-capital ratio stood at 2.1x, meaning it generated $2.1 of revenue for every $1 invested in the business. For Uber, it was at 1.7x.

Even if we assume 1.5x sales-to-capital and 30% operating margin with 25% tax rate, the normalized ROIC of DoorDash will be around 34% [ROIC = Sales-to-Capital×Operating Margin×(1−Tax Rate)] while it transitions from high-growth to stalwart status.

Summing up the fundamentals:

• DoorDash has performed incredibly well since it became public.

• Faster revenue growth than GMO validates the core assumptions.

• It has managed its balance sheet conservatively without any red flags.

• Margins profile describes a dominant platform beyond the topping point.

• Return on capital is hidden as it became profitable in 2024, but the normalized trajectory is beyond impressive.

DoorDash has one of the strongest sets of fundamentals I have ever seen.

As we already checked the competition and fundamentals, there remains just one question—is the valuation attractive?

Let’s see.

📈 Valuation

The more competitive advantages a business has, the easier the valuation gets; the less competitive it is, the harder the valuation.

This is because valuation is simply forecasting the total of future cash flows of the business and deciding what they are worth today. The stronger the competitive position of a business, the easier it is to forecast future earnings.

Thus, when you have a strong business with durable competitive advantages, valuation is just coming up with plausible & conservative estimates about the future, and determining the current value of that scenario.

Luckily, we have such a strong business with DoorDash.

So, what would be such a plausible and conservative scenario for DoorDash?

• I assume it’ll keep growing at around 20% CAGR over the next five years, and then it’ll gradually converge to 3% in the terminal period.

• Though I believe net margins of these platform businesses can reach 35% due to AI-related efficiencies, I’ll remain conservative, exclude that scenario, and assume 35% operating margin at maturity.

• I assume the end ROIC will be around 33%, as it implies a conservative 1.25x sales to capital ratio.

• Its cost of equity is around 13%, based on the current risk-free rate, equity risk premium, and DoorDash’s beta. It uses very little debt, so I assume WACC is around 13%, and it’ll converge to 7.5% in the terminal period as it’s the average of mature American companies.

• Fair value of outstanding options is $522 million based on their latest 10-K.

• Marginal tax rate will be around 25%.

Here is how this scenario plays out:

This scenario gives us $347 per share intrinsic value for DoorDash. This is just around the high end of the current analyst targets, though I believe this is a conservative estimate; it doesn’t factor in any AI-related efficiencies.

I can’t see any reason why DoorDash can’t be run with a fraction of its current workforce when you think about the level AI technologies will reach in 5-10 years from now.

The current price is deeply undervalued in my view.

🏁 Conclusion

DoorDash is one of those rare platform businesses that benefit from both direct and indirect network effects. It’s very hard to compete or disrupt these businesses.

DoorDash has a unique position among all these platform businesses as it’s one of the youngest ones. The market normally optimistically prices these businesses, but it’s currently ignoring DoorDash, as all the money is flowing into AI infrastructure.

It checks all the boxes:

• Giant competitive advantage

• Ample growth opportunities

• Track record of execution

• Undervalued stock price

Normally, when the first three exist, the market optimistically prices the stock, but it’s currently ignored as all the money is flowing into AI.

That won’t last forever. Eventually, everything in AI will become absurdly priced, and investors will rotate into other opportunities. When they do, DoorDash will shine like a jewel, and those who seize the opportunity here will be handsomely rewarded.

Long DoorDash.

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👋🏽👋🏽See you in the next issue!

• Our AMD position that we entered in early 2025 has become a four-bagger.

• We turned out to be right on Oscar as it delivered a monster beat. Stock hit $20.

• Fluence Energy, which we picked last October, jumped by 100% over the last week.

Thus, I have received many kind DMs over the past week. I tried to respond to everybody, and I want to take this as an opportunity to once again thank everybody for their kind words. Thank you.

Among all the wins above, the Fluence thesis was possibly the most divergent alpha, as nobody was watching it when I published the thesis in October.

Most people think the stock moved up violently because the hyperscaler deals it announced were a surprise. It wasn’t. It’s always been the thesis.

When I looked at it in October, the case was obvious:

• Almost all AI data centers need batteries as the cost of intermittency is high.

• Fluence was the best-positioned one as it was a JV between AES and Siemens.

• Fluence was the first mover in reshoring, with 100% American manufacturing supply chain.

As a result of being a JV by AES and Siemens, Fluence had already inherited most, if not all, hyperscalers in its book of business.

In the thesis I published in October, I wrote this:

So, it already had relations with hyperscalers, and its 100% American manufacturing supply chain made it even more attractive, thanks to tariffs on Chinese products. Thus, it was only a matter of time before it announced a new hyperscaler deal.

This was the core thesis, not a surprise, unlike what many people take from the aggressive re-rating.

After the stock moved, many people tried to chase it. You don’t need to.

Power is currently the biggest bottleneck for building data centers and scaling AI. There are many opportunities across power generation and distribution supply chains. Demand for power distribution equipment is especially tight as data center demand is growing way faster than the manufacturing capacity for these products.

Today, we’ll dive into one of these companies that is riding the exploding demand for power distribution equipment, and it’s still under the radar. Literally nobody talks about it.

Tailwinds are already hitting the wheel. Revenue jumped by 48% over the last twelve months, thanks to five data center contracts it received in that period:

In January, it received a data center contract half as big as its total revenues in 2025. Yet, this is just the beginning as the data center buildout in its market is still in very early innings, so it’ll likely receive dozens of these contracts over the next decade.

What’s even better is that this optionality hasn’t been priced into the stock as it’s still trading near 17x earnings against the industry average of 30x.

This is one of the best risk/reward opportunities I have seen in the power equipment industry for a long time, as the whole industry has been aggressively repriced due to the data center buildout.

So, let’s cut the introduction and dive deep into this hidden gem.

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🏭 Understanding the Business

Power demand from data centers will triple over the next decade, increasing from 500 TWh in 2025 to over 1,500 TWh in 2034.

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Almost all our positions are appreciated, some have gone vertical, and our TTM performance climbed above 65%.

If you go back to the environment in early April, this would look unlikely. All-time high markets, conflict in the Middle-East, and increasing energy prices, declining hopes for rate cuts, etc.

It would be total insanity for any sane person to expect strong performance in the market under these conditions. I remember, at the heights of the Iran War, just as when valuations in the market started becoming attractive, many people exited the market, thinking that the risk was elevated.

Ironically, that was the time the market was most de-risked since April 2025. Many high-quality businesses were trading at attractive prices, and decisions were driven by extreme fear, exactly the conditions you would love to see to succeed in the market.

I said keep holding the quality businesses and even buy if you already have a big enough cash cushion. After all, newspaper headlines eventually wane in importance against the fundamentals.

The market once again humbled all those people who think they can better position themselves by looking at the headlines and forecasting the futures than by looking at fundamentals.

The market is up by almost 6% since the war started:

As the market was dipping in this period, we insisted on keeping our positions. We sold nothing, as we believe all our positions were very strong fundamentally. We even bought a new position.

Result? The past two weeks couldn’t have been better for us.

Our portfolio was up by 61% TTM in late April; now it has climbed over 65%.

Almost all of our positions posted positive returns in this two-week period, and a few of them literally went vertical.

What’s even better for me is that we haven’t derived this performance through a heavy exposure to one single theme like AI.

For instance, we own AMD, and we bought it in early 2025 when it was hated by everybody. That position is now almost 4x for us.

But that’s a 6% position for us. We also generated heavy alpha from financials last year and healthcare this year, alongside AI-driven sectors like semiconductors, cloud, etc.

That sectoral diversification is one of the core strengths of our portfolio.

However, it’s less of a deliberate pursuit and more of a by-product of our investing philosophy. We believe inefficiencies occur when people get concentrated too much on a sector, theme, or a specific name, completely ignoring others.

We are willing to look at those ignored places and buy inefficiencies there.

This was exactly the case when we bought AMD. Everybody was focused on Nvidia, and they thought AMD was trash. Same for Nebius. When we bought it, everybody was focused on Coreweave, and Nebius was there trading at $20 with a $5 billion market cap and almost $1 billion ARR guidance.

We now see this case again, and we see it more emphatically on a sectoral basis:

I recommend you to completely ignore the benevolent picture provided by P/Es relative to S&P 500, as S&P 500 itself as the current market P/E is between the 87th and 95th percentile. When you look at the absolute valuations, you see where you may find opportunities going forward. Even then, it’ll be really hard because no sector is undervalued relative to their 10-year and 30-year historical valuations.

Under these conditions, it’s imperative to look beyond what’s obvious and seek opportunities in overlooked sectors and industries to limit the downside risk while still retaining optionality.

This is what made us succeed so far, and we’ll keep adhering to it.

Today’s transactions will reflect this strategy once again. I’ll make four transactions:

• Trim two positions

• Open two new positions

Together, these transactions will broaden our optionality, reduce the concentration risk, and position the portfolio for further alpha generation going forward.

Let’s get started.

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Let’s start with the trims as always.

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What followed this was perhaps even more striking:

He ended up warning investors against succumbing to these behaviors, as it always, at some point, ends up in disappointment and loss of their hard-earned money.

What he warned against is exactly what’s happening in the markets today.

People are chasing small-cap stocks trading at 200-300x forward earnings under the name of AI bottlenecks, with the assumption that a future evolution of the technology will create demand dynamics that will justify those prices.

Sounds familiar? If not, I recommend you read some of the investment theses about the new internet companies of the dot-com era.

I am not saying bottlenecks don’t exist; they do. But this doesn’t mean they’ll evolve exactly as we see today, and it definitely doesn’t mean paying 100x sales (yes, sales) for a stock is sensible. It’s not, and I guarantee anybody that they’ll end up losing money if they consistently pursue this.

Only group that makes money out of this feverish behavior, as Warren Buffett says, is the promoters of this behavior, i.e., the promoters of these stocks.

They take positions in small-caps before, then post about it in coordination, creating the hype. Some people naively follow them, believing in the future potential of the stocks, while others follow the greater-fool theory, thinking that they’ll be able to ride the hype and sell way higher if they are early enough.

And nobody is immune to this kind of behavior, even the best of the game.

Druckenmiller shorted $200 million in internet stocks in 1999, expecting the bubble to burst. The market kept rising, he got FOMO, and covered his shorts with a $600 million loss. He then went long, buying $6 billion of tech stocks. The bubble burst, and he lost $3 billion on his overall tech exposure.

When asked what he learnt, he said—“I didn’t learn anything. I already knew that I wasn’t supposed to do that. I was just an emotional basket case and couldn’t help myself.”

Nobody is immune.

In an environment where getting carried away is so easy, we have to consistently remind ourselves that almost nobody made a fortune trading dotcom stocks in the 2000s, only the shameless pumpers.

Look at all the great investors, Buffett, Munger, Lynch, etc. You can’t find a single one who made money playing the speculation game we are seeing in the markets today.

For long-term wealth creation, the recipe is simple—buy quality and never overpay.

But.. Are there still high-quality businesses with solid growth prospects and attractive valuations left in the current market environment?

The answer is an emphatic “yes.”

Fortunately, people’s clustering in the sexy industries and hype zones leaves the boring corners of the market ignored, creating opportunities for those willing to look.

I have just found such an opportunity:

• Revenues grew by 32% annually since 2023.

• Net income has almost doubled since 2024.

• Return on equity expanded from 14% in 2024 to 18% now.

What’s even better is that the stock is trading at just 10x this year’s earnings, and the management is aggressively buying back shares.

It’s a rare, mispriced opportunity in this market. I have been following the company for a while and recently decided to pull the trigger after their latest earnings print came even better than I expected.

It will be a multi-bagger over the next few years, even if it can hit conservative growth targets.

So, let’s cut the introduction here and dive deeper into this gem.

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🏭 Understanding The Business

The more niche you get in the market, the more inefficiency you’ll find. This has always been a well-known fact among investors.

If you are managing a small sum, go niche, overlooked corners of the market. You’ll see more inefficiency because the companies in these spaces generally lack broad analyst coverage and are too small for institutions to be interested.

The same principle applies in business as well.

The more niche you go, the more supply gaps you’ll find. Given that these gaps will be relatively small, you can create a defendable business if the product is sticky, as it’ll keep the contestable portion of the market small enough to make the entry unfeasible for potential competitors.

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Portfolio is now up 62% over the last twelve months against 30% of the S&P 500!

It’s been a wild ride! — This is probably what best explains how I feel about the last few months.

It’s truly been a wild ride, and I am extremely happy and proud of where our portfolio has reached today after this wild ride. I’ll give you the update and talk about the strategies and investment philosophy, but first, let me start by extending my thanks to the great community we have here.

If you are a human with a conscience, writing about finance and stocks is very hard because you know that people make financial decisions based on what you write. The only way to have a clear conscience is to fully align yourself with what you write.

When something you write wins, you win; when it loses, you lose as well.

This is what I have always practiced here. If you have been in the community for a while, you have probably heard me say, “I can’t say buy because I am not holding it.” And not getting a concrete answer might have disappointed you at that point, but that’s the only way to have a clear conscience on my end.

As a result, sincerity has emerged as the default mode of operation in this community, and we have developed a strong sense of friendship. We have exchanged ideas, poked holes in our theses, and restored sanity through discussions when things got volatile.

So, thank you.

When it comes to our performance, I’ll say again what I have said a few times in the past—forget the performance, what’s important is how well your positioning played out.

Indeed, this performance could be 45% today instead of 62%, but this wouldn’t change anything in its impressiveness because what’s important was being able to position to generate this level of return.

If you remember, at the end of last year, I said two things:

• The market is overvalued.

• 2025 was hard, and 2026 will be harder because there is no single asset class that is clearly positioned to go higher.

Yet, despite all this, I also said “stay in the market.” I recommended exiting fundamentally weak or overextended positions, building a nice cash cushion, and leaving the rest in the market and allocating to opportunities as they come.

Then the war happened, and we still didn’t sell a single share.

Because our position was this:

• All our holdings were very strong fundamentally.

• In the worst-case scenario, they would go undervalued, which is never a reason to sell.

In the end, optimism won once again, and parties to the war entered a de-escalation path, so the market has come back. Then, AI optimism peaked as Anthropic revenues tripled in Q1 and compute demand skyrocketed again, driving further optimism.

Result? Most of our positions are now at or near all-time highs.

What’s even more valuable is that we have achieved this without any leverage or mass buying speculative stocks.

Fundamentals of all our positions today justify either the current valuations or way more than the current valuations, but not less. Having said this, I have to talk a bit about a dangerous trend I see on Substack and X (Twitter), under the name of “bottleneck investing.”

This is pure speculation, given a fancy name to make it look more reasonable. Bottlenecks, of course, exist, and it’s often productive to see the bottlenecks ahead and invest in them. If the bottleneck proves legit, companies operating there will likely have strong pricing power, and this will be enough to boost earnings by a lot.

Many positions in our portfolio are there because we believe they address certain bottlenecks as well. There is nothing wrong with this.

But… This doesn’t mean every price is justified or that the stock should be priced as if the bottleneck will persist forever. When this happens, the result is almost always a disaster.

Here is an example:

When you look at Corning stock, you see the last time a price movement like this happened was back in 2000. We know how it ended. This won’t be any different.

In some small-cap stocks, the situation is even more absurd.

You should be careful. If the fundamentals of those stocks were able to take them to highs, those who own them wouldn’t need to shill them every day. Those positions will be dumped on some people at some point.

We have never engaged in such speculative behaviors, and will never do.

Our philosophy is simple. We run a barbell portfolio where:

• We buy companies with durable competitive advantages, i.e., foundational stocks.

• We combine foundationals with growth positions that have strong balance sheets.

• We don’t sell unless fundamentals deteriorate or the price goes off the roof.

This has worked incredibly well for us so far:

Our portfolio is now up by 62% against 30% of S&P 500!

The following transactions took place in our portfolio in November:

• Exited 1 position.

• Opened 1 new position.

In the previous updates, I had provided my outlook for each company in the portfolio.

In this update, I’ll also provide an outlook for our new position and share my overall portfolio commentary and strategy going forward.

Let’s dive in!

🚨Our portfolio is proprietary to the members supporting the publication🚨

Members get portfolio updates every month!

Here is a 25% discount to celebrate new readers!

Valid only until Monday!

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📊Here Is Our Full Portfolio!

As of today, we have 18 holdings in our portfolio.

8 of these positions can be considered foundational.

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We are now up 60% in the last twelve months, against just 33% of the S&P 500.

How have we achieved this? Well, looking back, I think there are three factors:

• We let the winners run.

• We timely opened new positions trading at deeply undervalued prices.

• We waited patiently for our existing undervalued positions to play out.

Before the year started, we had closed three groups of positions:

• Those that went too high above their intrinsic value.

• Those whose fundamentals were deteriorating.

• Those that were too small to make a difference.

We rolled a portion of the proceeds from these exits over to new undervalued positions that could create alpha as they were starting from a lower base, and kept the rest to create a bigger cash pile as the market was obviously overvalued.

But we kept the exceptional companies we owned, even if they appreciated as their fundamentals were improving fast, and we didn’t see a safe selling price. In these positions, we would rather ride the downside volatility than give away the optionality.

Then, within this year, we have only opened three new positions. One of them is up by 30%, and the other two are largely flat. The good thing with other positions is that they tested their lows a few times since we bought them, and bounced back. They have now broken the downtrend and are ready to go up if favorable market conditions continue.

Another driver of alpha was the recovery in one of our most undervalued and biggest positions. We heavily increased our allocation in this name last year after it got heavily undervalued and it finally started to play out, creating alpha while the market has been largely flat YTD.

We had finished all these positional arrangements before the Iran War started. So, at the outset of the war, we didn’t have any “egregiously overvalued” position that could stress us during the downturn. Thus, we managed to do exactly “nothing” while everybody was panicking.

For me, this is the gold standard of positioning.

If you can afford doing nothing during downturns and it looks like the only logical thing is buying more if you are to do something, then the positioning was right.

That’s exactly how it was during the downturn. We didn’t have any position to stress us, and we could only consider buying more if the prices came down to our “no-brainer” zones. In the end, most positions didn’t come down enough for us to buy, given our ~20% cash position, and we ended up doing nothing.

Now, the market has recovered and recorded a new all-time high, and valuations have swung from “somewhat attractive” to “unattractive” again.

Indeed, the market is now trading at around 21 times earnings, only 200bps below where it was in late 2025:

And the credit spread is still below 3%, meaning the money is still abundant, and optimism dominates the capital allocation decisions.

This is not an environment where you find one fat pitch after another.

In this kind of environment, the best opportunities come when the qualitative conditions that led to the discounting of particular stocks start changing, and the discount looks increasingly unjustified. The market is sometimes slow to recognize these changes and to bump up those stocks to their full expected value.

I think we have one such opportunity, and it’ll be an obvious one in hindsight.

Yet I still want to keep my guard up, as the market's valuation makes me nervous, and I don’t want to reduce my cash position. This is why I will fund that position by closing a position that is probably the lowest conviction for me in the current portfolio set-up. It’s in the money, but I think the upside scenario is getting weaker.

So today, I’ll be making two transactions:

• Close one position.

• Open one new position.

This way, we’ll be able to get exposure to an additional optionality while eliminating a potential weak link in the portfolio in terms of market power.

You’ll also find the link to the portfolio spreadsheet at the end of the write-up. I’ll be updating it after I execute the trades.

Let’s get started.

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Here are the exact trades I am making:

Let’s start with the exit, as always.

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Founder mode happens when an entrepreneur acts like he is still the business, because this is how it is when companies are young. There is nothing as “business” on the first day; it’s a founder and an idea that would …

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“As fast as we put the capacity in, it's being consumed.” — Andy Jassy, Amazon CEO, said this in Amazon’s Q1 earnings call last year.

Almost a year later, after he said the words above, we read in his annual letter earlier this week that:

• Tarinium 2 capacity was sold out.

• Trainium 3 is almost fully subscribed.

• A part of Trainium 4 is already reserved.

Not ju…

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Steve Jobs once said, “You can't connect the dots looking forward; you can only connect them looking backwards.”

This doesn’t mean you can’t have any reasonable prediction about the future, but it means that you can only track the flow going backwards. Then, you can build a reasonable narrative of the future based on …

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In all times, it’s only second to inventions like writing, the wheel, or discoveries like fire that made humans endure and thrive over the course of centuries. If you leave these aside, nothing comes close to the internet's impact.

What the internet did differently from all other groundbre…

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Portfolio is now up 21% in the last twelve months against 11% of the S&P 500!

“It’s not going to be an easy year.” — This was how I started the last portfolio update.

I started it this way because it was the theme that I had been emphasizing in several updates before it, and in all the trade updates I had posted before.

In February, we started to see the early weaknesses, and this month the downtrend accelerated as the Iran War weighed on the sentiment. I 100% believe that it would be something else if it weren’t this war, and weak sentiment would find a way to manifest itself. This is because it stemmed from an undeniable fact—the market was expensive.

Because of the elevated market, we stopped allocating fresh capital, did very little buying, and funded almost all the buys by exiting or trimming some other positions.

In short:

• We thought the market was expensive.

• We wanted it to come down to deploy capital.

• We thought it would come down sooner or later and increase our cash position.

This is exactly what we are having today—the market is going down.

This wasn’t market timing, as we don’t get out of the market to get in at some other time. It’s just plain positioning based on where we feel we are in the market cycle.

As Howard Marks says, it’s very hard to tell where we are unless we are close to extremes. If we turn back to late 2025, we could see that we were near the upper end:

Just before the new year, the market was trading at around 23.5x forward earnings, a nearly 50% premium to the 40-year average of 16.

It’s impossible to say when the market will peak and start to decline. However, you could easily say we would likely go down in the medium-term, as whenever the market passed above 20x forward earnings, a correction followed in the medium-term. You could position accordingly by increasing cash position and cutting exposure.

This is exactly what we did, so I am very happy that the market is coming down.

Yet, I see people are feeling the exact opposite. Most people are panicking, feel disappointed, and discouraged from further participating in the market. They started questioning themselves, their positions, and their knowledge.

This is the ultimate worst attitude you can have.

Let me tell you this—even the best investors go down with the market.

One of the biggest dangers I currently see is that people are fabricating portfolios on Substack and Twitter, and those portfolios always go up, somehow.

Don’t fall into this trap.

Some of them are outright lies, and this is very dangerous. I see people posting updates monthly, no granular transaction updates, and somehow they did some transactions within the month, they worked well, and they went up in a down market.

Obvious question—why aren’t you getting a loan and betting it all on your always-up strategy instead of posting your alpha on Twitter or Substack and making it known?

Some others, macro and thematic funds, are creating imaginary indices and baskets, trading this and that, cutting this and doubling down on that, and it all works out.

Well, everybody can become a billionaire with paper trading. Where is the money?

The same question persists—why aren’t you betting it all instead of giving away your alpha?

Because they aren’t real and are not honest. Best investors, best portfolios also go down, and they almost always go down with the market.

The quality of a stock is independent of the stock price. The quality can be undeniable, and it may still go down. If you hold it, you go down as well. Yet, that’s still the best thing you can do. That shouldn’t bother you at all.

Amazon’s quality is undeniable. It’s down ytd. If you are holding it, you are down. And it’s fine. We are down by 13% YTD, and it’s fine. We don’t trade; we want to own the high-quality businesses forever. We manage risk not by trading in and out of them but by adjusting our posture between defensive and aggressive, and by position sizing.

You’ll never make it unless you make your peace with a down market.

Take a look at this, I am obsessed with this picture lately:

As of December 31 last year, Buffett was up 44x on his American Express position.

Let’s take a closer look at this, shall we?

Buffett started building his current American Express position in 1990-1991. At the time, the stock traded between $5-$10 per share, adjusted for the splits. Given that his position was 44x bagger as of December 31, his average split-adjusted price is $8.40, meaning he bought some shares at higher prices, possibly above $10.

In June 2007, the stock was trading at a split-adjusted price of $65. His early shares were now at least a 6x-7x bagger for him, potentially higher. What happened then?

It collapsed by 85%. Not 10, 20, 30.. It’s freaking 85%:

It was almost 20 years after he started building the position, and some of his early shares were underwater. What did he do? He didn’t sell a SINGLE share.

And this was his second biggest position going into 2007, only Coca-Cola was bigger than American Express in his portfolio. Imagine what this did to his portfolio?

The best investors go down, and they are exceptionally good at detaching themselves from the stock price. What’s important is buying and holding exceptional businesses at attractive valuations; the market price is and should be irrelevant to you.

He is not the only one. Look at Bill Ackman:

He is probably down by over 20% YTD. What does this mean? Does this mean he is useless? No.

Like him or not, Ackman is a good investor with a long-term track record of delivering above-average returns.

He owns a lot of Uber, Amazon, Meta, and Brookfield. All these stocks are down by 10-20% YTD, so his fund is down by a similar amount. What message should he get from this? He should no longer hold these? It was a mistake to pick them?

If these were the type of messages Buffett got from a stock price, he would never be up by 43x on his American Express position.

• Good investors pick good businesses.

• Good stocks can still go down when people sell for who knows what reason.

• Thus, a good investor goes down.

What then happens is that when the sentiment changes, good holdings go up way more than the broader market, thanks to their business development. This is what certifies a good investor, and it takes a long time for this cycle to complete.

In short, don’t get disappointed in the market or in yourself, and don’t be pushed to follow those who seemingly always go up. It’s a scam, and I guarantee you it’s the worst thing you can do for your portfolio.

What you should do is simple:

• Own good business.

• Build a cash position when the market cycle is near highs.

• When the market starts going down, be chill. Go down with your good businesses.

• When prices are right, buy more of the good businesses and increase your stake.

When the sentiment changes and the market recovers, you’ll be way better off.

The hallmark of a good investor is being able to hold onto their quality businesses without getting their conviction shaken and buy more when the time is right.

So, don’t be disappointed, and use this as an opportunity to do three things:

• Test your conviction.

• Buy more of the businesses you like.

• Unfollow those who are UNABLE to go down as they are 100% scammers & liars.

If you are holding good businesses bought at attractive prices, I guarantee you it’ll work out very well over time. This is what we have always done here and keep doing regardless of what the market does.

💥Our portfolio is now up 21% in the last twelve months against 11% of the S&P 500!

In the previous updates, I provided my outlook for each company in the portfolio. In this update, I’ll also provide an overall commentary about what I expect from the portfolio and the market going forward.

I’ll also talk about the stock that I’ll be giving a priority to buy and why.

Let’s dive in!

🚨Our portfolio is proprietary to the members supporting the publication🚨

Members get portfolio updates every month.

Here is a 25% discount to celebrate our new readers!

Valid only until tomorrow!

Get 20% off for 1 year

📊Here Is Our Full Portfolio!

As of today, we have 18 holdings in our portfolio.

8 of these positions can be considered foundational.

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Buffett made 10x his money on his Apple position that he opened in 2016. When you say it this way, it sounds natural, but it’s not, as it was already the biggest company in the world when he bought it.

This is probably the biggest alpha ever created in a mega-cap by any investor.

And it’s not a…

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I often think about this question, especially when the times get hard. Of course, one can come up with many answers like:

• Deeper knowledge.

• Better research.

• Or even luck.

I don’t think it’s any of these.

How, you may ask, “how come deeper knowledge isn’t a factor?”

I have always said …

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Take Mercadolibre as an example. There is a reason it’s called “the Amazon of Latin America.” It took the model and implemented it in an underpenetrated market.

There are many others like MercadoLibre because this is a very fruitful soil for entrepreneurship. Look at what’s working in other markets, and bring it to your own.

These companies tend to be very attractive investment opportunities, as the business model is already derisked. When this is combined with low penetration in their respective market, they can easily grow at an above-average rate, at least for a decade.

The downside of this is that it tends to attract a lot of competition.

As the model is proven and a blueprint already exists, it’s easy for others to follow once somebody starts it.

However… In some cases, the business model and industry allow you to create a durable competitive advantage, like in Mercadolibre’s case. In those cases, the business is well-positioned to exploit the underpenetrated market without getting decimated by the competition, and it can become a giant.

This is one of those opportunities.

This company takes a proven business model and implements it in a deeply unpenetrated market.

Result? Booming business. Take a look at this:

• Revenue has quadrupled in the last 5 years.

• Operating cash flow has almost quintupled since 2020.

• EBITDA margin is expanding despite the hyper-growth phase.

What’s even better is that it’s trading only around 12x forward EV/EBITDA despite the fact that it’s still a very small ~$3 billion company with decades of runway ahead.

Plus, it has one of the most promising emerging moats I currently see in the market.

So, let’s cut the introduction and dive deeper into this gem.

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🏭 Understanding the Business

Private equity insiders are one of the best-positioned people to become successful entrepreneurs. They observe many portfolio companies and investment opportunities, thus they have a high chance to spot winning models early.

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The legendary CEO of General Electric, Jack Welch, puts this eloquently:

This principle directly applies to investing as it’s essentially a game.

It’s a game that we play to make money. The problem is that there ar…

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Portfolio is now up 27% in the last twelve months against 16% of the S&P 500!

“It’s not going to be an easy year.”

This was the theme I emphasized in the last several portfolio updates and almost all my trade updates since September.

One of the strengths of our community is that it goes beyond the writer-reader relationship. We are always in very close contact through our Discord community, and I feel like we have come to see ourselves as a group of friends.

We have done very good trades together, made money, and also naturally had some losers. All these have resulted in a strong sense of friendship in the community.

This environment enabled us to be very straightforward and act with a sense of responsibility.

This is why I have been very clear for the last few months that:

• 2025 was not an easy year, as 75% of large-cap managers underperformed.

• We outperformed because we were exceptional in stock picking and also lucky.

• 2026 will be an even harder year as everything has peaked, including uncertainty.

Toward the end of 2025, the picture was this: Equities, metals, and commodities were stretched, and economic-geopolitical directions were uncertain.

This is why I said a downward move in 2026 was more likely than an upward move.

This is what history taught us. Whenever the forward P/E of S&P goes above 22x, it drastically comes down at some point over the next two years:

To be prepared, I laid out a three-pillared strategy:

• Cut risk assets that do not have much legroom for further appreciation.

• Diversify away from the US and into the emerging markets.

• Keep an eye on opportunistic purchases in the US market.

This is why we began growing our cash position last October and went from 10% cash position to almost 20%.

We started to see these predictions play out. Forward P/E has come down below 22x as investors rotated out of the more expensive tech stocks with a higher weight in the index to more defensive sectors.

This is why many growth investors saw their portfolio down between 10-20% while the index stayed stable near its all-time high.

Though we prepared for this by exiting the riskiest assets in our portfolio, we weren’t fully immune, as we always prefer to stay invested at all times. As a result, our portfolio was down by 7% YTD, which is still pretty solid given that the Nasdaq is down by 4% and many growth portfolios are down by +10%.

Another piece of good news is that our drawdown is mainly due to a pullback in two of our biggest and permanent positions—SoFi and Amazon.

We see these two as permanent positions, so we ride ups and downs in the positions, not trade them, and consider pullbacks as buying opportunities, so our YTD drawdown doesn’t bother me at all. Quite the opposite, it excites me as betting on these stocks at the current levels will be the drivers of the alpha in the future.

I want to remind everybody that this is how you should feel about the downturns.

I have been trying to explain to people who are coveting my returns for the last three years that the seeds of these returns were planted at times nobody wanted to invest in the markets.

When nobody wanted SoFi back in 2023, I was buying. When nobody wanted Nebius last April, I tripled down at around $20 per share.

Yet, I still see some people trying to position themselves according to what may come next in the markets. Please don’t.

Peter Lynch puts it best:

Investing in stocks is simply owning pieces of the business. Can you imagine being a sole owner of a business and trying to sell when you think the market will go down and buy again when you think it’ll go up? Sounds insane, right? Doing the same in stocks is equally insane; they are basically the same things.

If you are holding exceptional businesses bought at attractive prices, you have nothing to be afraid of. You should stay in the position, be unemotional, and do nothing.

Yes, you’ll go down with the market, but this is part of the game. If the companies you are holding are exceptional, they’ll keep increasing their intrinsic value even in down markets, and the stock price will rise back stronger when good times come again.

And even beyond staying in position, ideally, you should be buying at those times.

This is why we grew our cash position. Not to sit on it, but to buy more of the exceptional businesses we own in case of a downturn.

Why should I be worried? There are signals that I may get these opportunities, as I already positioned myself accordingly as I explained above, and trying to prepare you for months. I should be excited. You should be excited.

Most people in markets are not too stupid to see quality after a while, but 99% still don’t have the emotional strength to buy when they are cheap or hold through downturns. We capitalize on their weakness. When they break and sell us bargains, we buy them, and we are happy. It’s not more complicated than this.

This is how we have always operated, and we’ll always operate this way.

I think this sane and measured strategy will deliver for us now and in the future as it’s delivered so far:

Our portfolio is now up 27% in the last twelve months against 16% of the S&P 500!

The following transactions took place in our portfolio in February:

• Exited 1 position.

• Increased 2 positions.

• Opened 1 new position.

In the previous updates, I provided my outlook for each company in the portfolio. In this update, I’ll also provide an outlook for our new position and provide a general commentary about the portfolio and strategy going forward.

Let’s dive in!

🚨Our portfolio is proprietary to the members supporting the publication🚨

Members get portfolio updates every month.

Here is a 25% discount to celebrate our new readers!

Valid only until tomorrow!

Get 25% off for 1 year

📊Here Is Our Full Portfolio!

As of today, we have 18 holdings in our portfolio.

8 of these positions can be considered foundational.

Read more