New Investment Idea (2025)
Today I’m sharing a new investment idea that has rapidly become a core holding in my portfolio. While I typically avoid allocating significant weight to new positions initially, I believe there are good reasons to make an exception.
The company I’m introducing today fulfills all criteria to become part of my permanent portfolio. These investments are generally characterized by a management team I trust to safeguard my family's purchasing power, a competitive advantage that strengthens over time, an attractive return on invested capital, and substantial reinvestment potential.
Here are further details regarding this company:
Provides mission-critical solutions essential to clients' operational efficiency, representing a negligible portion of total costs. Clients fund these solutions through opex, not capex. These purchases are non-deferrable.
Operates an asset-light model with minimal maintenance capital expenditure and working capital requirements, enabling the reinvestment of all free cash flow into acquisitions within a highly fragmented target market (less than 3% market share).
Achieves a return on invested capital, including goodwill, and an incremental return on reinvested capital exceeding 20%, reinvesting over 100% of cash flow into acquisitions without diluting shareholders.
Expands through both M&A and organic growth. With effective execution, it has the capacity to significantly expand operating margins, enter new geographies, and explore adjacent categories.
Benefits from reference shareholders who control over 50% of the shares, providing permanent capital and facilitating decisions based solely on long-term value creation.
Features a management team with a proven track record. Key figures from the management team have previously led comparable companies, achieving historical returns exceeding 22% CAGR. Aligned incentives.
Maintains limited market visibility, with coverage from very few analysts, restricted investment access for many large funds, and minimal international investor attention, despite comparable (although more mature) companies consistently outperforming the S&P 500 over extended periods.
Exhibits a disruption-resistant business model with a high terminal value. Industry dynamics reinforce its strategy and value proposition.