Thanks Kevin! I'll be sure to stop tagging you about this topic soon, but I keep thinking about the point about inflections you made - a profound effect on my thinking!
Thanks! I started reading munger and buffet unscripted by @TSOH Investment Research and thinking about possible acceleration or deceleration is one of the criteria Buffett mentioned for his stock picking (p. 13)
I'm sure things will turn for both these names. My issue is all about how much relative underperformance should one accept? To me the idea was that these were steady-chuggers, with strong counter-cyclicality. I'm really not convinced that they're in the elite of companies that can chugg on no matter the macro we're positioned in. That left me with the question: Why stay stubborn, when I have companies in my portfolio which have made shifts for the better, and where I am more convinced of their relative over-performance going forward?
Always a tough call, but I think there's little value and money to be made by being stubborn. Trying to stay rational, trying to stay focused on my absolute return goal of 12-15% per annum. This goal puts some pressure on my portfolio: I want all my companies to contribute meaningfully to this goal.
Again, with a good time horizon and patience I'm sure you'll come out of both Evolution and SanLorenzo with a good return - I wish you the best of luck!
To seed, build, and nurture timeless, intangible human capitals — such as resilience, trust, truth, evolution, fulfilment, quality, peace, patience, discipline, relationships and conviction — in order to elevate human judgment, deepen relationships, and restore sacred trusteeship and stewardship of long-term firm value across generations.
A refreshing take on our business world and capitalism.
A reflection on why today’s capital architectures—PE, VC, Hedge funds, SPAC, Alt funds, Rollups—mostly fail to build and nuture what time can trust.
“Built to Be Left.”
A quiet anatomy of extraction, abandonment, and the collapse of stewardship.
"Principal-Agent Risk is not a flaw in the system.
Great insights as usual Mathias! sounds like you are heading towards owning more companies you (and your family) can sleep well owning.
The strange thing with our minds, is that we think we need to win back our lost capital in the same names as we lost them in. While there is definitely a chance both Sanlorenzo and Evolution recovers, there is also a chance that your new picks does just as well. Happy Easter!
Thanks Ole, always great chatting with you about stuffs- and additional appreciation to you for being available for my erratic idea tossing and occasional trading. God påske!
Great insights - pruning the portfolio based on what's going on fundamentally and assessing risk vs. reward and opportunity costs. Your portfolio should have a bright return outlook ahead :)
Thanks mate! That's indeed what makes investing fun - assessing opportunity, risk and opportunity costs as you say. No 100% correct answer, and always a scale of balance between being stubborn and/or having conviction. 🙌
Hi Mathias, how long have you actually been investing? I really like your process and that you want to focus on these 4 segments. For me personally, the portfolio would be too concentrated, but that's a matter of preference.
I have Norbit myself and still consider it undervalued. Why are you worried about a slowdown in growth here? Given the valuation, that shouldn’t really be an issue, right? Or are you just holding on to Norbit until the growth flattens out? Who do you see as direct competitors to Norbit and in which segment? Teledyne? Have you also looked at Fugro?
Thanks for your explanation on Hemnet. I knew them from screening, but then I didn’t dive further into it. I think we're currently in a less favorable part of the cycle, as you mentioned… but unfortunately, it's also become quite expensive. So, no further spot on Hemnet, unless I read from you in 3-4 years that it’s attractively valued again and should continue long-term 😊
Why do you think FFH can now increase its book value by around 12-15% annually after years of stagnation (stock price-wise)? The stock buybacks haven’t been as massive as the article suggests. BN seems much more attractive as a value play. Don’t you think?
I wish you much success and look forward to the next update and your honest thoughts on your process and your learnings!
--- EDIT
Something I’d like to add: it might be worth paying more attention to the shareholder structure with small caps as well. Hemnet does put me off with its concentration. I also have no idea what VorCapital, with its 11% stake, is up to. They also trade commodities, so I’m not sure how long-term their involvement is. On the other hand, there are no insiders and no founding company. Maybe going forward, it will be a must for small caps to be founder-led with "skin in the game."
I've been investing for around 5 years now, but most of the time it's been an on/off thing with very little time or money dedicated to it. It's just the last 1.5-2 years or so where I've tried to have a structured process around my investments.
I am not worried about an imminent slowdown in Norbits growth, but I am mindful of any company starting to grow >20% a year - if there's a slowing, these are usually a bit brutal in terms of share prices. I doubt that'll happen this year at least. I however consider Norbit to be slightly above fair price, but if they keep delivering as they do, there should be nothing to worry about. The competitive landscape is quite a bit varied depending on the segment, so a bit to broad to touch on in a comment. I'm planning a "One year later" post on Norbit, so I might get into it then.
In terms of Hemnet (and I'll add a comment on the ownership) I think they're a bit expensive, obviously, but imo they're priced at comparable levels to peers in terms of EV/EBITA. REA in particular holds a similarly premium valuation. As you say, we're in a less favourable part of the real-estate cycle, but they still manage to grow ~30% per annum. That tells a strong tale. VorCapital is not one I am concerned about. They seem to have significant stakes in several online classified businesses alongside Hemnet: Schibsted ASA and Baltic Classifieds. I simply think they see the competitive strengths of the model and want to earn money with these names.
In terms of FFH I'm honestly not sure if we're looking at the same name if you think thats a stagnating share price (they're up ~440% last 5 years (a CAGR of 40%). The share buybacks are programmatic and pragmatic, thats the key: They keep on buying because the share price is still undervalued despite a pretty insane run. I'm very certain that we'll continue to see the book value continue to compound in the mid-high DD levels driven by good growth in insurance income (hard markets are set to continue with Trump at the helm), a strong bond portfolio that gives them flexibility thanks to their durations and a undervalued (both in terms of reporting and in the markets) stock portfolio of companies performing excellently.
Thanks again for some good feedback, much appreciated!
Thank you very much for your detailed response. I'm a bit surprised—maybe even shocked—to learn that you've only been active in the stock market for such a short time, and have only recently started following a more “structured” approach. It seems like you've already learned a great deal in a short period. At the very least, your current approach appears to reflect quality thinking.
As for Norbit—while I do expect growth to slow down at some point, I’m not really concerned about a crash. The stock still seems attractively valued. With a ROIC of 20%, an EBIT margin of 20%, and 20% free cash flow, I don't see major red flags. I've been holding Norbit shares for about a year now.
Regarding Hemnet, I had mostly been looking at Costar as a major peer. Hemnet could actually be an interesting acquisition target for them, though it is a bit pricey. I hope you’ll keep posting updates on Hemnet, so I don’t completely lose track of it—but at the moment, I’m not too tempted by it given its valuation and limited optionality.
By the way, where are you from, if you don’t mind me asking?
I'm happy to shock (I suppose), but that's always why I try to firmly underline that I'm not one to listen to: I still lack a lot of experience, and I'm a fresh face on the scene. So far, I attribute all and any success to a rising tide and good help from others.
In terms of Norbit, I suppose I come of far more bearish than I actually am: I have no immediate concerns about the trajectory (though tariffs might ripple through their chain of customers and production too unknown effects). But the point that I am trying to make can be put quite simply: We've moved from an underdog and underappreciated position, to now having the company frequently being named among other trendy stocks. This often puts the risk on the downside, and with any slow-down we should be open to expecting some shareprice pummeling. I do not plan on selling any shares though, now's the time to not disturb the compounding.
In regards to Hemnet and CoStar: It is both a good and not so good comparison. The U.S. is probably the only western market where the online classifieds aren't a monopol-by-nature. That's because there's so many markets overlapping eachother, that scale is hard to get. Just look at how bad the economics of Zillow are compared to Hemnet, RightMove, REA and so on. But CoStar is important to follow because they're trying to win markets by buying nr. 3 and nr. 2. in many countries (such as UK and Aus). So far they haven't made a dent, and when a great company like CoStar can fling billions of marketing and development trying to disrupt something, and they just fall flat, I think that tells an immensly interesting story about the moat of the national online classifieds leaders in real estate advertising. In terms of Hemnet, I'd say now might be a great time - the market is misunderstanding the introduction of the newest pricing class, and I'm pretty sure they'll surprise to the upside for the coming quarters.
Oh, and I'm from Norway myself. :) Thanks for some very interesting comments, always fun linking up!
I'm also quite active on Twitter and especially on YouTube, but I haven't really come across Norbit that often. The more expensive small serial acquirers like DPLM, MMGR, and ROKO are much more present there.
Hemnet would be too expensive for me, or maybe I'm just missing the value behind it. As mentioned, I'm waiting to read more updates and get a better sense of their future and growth, while continuing to add to other positions in the meantime.
Thank you for the kind words Rudolfi! I'm sure you're correct in that Ill miss great companies, but that's (in my opinion) the name of the game - we won't be able to spot all the greats, finding one - three should be plenty though! I aim to write and focus on relevant topics outside just acquistional compounders, so let's see where this road takes us! 😄
Thanks for the mention. Norbit sits on my watchlist btw.
Thanks Kevin! I'll be sure to stop tagging you about this topic soon, but I keep thinking about the point about inflections you made - a profound effect on my thinking!
Thanks! I started reading munger and buffet unscripted by @TSOH Investment Research and thinking about possible acceleration or deceleration is one of the criteria Buffett mentioned for his stock picking (p. 13)
Interesting. Basically the opposite of what I've done. I bought more Evolution and Sanlorenzo.
I'm sure things will turn for both these names. My issue is all about how much relative underperformance should one accept? To me the idea was that these were steady-chuggers, with strong counter-cyclicality. I'm really not convinced that they're in the elite of companies that can chugg on no matter the macro we're positioned in. That left me with the question: Why stay stubborn, when I have companies in my portfolio which have made shifts for the better, and where I am more convinced of their relative over-performance going forward?
Always a tough call, but I think there's little value and money to be made by being stubborn. Trying to stay rational, trying to stay focused on my absolute return goal of 12-15% per annum. This goal puts some pressure on my portfolio: I want all my companies to contribute meaningfully to this goal.
Again, with a good time horizon and patience I'm sure you'll come out of both Evolution and SanLorenzo with a good return - I wish you the best of luck!
Hello there,
Huge Respect for your work!
New here. No huge reader base Yet.
But the work has waited long to be spoken.
Its truths have roots older than this platform.
My Sub-stack Purpose
To seed, build, and nurture timeless, intangible human capitals — such as resilience, trust, truth, evolution, fulfilment, quality, peace, patience, discipline, relationships and conviction — in order to elevate human judgment, deepen relationships, and restore sacred trusteeship and stewardship of long-term firm value across generations.
A refreshing take on our business world and capitalism.
A reflection on why today’s capital architectures—PE, VC, Hedge funds, SPAC, Alt funds, Rollups—mostly fail to build and nuture what time can trust.
“Built to Be Left.”
A quiet anatomy of extraction, abandonment, and the collapse of stewardship.
"Principal-Agent Risk is not a flaw in the system.
It is the system’s operating principle”
Experience first. Return if it speaks to you.
- The Silent Treasury
https://tinyurl.com/48m97w5e
Great work! Thanks for the effort.
Thanks mate, happy to hear you enjoyed it 😄
Great insights as usual Mathias! sounds like you are heading towards owning more companies you (and your family) can sleep well owning.
The strange thing with our minds, is that we think we need to win back our lost capital in the same names as we lost them in. While there is definitely a chance both Sanlorenzo and Evolution recovers, there is also a chance that your new picks does just as well. Happy Easter!
Thanks Ole, always great chatting with you about stuffs- and additional appreciation to you for being available for my erratic idea tossing and occasional trading. God påske!
Great insights - pruning the portfolio based on what's going on fundamentally and assessing risk vs. reward and opportunity costs. Your portfolio should have a bright return outlook ahead :)
Thanks mate! That's indeed what makes investing fun - assessing opportunity, risk and opportunity costs as you say. No 100% correct answer, and always a scale of balance between being stubborn and/or having conviction. 🙌
Hi Mathias, how long have you actually been investing? I really like your process and that you want to focus on these 4 segments. For me personally, the portfolio would be too concentrated, but that's a matter of preference.
I have Norbit myself and still consider it undervalued. Why are you worried about a slowdown in growth here? Given the valuation, that shouldn’t really be an issue, right? Or are you just holding on to Norbit until the growth flattens out? Who do you see as direct competitors to Norbit and in which segment? Teledyne? Have you also looked at Fugro?
Thanks for your explanation on Hemnet. I knew them from screening, but then I didn’t dive further into it. I think we're currently in a less favorable part of the cycle, as you mentioned… but unfortunately, it's also become quite expensive. So, no further spot on Hemnet, unless I read from you in 3-4 years that it’s attractively valued again and should continue long-term 😊
Why do you think FFH can now increase its book value by around 12-15% annually after years of stagnation (stock price-wise)? The stock buybacks haven’t been as massive as the article suggests. BN seems much more attractive as a value play. Don’t you think?
I wish you much success and look forward to the next update and your honest thoughts on your process and your learnings!
--- EDIT
Something I’d like to add: it might be worth paying more attention to the shareholder structure with small caps as well. Hemnet does put me off with its concentration. I also have no idea what VorCapital, with its 11% stake, is up to. They also trade commodities, so I’m not sure how long-term their involvement is. On the other hand, there are no insiders and no founding company. Maybe going forward, it will be a must for small caps to be founder-led with "skin in the game."
Thank you for an interesting reply mate!
I've been investing for around 5 years now, but most of the time it's been an on/off thing with very little time or money dedicated to it. It's just the last 1.5-2 years or so where I've tried to have a structured process around my investments.
I am not worried about an imminent slowdown in Norbits growth, but I am mindful of any company starting to grow >20% a year - if there's a slowing, these are usually a bit brutal in terms of share prices. I doubt that'll happen this year at least. I however consider Norbit to be slightly above fair price, but if they keep delivering as they do, there should be nothing to worry about. The competitive landscape is quite a bit varied depending on the segment, so a bit to broad to touch on in a comment. I'm planning a "One year later" post on Norbit, so I might get into it then.
In terms of Hemnet (and I'll add a comment on the ownership) I think they're a bit expensive, obviously, but imo they're priced at comparable levels to peers in terms of EV/EBITA. REA in particular holds a similarly premium valuation. As you say, we're in a less favourable part of the real-estate cycle, but they still manage to grow ~30% per annum. That tells a strong tale. VorCapital is not one I am concerned about. They seem to have significant stakes in several online classified businesses alongside Hemnet: Schibsted ASA and Baltic Classifieds. I simply think they see the competitive strengths of the model and want to earn money with these names.
In terms of FFH I'm honestly not sure if we're looking at the same name if you think thats a stagnating share price (they're up ~440% last 5 years (a CAGR of 40%). The share buybacks are programmatic and pragmatic, thats the key: They keep on buying because the share price is still undervalued despite a pretty insane run. I'm very certain that we'll continue to see the book value continue to compound in the mid-high DD levels driven by good growth in insurance income (hard markets are set to continue with Trump at the helm), a strong bond portfolio that gives them flexibility thanks to their durations and a undervalued (both in terms of reporting and in the markets) stock portfolio of companies performing excellently.
Thanks again for some good feedback, much appreciated!
Thank you very much for your detailed response. I'm a bit surprised—maybe even shocked—to learn that you've only been active in the stock market for such a short time, and have only recently started following a more “structured” approach. It seems like you've already learned a great deal in a short period. At the very least, your current approach appears to reflect quality thinking.
As for Norbit—while I do expect growth to slow down at some point, I’m not really concerned about a crash. The stock still seems attractively valued. With a ROIC of 20%, an EBIT margin of 20%, and 20% free cash flow, I don't see major red flags. I've been holding Norbit shares for about a year now.
Regarding Hemnet, I had mostly been looking at Costar as a major peer. Hemnet could actually be an interesting acquisition target for them, though it is a bit pricey. I hope you’ll keep posting updates on Hemnet, so I don’t completely lose track of it—but at the moment, I’m not too tempted by it given its valuation and limited optionality.
By the way, where are you from, if you don’t mind me asking?
Best regards from Austria!
I'm happy to shock (I suppose), but that's always why I try to firmly underline that I'm not one to listen to: I still lack a lot of experience, and I'm a fresh face on the scene. So far, I attribute all and any success to a rising tide and good help from others.
In terms of Norbit, I suppose I come of far more bearish than I actually am: I have no immediate concerns about the trajectory (though tariffs might ripple through their chain of customers and production too unknown effects). But the point that I am trying to make can be put quite simply: We've moved from an underdog and underappreciated position, to now having the company frequently being named among other trendy stocks. This often puts the risk on the downside, and with any slow-down we should be open to expecting some shareprice pummeling. I do not plan on selling any shares though, now's the time to not disturb the compounding.
In regards to Hemnet and CoStar: It is both a good and not so good comparison. The U.S. is probably the only western market where the online classifieds aren't a monopol-by-nature. That's because there's so many markets overlapping eachother, that scale is hard to get. Just look at how bad the economics of Zillow are compared to Hemnet, RightMove, REA and so on. But CoStar is important to follow because they're trying to win markets by buying nr. 3 and nr. 2. in many countries (such as UK and Aus). So far they haven't made a dent, and when a great company like CoStar can fling billions of marketing and development trying to disrupt something, and they just fall flat, I think that tells an immensly interesting story about the moat of the national online classifieds leaders in real estate advertising. In terms of Hemnet, I'd say now might be a great time - the market is misunderstanding the introduction of the newest pricing class, and I'm pretty sure they'll surprise to the upside for the coming quarters.
Oh, and I'm from Norway myself. :) Thanks for some very interesting comments, always fun linking up!
I'm also quite active on Twitter and especially on YouTube, but I haven't really come across Norbit that often. The more expensive small serial acquirers like DPLM, MMGR, and ROKO are much more present there.
Hemnet would be too expensive for me, or maybe I'm just missing the value behind it. As mentioned, I'm waiting to read more updates and get a better sense of their future and growth, while continuing to add to other positions in the meantime.
Greets to Norway :-)
Man im glad that you Post again. I find your Insights very interesting and your writing Style compells to me!
Keep Up the great Work.
However i personally dislike your decision to focus on serial acquirers, i can understand your argueing.
I personally think, that you will Miss Out in great opportunities that way.
Thank you for the kind words Rudolfi! I'm sure you're correct in that Ill miss great companies, but that's (in my opinion) the name of the game - we won't be able to spot all the greats, finding one - three should be plenty though! I aim to write and focus on relevant topics outside just acquistional compounders, so let's see where this road takes us! 😄