2025 Portfolio Update
The Fund's Top 10 Holdings and Why It Owns Them
This post is an abstract from my latest investor letter that came out today.
Looking ahead to the next five years, for the fund to continue its targeted long-term performance of >10% p.a. on average, it needs to be invested in a collection of outstanding companies that may achieve an operational compelling development. Below are the fund’s ten largest holdings as of January 1, 2025.
Please note that this is not investment advice or financial analysis. Investing in stocks or funds involves a risk of loss. The multiples shown below are consensus estimates as of 04/07/25, and my own expectations may differ.
Alphabet (GOOG)
Google's parent company is the world's largest search and advertising company, with revenue of $350.0bn in 2024 and an operating margin of 32% ($112.4bn EBIT). GOOG’s two most promising non-advertising businesses, Cloud and Waymo, are making rapid progress. Cloud reached 12% of FY24 revenue, growing 31% and delivering a 14% operating margin, with significant headroom. Waymo provides nearly 1m paid trips per month, has surpassed 50m miles of self-driving on public roads with 80% less accidents than a human driver and will soon test its robotaxis in ten new cities, including Tokyo. However, GOOG’s future hinges on the fate of its central cash cow: Search. Despite founder Sergey Brin’s return to lead GOOG’s AI initiatives, AI Overviews remain an insufficient answer to the self-triggered, LLM-driven Search revolution. Luckily, the recently unveiled AI Mode in Labs could be a promising step forward. In its ongoing antitrust saga, GOOG can expect a remedy ruling in H2/25. It will then appeal, and the case goes up to the D.C. Circuit. I have written extensively on GOOG’s business model here and its legal affairs here. GOOG trades at 15x NTM P/E.
Alimentation Couche-Tard (ATD)
ATD is a leading convenience store chain with 17k stores in 29 countries, most of them under the Circle K banner. Globally, the U.S. is the largest c-store market and ATD is the local no. 2 player with a 5% share behind 7-Eleven with 8% and in front of Casey’s with 2%. With inside sales growing for the 18th consecutive year according to NACS, c-stores are an attractive industry with consolidation opportunities as 60% of all U.S. stores are run by single-store owners. ATD has a strong M&A track record, with over 70% of its current store base resulting from acquisitions and its founder remains actively involved. ATD targets LDD earnings growth, shares trade at 16x NTM P/E.
Fidelity National Information Services (FIS)
FIS’ roots lie in core banking solutions for large banks, monetized primarily through per-account fees under long-term contracts, with near-zero churn due to high switching costs. Furthermore, FIS operates a sizable issuer processing business, connecting banks to major payment networks (e.g. VisaNet) and managing the backend of banks’ card programs. Unlike merchant acquiring, which is tied to transaction volume, issuer processing follows a long-term contract model, aligning with FIS’ focus on more stable, recurring revenues. In total, FIS’ banking solutions segment accounts for 70% of total revenue, with the remainder coming from the capital markets segment, primarily through software sales to investment firms. Overall, FIS generates $10bn in revenue, $4bn in EBITDA and $3bn in net profit, with 80% of revenue recurring. Shares trade at 11x NTM P/E.
Fomento Económico Mexicano (FMX)
FMX operates Mexico’s dominant c-store chain, OXXO, and is 39% owned by its founding families. Furthermore, it holds a 47.2% stake in the world’s largest and most profitable Coke bottler, Coca-Cola FEMSA (KOF), as a second major asset. FMX’s total c-store footprint comprises 24k units and it plans to almost double that number over the coming decade. It also recently expanded into the U.S. through acquiring 250 DK stores in Texas. FMX generates revenue of $43bn, $1.5bn in net income and targets LDD earnings growth. Its market cap is ~$35bn and the company will return $5.3bn to shareholders over FY25-26. I have written extensively on FMX here.
LVMH (LVMH)
LVMH is the world’s leading luxury group with several of its brands’ origins going back to the 1700s and 1800s. With 6,300 stores and 75 brands – including Louis Vuitton, Christian Dior, Loro Piana, Dom Pérignon, Tiffany & Co. and Rimowa – LVMH generated €84.7bn in FY24 revenue and €19.6bn in EBIT (23% margin). The company is 49% owned by the family of Bernard Arnault, Europe’s richest man, and has achieved an impressive 9% annual organic growth over the past 35 years. LVMH’s Fashion & Leather Goods segment contributes 50% to group sales and 75% to EBIT, with Louis Vuitton being one of the highest margin brands inside F&L, estimated to represent ~60% of segment revenue and around half of total group EBIT. China exposure is 30% and LVMH could potentially grow MSD through a combination of price, mix and volume. Shares trade at 18x NTM P/E.
Microsoft (MSFT)
MSFT is the largest software firm in the world with undisputed market leadership in Office suites, PC operating systems as well as a strong no. 2 position in hyperscale cloud services. In FY24, MSFT generated $245bn in revenue and an operating income of $109bn (45% margin). In FY25, Azure is expected to be the largest revenue contributor, surpassing $80bn in run-rate revenue with 30% growth. Office should contribute over $60bn, growing in the double-digits. Together, Azure and Office represent about half of MSFT’s topline with potential for continued success. Office 365 has 400m+ commercial paid seats out of more than 1bn knowledge workers globally, providing room for further seat growth and upselling customers from E3 to E5 to potentially even higher priced plans featuring varying GenAI capabilities. With less than half of total workloads currently running on public cloud platforms, Azure benefits from ongoing migration while Gartner estimates that 90%+ of new workloads will be deployed cloud-natively. MSFT also has a ~$25bn on-premise server products business, which it may partially convert to Azure over time with a revenue uplift. MSFT trades at 24x NTM P/E.
VEF (VEFAB)
VEF is an investment holding taking minority stakes in emerging market fintech companies. Its most important holding is an 8.8% stake in Brazilian unicorn Creditas, an online lending platform for secured loans. In a country where consumers pay 100%+ annual interest rates, Creditas charges 50-75% less through a mix of innovative credit scoring and accepting borrowers’ cars or real estate as collateral. The company’s loan portfolio was $1bn last year, revenue was $375m and it was cash flow breakeven. After some more years of planned 25% growth, Creditas is eying an IPO which could serve as a catalyst for VEF’s share price. VEF’s stake in Creditas alone represents 85% of its market cap of $165m and VEF’s total portfolio including Juspay and Konfio has a NAV of $350m.
VISA (V)
Outside of China, V operates the largest credit and debit card network in the world with a market share of 60% and a lead of 1.6x over its closest rival Mastercard. In its core C2B business, V remains a toll booth on consumer spending, albeit the delta between its consumer payments volume growth and the overall consumer spend growth will narrow. However, with VAS and CMS growth exceeding 15%, these revenue sources could a) account for over 50% of V’s net revenue in the future and b) enable V to grow its topline by 9-12% per year, as outlined by management in an illustrative framework at its recent Investor Day. Shares trade at a 4% NTM FCF-Yield. I wrote more on V here.
Watches of Switzerland Group (WOSG)
WOSG is the UK’s largest authorized luxury watch retailer, with a growing U.S. presence and a store base of 217. WOSG generated £1,538m in revenue and £118m in FCF (8% margin) in FY24, with 87% of sales from luxury watches and the rest from jewelry and services. Revenue is split evenly between UK/Europe and the U.S. Rolex accounts for ~50% of sales, with another 10% from Audemars Piguet and Patek Philippe. These three brands have achieved the holy grail in luxury – selling on a waitlist basis – which enhances customer desirability and strengthens WOSG’s revenue quality. WOSG holds an estimated 40-50% market share of all Rolex UK sales vs. 5-10% in the U.S., its main expansion market. Long term, luxury watches are a growth industry, driven by annual price increases of 5%. Additionally, Rolex is significantly ramping up production until the end of this decade and WOSG will likely be a key partner in selling these additional volumes in a trusted, controlled brand environment. Amid U.S. tariff risks to profitability, WOSG trades at 7x FY24 FCF.
Wise (WISE)
WISE is a UK fintech with a clear mission to reduce the costs of cross-border money transfers for consumers and businesses. A transfer via the traditional correspondent banking system often incurs fees of 3% or more due to multiple bank intermediaries, whereas WISE charges only 0.6% on average. WISE lowers costs by often not making the money cross borders at all, instead paying recipients from local accounts at partner banks in 160 countries, integrating into domestic payment schemes and matching transfers in the same corridor. In FY25, WISE generated £1.4bn in revenue and £0.5bn in pre-tax income. Over the last four years, active customers grew by a 27% CAGR to 15.5m and cross-border volumes by a 28% CAGR to £145bn. With a $4tn TAM for cross-border transfers from individuals, WISE holds 5% market share. However, considering a $25tn+ TAM in B2B and the early success of 'Wise Platform' for large bank customers, every trillion in volume captured at a long-term 0.1% take rate could double the company’s revenue from its current size. Shares trade at 25x NTM P/E.
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This document is for informational purposes only. It is no investment advice and no financial analysis. The Imprint applies.