Jacobus Enslin @Enslinjaco: "𝙅𝙖𝙣𝙪𝙖𝙧𝙮 𝟮𝟬𝟮𝟲 𝙪𝙥𝙙𝙖𝙩𝙚 𝙋𝙚𝙧𝙛𝙤𝙧𝙢𝙖𝙣𝙘𝙚 • The portfolio..."

United Kingdom

𝙅𝙖𝙣𝙪𝙖𝙧𝙮 𝟮𝟬𝟮𝟲 𝙪𝙥𝙙𝙖𝙩𝙚 𝙋𝙚𝙧𝙛𝙤𝙧𝙢𝙖𝙣𝙘𝙚 • The portfolio returned 5.28% in January vs 1.37% for the SP500. • The annualized return since inception of the portfolio is 23.06% vs 12.01% for the SP500. 𝘾𝙤𝙢𝙢𝙚𝙣𝙩𝙖𝙧𝙮 During January I hesitantly sold out of the position in $INPST.NV (InPost SA) The company is engaged in an effort to be taken private. The takeover price is rumored to be €6bn which is around the current share price. I think this is a low-ball offer and a rational shareholder should reject it. However the takeover consortium already owns around 48% of the shares and it includes the CEO. Therefore I think they will push hard for the low-ball offer to go though. The only way the stock appreciates from current levels is if the takeover consortium increases the bid price and I don’t assign a high probability to this. $BFIT.NV (Basic-Fit N.V) released a trading update last week. Things are tracking as expected. They guided to mid-range Ebitda less rent of €425mn in 2026. Subtracting the expected maintenance capex, interest and taxes, yields an expected normalised FCFe of €235mn or €3.7 a share. This puts them at a P/FCF valuation of 9x. I think the multiple should be higher for reasons including them being a non-cyclical, high margin business with a capex and geographic moat. A 12x multiple (8% fcf yield) is reasonable in my opinion and would represent a fair value of €45 per share. $VTY.L (Vistry Group PLC) also published an FY25 trading update last month. They expect ebit of around £360mn, which is within expectations and values them at a current EV/EBIT of 6.7x. Their valuation is slightly below historical averages. As mentioned previously the real upside is only expected toward the second half of 2026 when the increased (+60%) UK affordable housing budget starts getting allocated. I’ll likely increase the position size in the months preceding this. $PYPL (PayPal Holdings) released results yesterday and has sold off aggressively. The FY25 results were not too far from what I expected, however the outlook provided was worse than expected. They are guiding to mid-single digits reduction in FCF for 2026. I view Paypal as being an ex-growth company with revenues likely declining going forward, however I thought that FCF could at least remain stable for a number of years as they cut costs (and there are a lot of costs they could cut). The fact that they are already guiding for FCF to decline by ~5% in 2026 is a concern. What needs to be weighed against the poor operational side is the valuation of the company compared to their future FCF (and what they do with the FCF). Paypal generates around $5bn in annual FCF currently and nearly all of this is used to buy back their own shares. They can at current prices buyback more than 12% of their shares outstanding per year. This means the share price should increase by >12% per year even if the market cap stays the same, all else being equal. Worryingly, management doesn't seem to realise that they are ex-growth. They are increasing capex to try to grow the business organically, which I don't think will pay-off. The capital allocation along with the signal that they are not going to pursue cost cuts to offset revenue declines, breaks the thesis. Paypal becomes a bargain only below $30 per share. I have thus exited the position. The portfolio's cash balance will be invested as and when companies on my watchlist reach target levels. Best regards Jacob

Not investment advice. The author may have financial interests in the mentioned instruments.