1/ What actually drives long-term shareholder returns?

This thread breaks down a practical framework centered on two core elements:

1. Reinvestment
2. Reinvestment rate

The mechanics are simple, but the implications are far-reaching. 👇 2/ Total Shareholder Return (TSR) is a function of two inputs:

– Business fundamentals
– Valuation multiples

Both matter, but their impact varies with time horizon.

In the short term: multiples dominate.
In the long term: fundamentals drive outcomes.

1/ I used to think the best investments were the cleanest ones.

Steady growth. Predictable cash flows. No surprises.

I was wrong (sort of).

This is the story of how I learned to embrace cyclicality and why some of the best opportunities are hiding in the cycles we fear most

🧵 2/ It started like most investing journeys do: with a desire to “beat the market.”

Sounds simple, until you realize how hard it actually is.

To give yourself a chance at outperformance, you must look for a different path. A place where people are not looking (or can't)

1/ Let me tell you one of the most important lessons I’ve learned as an investor:

"The PE ratio is not what it seems."

Yes, it’s a simple formula. Yes, it’s everywhere. But most investors don't interpret it correctly 🧵 2/ We’re taught that PE = Price / Earnings. Easy enough.

Then we’re told that...

🔴 High PE = Overvalued
🟢 Low PE = Undervalued

But here’s the truth: investing is not black or white and needs more context.

1/ A few months ago, I stumbled across a quiet little company out of Italy that flies under the radar.

Not a biotech, not a flashy AI stock...something even rarer: a boring business with deep roots, high margins, and LT tailwinds.

Let me tell you about Stevanato $STVN 🧵 2/ Stevanato operates in the pharma value chain, but it doesn’t make drugs: it makes what injectable drugs go into: glass vials, syringes, and cartridges (i.e, containment solutions)

Unsexy? Yes (it's basically a "commodity"), but the business model is pretty interesting.

1/ Yesterday I gave a presentation to some investors on Deere $DE

I thought it would be a good idea to upload the presentation here

Let's go!👇 2/ These are the topics I will go over...

1/ Aoris Investment Management released its 2023 annual letter and it's a must read for any LT investor.

Echoes some of my thoughts across several topics.

Sold: $NKE $GGG
Bought: $RELX $ATCO.B

Brief thread 👇 2/ Stock market did well since the inception of the fund (2018) despite all the obstacles that lay ahead.

The future is inherently unpredictable and if there's no uncertainty ahead then it's probably tough to buy at decent prices.

1/ Last week I uploaded pt. 1 of an $ASML presentation I gave to some investors. I discussed topics such as the industry, what the company does, financials, moat etc.

In Part 2 I will talk about management, capital allocation, risks, and valuation

Let's get on with it 👇 2/ ASML has a very experienced two-layered management team (CEO/CTO - rest). This structure is typically CEO/CFO in other companies but it makes sense for ASML to have the CTO there.

Average tenure is long at roughly 19 years.

1/ A couple of weeks ago I gave a presentation on $ASML to some investors.

The goal of the presentation was to give an overview on the company, touching all the relevant topics (I cover $ASML more in detail at Best Anchor Stocks, together with other high quality companies)

👇 2/ I covered the following topics in the presentation.

This thread will discuss the first 4 topics, leaving the rest for another thread (coming next week)

1/ Topicus $TOI reported good earnings last week.

It was a strong quarter where one of the growth engines came in pretty strong relative to the other.

Let's take a look at these 👇 2/ First, the headlines.

Revenue grew 22% YoY to $279 million.

Net income grew considerably faster at 54% YoY to $28.3 million.

1/ Decided to do a thread on $AMZN's Q3 earnings

The company had an outstanding quarter where the highlight was once again retail profitability, not so much AWS growth.

Let's dig deeper 👇 2/ For yet another quarter the company's beat on the bottom line was much more substantial than on the top line.

This is something normal considering that...

1. Analysts have a better grab of the company's top line
2. Analysts continue to underestimate the margin potential

1/ Some months ago I built a checklist to try to "objectivize" the quality of the companies included in my portfolio.

I run $CPRT through the Checklist and it got a score of 85.4 (out of 100).

Here's how it fared in each category (a brief explanation follows) 👇 2/ Product Quality (4.3/4.5)

$CPRT has a great service, but it doesn't enjoy a monopoly. I must say that if IAA keeps mismanaging its business, Copart will come close to one, albeit it's highly unlikely it will ever achieve monopoly status (insurers don't want only 1 player)

1/ A bit more than a year ago I left my "safe" job to focus full-time on investing; what I truly enjoy.

Despite being active at Best Anchor Stocks for all this time, I regularly come across people who have no idea about this project, so let me explain it briefly! 👇 2/ The pandemic period brought quite a bit of volatility, and while many thought of this volatility like a one-off, truth is that volatility has been at the core of financial markets for a long time.

There are always clouds in the sky:

1/ Sharing some semiconductor-related content now that semis are back (they never left)

First, a simple visual that explains the industry's structure. People who already know the industry might find this basic, but I struggled to find something similar when doing my research 2/ I then decided to do a somewhat more complex visual with some more info on the industry. I tried to condense it one page but found it impossible, so I did a three-pager

Part 1: Types of chips and how they are made

1/ Scott Belsky, $ADBE's Chief Strategy Officer, recently participated in a conference where he discussed some relevant topics for the company, mainly related to AI and Figma

He sees generative AI present in most parts of the creative process 2/ The longer-term vision of the company is to provide customers with an "AI assistant" that does three things:

1. Trains users
2. Helps with idea generation
3. Does things for you

1/ Reading is one of the most important "tasks" for any investor.

I almost never remember the entire content of a book, but there's always a lesson that sticks with me for a long time.

Here's a list of 10 of my favorite books and the lesson I learned from them 👇 2/ Capital Returns by Edward Chancellor

Lesson: Cyclical industries can be great to invest in when coupled with great management that understands their cycles.

(It's a bit expensive but worth it imho)

1/ I am currently reading "The Big Money" by Frederick Kobrik, a fundamental-oriented investor who generated great returns.

Today, I read a very timely chapter: "Bear Markets, Bubbles, and Market Timing"

Here's a short thread with some highlights with my comments. 2/ Trying to forecast earnings and interest rates accurately is a waste of time which will take you more of a gambler than an investor

Just because you get it right once doesn't mean you have a valid system to predict these variables

1/ François Rochon recently released Giverny Capital's 2022 Annual Letter

It was once again refreshing after a tough year in the stock market, and the podium of errors was pretty interesting

🧵 with some highlights 2/ The Rochon Global Portfolio was down 15.2% in 2022, its worst year on record. It was Giverny's second down year since 2008 and its 4th down year overall (30 years)

Since 1993, Giverny has compounded at a CAGR of 14.5%, leading to a total return of 5355%:

1/ Some thoughts on capital allocation.

Management can allocate capital in 5 ways:

(a) Invest in organic initiatives
(b) Acquire other companies
(c) Pay off debt (if there's any outstanding)
(d) Buy back stock
(e) Pay out dividends 2/ If there are reinvestment opportunities, management should pursue #1 and/or #2.

If there are few reinvestment opportunities, then management should pursue one of the other three.

1/ Very interesting Constellation Software expert call.

Discusses some things around the M&A machine and Lumine, which is expected to start trading next week.

Short thread (link to the call in the last tweet)

$CSU $LMN 2/ "Reached out directly to Mark Leonard. I sent him an email, said "You've prescribed this thesis. If you're looking for companies like this, here's how I fit the mold."

He replied back to me in 24 hours, sent me on to his M&A guy at Constellation named Shahzad."

$CSU

1/ Trying to sell tops and buy bottoms can lead to severe underperformance by missing the best days

And yes, missing the worst days can definitely amplify the 9.40% return of those who are fully invested, but why do you think you can miss the worst without missing the best? 2/ Remaining fully invested means you have to be right "only" once and you can avoid all the hassle that comes with buying and selling constantly

Ofc, to remain fully invested one must find durable companies with strong competitive advantages that allow for the low turnover

1/ Interesting call with a digital marketer on $AMZN's 3P services and ad spend

They believe 3P GMV is growing due to:

1. Sellers getting better at selling on $AMZN
2. $AMZN's expanded services
3. Pullback in certain 1P categories
4. Ability to cash out 2/ Incremental ad spend will probably slow down now that it's at 10-15% for sellers. Only very high-margin products can justify spending more on Amazon Ads