| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | 16.3% |
The Compound Interest fund delivered strong performance with a 16.3% year-to-date return, driven by a disciplined value-oriented investment philosophy focused on quality companies. The manager targets outstanding, owner-led businesses in Europe and North America that trade below intrinsic value, emphasizing business resilience, leadership quality, and balance sheet strength. The fund's approach has proven effective with exited investments generating a 15.6% annual return, where 17 out of 26 positions exceeded the 16% target return. Key contributors include Interactive Brokers, which accounted for 37% of realized profits, and current holdings like Chapters Group. The portfolio consists of 13 companies with only 4.34% cash, reflecting active deployment of capital. The manager expects significant earnings growth across nearly all portfolio companies in 2025 and meaningful increases in intrinsic value per share. The strategy emphasizes long-term compounding over decades while maintaining a manageable risk profile through diversification and quality focus.
The fund aims to achieve the highest possible long-term returns by investing in outstanding, owner-led companies trading below intrinsic value, focusing on business resilience, quality leadership teams, and strong balance sheets while leveraging the power of compound interest over decades.
For 2025, the manager expects significant earnings growth at nearly all portfolio companies and a meaningful increase in intrinsic value per share across the board. Most portfolio companies are progressing well and fundamental investment theses are being confirmed in many cases.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 1 2025 | 2025 Q2 | ABYY.DE, BNTX, FMX, IBKR, MELI, MTX.DE, PYPL, RR.L, SPR.DE, STNE, TCX, UTDI.DE | Compounding, Europe, growth, long-term, Quality, value |
MELI IBKR |
Compound Interest fund posted 16.3% YTD returns through disciplined value investing in quality European and North American companies. The manager focuses on owner-led businesses trading below intrinsic value with strong balance sheets and leadership teams. Exited investments averaged 15.6% annual returns with 65% exceeding targets. Portfolio positioned for continued earnings growth across holdings in 2025. |
| Dec 31 2024 | 2024 Q4 | ABYY.DE, ARL.DE, BNTX, FMX, IBKR, MTX.DE, PYPL, ROVI.MC, TCX, UTDI.DE | Europe, Long Term, Owner Led, Pharmaceuticals, technology, Telecommunications, value |
ROVI.MC UTDI.DE |
European value fund delivered 16.9% in 2024 through concentrated portfolio of owner-led companies. Sold About You and Interactive Brokers on valuation concerns, added Spanish pharma Rovi and German telecom United Internet. Ten-year investment horizon focuses on capable management, defensible business models, and deep value opportunities. Manager expects significant earnings growth across portfolio in 2025. |
| Jun 30 2024 | 2024 Q2 | ABYY.DE, ARL.DE, BNTX, FMX, IBKR, MTX.DE, PYPL, TCX.TO, WINE.L | Concentration, Europe, Long Term, Owner Managed, value |
AAREAL.DE FMSAUBD.MX MTX.DE |
Concentrated European value fund targeting owner-managed companies delivered 0.5% in H1 2024. Opportunistic Aareal Bank bond investment generated 26% returns amid commercial real estate stress. Added MTU Aero Engines for aerospace duopoly exposure and re-entered Femsa post-simplification. Portfolio of 11 quality businesses positioned for significant profit growth in 2024 with abundant opportunities visible. |
| Dec 29 2023 | 2023 Q4 | BNTX, IBKR, MELI, PYPL, SCHJF, TCX, WAF.DE, WINE.L | Concentration, E-Commerce, Europe, Fintech, small cap, software, value |
ACGL|CHH|FDS|GWRE|IBKR|IDXX|MTN|SPOT|TSLA WINE.L |
Concentrated German fund delivered 17.3% in 2023 led by EQS Group's 63% gain from Toma Bravo acquisition. Manager actively traded around core positions, maintaining 9-company portfolio spanning software, e-commerce, and fintech. High conviction approach focuses on differentiated business models with capable management. Expects significant profit growth across holdings in 2024 with abundant small-cap opportunities ahead. |
| Jun 30 2019 | 2019 Q2 | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q2 |
ValueThe fund focuses on investing in companies trading below intrinsic value as one of three core investment criteria. The manager evaluates whether the price is clearly below intrinsic value, defined as the price a well-informed investor would pay to own the entire company. This value-oriented approach has contributed to the fund's strong performance with 17 out of 26 exited investments generating returns above 16% annually. |
Intrinsic Value Valuation Price Undervalued Investment Criteria |
QualityThe investment philosophy emphasizes business resilience, quality of leadership teams, and strength of balance sheets. The manager focuses on outstanding, owner-led companies with differentiated business models, intelligent and trustworthy management teams, strong balance sheets, and stable cash flows. This quality focus is designed to ensure companies can grow their intrinsic value over the long term. |
Business Resilience Leadership Quality Balance Sheets Owner-Led Cash Flows | |
GrowthThe manager expects significant earnings growth at nearly all portfolio companies for 2025 and meaningful increases in intrinsic value per share across the board. The fund has delivered strong growth with 16.3% year-to-date returns and an annualized net return of 16.9% over the past five years. The focus on compounding and long-term value creation drives the growth orientation. |
Earnings Growth Compounding Value Creation Long-term Returns Performance | |
| 2024 Q4 |
Contract ManufacturingRovi operates contract manufacturing for pharmaceutical companies, with many well-known drug manufacturers outsourcing production to specialized providers. Regulatory oversight makes switching CMO partners lengthy and complex, creating competitive moats. Rovi announced a major new client with production starting in 2026. |
Pharmaceuticals Manufacturing Regulatory Outsourcing Capacity |
PharmaceuticalsRovi develops heparins including Bemiparin and Enoxaparin biosimilar, generating significant revenue across multiple countries. The company focuses on injectable drugs and has an impressive operational history with revenue increasing tenfold between 2005-2023. Products are crisis-resistant with strong regulatory positioning. |
Heparins Biosimilars Injectable Revenue Growth Crisis Resistant | |
BroadbandUnited Internet provides internet access through fiber-optic infrastructure and is building Germany's fourth mobile network. The company owns over 60,000 kilometers of fiber infrastructure and serves millions of customers through both business and consumer segments with daily-use, difficult-to-switch services. |
Fiber Optic Mobile Network Infrastructure Germany Internet Access | |
| 2024 Q2 |
Commercial Real EstateAareal Bank faced market stress due to exposure to US office properties, creating a mispricing opportunity. The bank held EUR 3.2 billion in US office loans representing 10% of total portfolio, with strong equity ratios and defensive positioning making the stress temporary rather than systemic. |
Office Properties Banking Real Estate Loans Stress Testing |
AerospaceMTU Aero Engines benefits from duopoly dynamics in commercial aircraft engines through its stake in the PW1100 program. Despite teething problems common to new engine programs, the company enjoys decades of predictable aftermarket revenues from both legacy V2500 and new PW1100 engines. |
Aircraft Engines Aftermarket Maintenance Duopoly | |
| 2023 Q4 |
E-commerceManager discusses multiple e-commerce investments including Mercadolibre as the leading marketplace in South America with excellent operational development, and About You as a current portfolio holding. Naked Wines represents online wine subscription model with direct-to-consumer approach. |
Marketplaces Online retail Direct-to-consumer Digital commerce Subscription |
FinTechInteractive Brokers represents online brokerage with professional-level trading access and strong competitive positioning. PayPal remains a portfolio holding in the payments space. Manager emphasizes the solid balance sheet and growing customer base of Interactive Brokers. |
Online brokerage Payments Trading platforms Financial services Digital finance | |
SoftwareEQS Group provides investor relations and compliance software, serving as market leader in Germany for capital market communication. The company offers mandatory disclosure systems and whistleblowing compliance solutions required by EU regulations for companies with 50+ employees. |
Compliance software Investor relations Regulatory technology Enterprise software B2B software |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 1, 2025 | Fund Letters | Laurenz Nienaber | MELI | MercadoLibre, Inc. | Consumer Discretionary | Broadline Retail | Bull | NASDAQ | e-commerce, Fintech, Latin America, margin expansion, market share, Payments | Login |
| Jul 1, 2025 | Fund Letters | Laurenz Nienaber | IBKR | Interactive Brokers Group, Inc. | Financials | Capital Markets | Bull | NASDAQ | Account Growth, Brokerage, Fintech, Interest rates, Low cost, operating leverage | Login |
| Dec 31, 2024 | Fund Letters | LMN Capital | ROVI.MC | Laboratorios Farmacéuticos Rovi | Health Care | Pharmaceuticals | Bull | Madrid Stock Exchange | Anticoagulants, Biosimilar, contract manufacturing, Crisis-resistant, Family-owned, Heparins, Injectable Drugs, Long-acting Injections, pharmaceuticals, Regulatory Moat, Spain | Login |
| Dec 31, 2024 | Fund Letters | LMN Capital | UTDI.DE | United Internet | Communication Services | Internet Services & Infrastructure | Bull | XETRA | digital infrastructure, Fiber Optic, Germany, internet services, Mobile Network, Owner operator, Sum-of-parts, telecommunications, Value, Web Hosting | Login |
| Jun 28, 2024 | Fund Letters | LMN Capital | MTX.DE | MTU Aero Engines AG | Industrials | Aerospace & Defense | Bull | XETRA | A320neo, Aerospace, aftermarket, Aircraft engines, barriers to entry, German Industrial, MRO, oligopoly, Order Backlog, Pratt & Whitney, PW1100, V2500 | Login |
| Jun 28, 2024 | Fund Letters | LMN Capital | AAREAL.DE | Aareal Bank AG | Financials | Banks | Bull | XETRA | Aareon, Advent, AT1 Bond, Centerbridge, commercial real estate, contrarian, Credit, German Bank, mispricing, risk management, US Office Properties, Value | Login |
| Jun 28, 2024 | Fund Letters | LMN Capital | FMSAUBD.MX | Fomento Economico Mexicano SAB de CV | Consumer Staples | Food Retail | Bull | Mexican Stock Exchange | Bill Gates, capital allocation, Coca-Cola Bottler, Complexity Reduction, convenience stores, Fintech, Latin America, Mexican Holding Company, OXXO, Share Buybacks, Unbanked Population | Login |
| Dec 29, 2023 | Fund Letters | LMN Capital | ACGL|CHH|FDS|GWRE|IBKR|IDXX|MTN|SPOT|TSLA | Interactive Brokers Group Inc | Diversified Financials | Investment Banking & Brokerage | Bull | NASDAQ | competitive moat, Customer growth, Electronic Trading, financial services, Fortress Balance Sheet, market volatility, Online Brokerage, Value | Login |
| Dec 29, 2023 | Fund Letters | LMN Capital | WINE.L | Naked Wines plc | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | LSE | deep value, e-commerce, founder return, Online Subscription, recovery, turnaround, Wine Retail, working capital | Login |
| Dec 29, 2023 | Fund Letters | LMN Capital | - | EQS Group AG | Software & Services | Application Software | Bull | XETRA | Compliance software, Europe, Germany, Investor Relations, market leader, private equity acquisition, Regulatory Technology, SaaS, Whistleblowing Systems | Login |
| TICKER | COMMENTARY |
|---|---|
| BNTX | BioNTech |
| FMX | Femsa |
| MTX.DE | MTU Aero Engines |
| PYPL | Paypal |
| TCX | Tucows |
| UTDI.DE | United Internet |
| IBKR | Interactive Brokers is a nearly fully automated online broker, run by its founder-led team under Thomas Peterffy. The company manages over $660 billion in client assets and continues to grow rapidly. It is currently adding 32% more active clients year over year, on top of its existing base of over 3.7 million users. Despite offering highly attractive conditions for customers, Interactive Brokers achieves a pre-tax margin of more than 67%. The fund has invested in Interactive Brokers three times and it has contributed 37% of all realized profits from exited investments. |
| MELI | MercadoLibre is Latin America's leading e-commerce marketplace and one of the region's most important fintech companies. Since 2015, revenue has grown more than thirtyfold, and the company's market cap has increased roughly twentyfold. In both phases during which the fund held shares in MercadoLibre, I was deeply impressed by the people running the company and by their operational progress. The decisions to sell were driven primarily by valuation. Expectations for future growth were already heavily priced in at the time and still are. |
| RR.L | Rolls-Royce manufactures jet engines for the world's largest aircraft. These engines cost billions to develop but operate for decades and generate attractive maintenance revenues over time. The global crisis and its devastating impact on the aviation industry hit Rolls-Royce hard. In 2020, the company posted a loss of over £3 billion and had to raise emergency capital. The fund sold its stake in early 2021 due to lingering issues with the new engine generation, structural changes in business travel due to remote work, and most critically a weak internal control system. |
| SPR.DE | Despite its modest return, it was a good investment. The investment process worked exactly as intended. The shares in the company were bought in early 2020 as a special situation and a hedge against market turmoil and it fulfilled that role perfectly. |
| ABYY.DE | About You |
| STNE | StoneCo |
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