| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | 7.3% |
| 2025 |
|---|
| 7.3% |
Bonsai Partners Fund delivered 7.3% net returns in the first half of 2025, outperforming the S&P 500's 6.2% return. The manager introduces the concept of Enduring Economics, combining competitive advantage with customer advantage to identify businesses capable of sustained profitable growth. The letter emphasizes that investors often focus too heavily on competitive positioning while underweighting customer relationships, which are the ultimate source of all revenue and profits. The portfolio demonstrates this philosophy through holdings like Wise, which exemplifies radical customer alignment in cross-border transfers. The major investment focus is Fever-Tree Drinks, purchased at attractive valuations following margin pressures from supply chain disruptions. The company's exclusive partnership with Molson Coors provides guaranteed minimum royalty payments through 2030, resolving operational issues while expanding U.S. distribution from 70,000 to over 500,000 accounts. Despite market indifference to the partnership announcement, the manager substantially increased the position, expecting EBITDA to double over three years.
Great investing requires identifying businesses with Enduring Economics - the combination of competitive advantage and customer advantage that enables companies to sustain profitable growth over long periods.
The manager expresses confidence in Fever-Tree's prospects, expecting EBITDA to likely double over the next three years if Molson Coors remains creditworthy and the non-U.S. business continues margin improvement.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Aug 18 2025 | 2025 Q2 | AMZN, CELH, FEVR.L, KO, MNST, TAP, WISE.L | Beverages, Customer Focus, Distribution, Enduring Economics, Partnerships, Quality | FEVR.L | Bonsai outperformed with 7.3% net returns, driven by the Enduring Economics framework combining competitive and customer advantages. The major focus is Fever-Tree's transformative Molson Coors partnership, providing guaranteed royalties through 2030 and massive U.S. distribution expansion. Despite market skepticism, the manager substantially increased the position at attractive valuations, expecting EBITDA to double over three years. |
| Sep 4 2024 | 2024 Q2 | AAPL, COST, CSCO, UI | Capital Allocation, hardware, Networking, Operational Float, Quality, value | UI | Bonsai Partners introduced 'operational float' as an investment framework, exemplified by new holding Ubiquiti. The networking hardware company achieves 32% operating margins while selling at one-third competitor prices through customer-subsidized operations. Founder-controlled with aggressive capital allocation, Ubiquiti was acquired at low valuations despite governance risks, offering potential for attractive long-term compounded growth. |
| Feb 19 2024 | 2023 Q4 | ESTC | long-term, Portfolio Management, software, technology, value | ESTC | Bonsai Partners outperformed in Q4 2023 while transitioning to a more stable, process-driven approach. The fund sold Elastic despite strong fundamentals, reflecting an evolved philosophy favoring adaptable companies over those requiring specific future outcomes. New technological tools and frameworks position the fund for improved decision-making and reduced operational friction going forward. |
| Dec 26 2023 | 2023 Q3 | ACN, CTSH, DAVA, EPAM, G, GLOB, NA9.DE, QCOM, TSM, TWKS, WIT | AI, IT Services, Robustness, semiconductors, technology, Value Investing | - | Bonsai Partners seeks robust businesses that spread risks across value chains, avoiding fragile single-point-of-failure companies. New investment in IT services company Nagarro exemplifies this approach - technology enablers that benefit from digitization without technology risk. Despite macro headwinds and AI uncertainty, the industry's adaptability and high success rate make it attractive at current valuations. |
| Feb 14 2023 | 2022 Q4 | FERG | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q2 |
BeveragesFever-Tree demonstrates the power of premium positioning in the mixer industry, capitalizing on Schweppes' fragmented ownership structure. The company's partnership with Molson Coors provides guaranteed minimum royalty payments through 2030, offering strong earnings visibility and resolving margin issues through domestic manufacturing. |
Premium Mixers Distribution Partnerships Margins |
QualityThe investment philosophy centers on identifying businesses with Enduring Economics - combining competitive advantage with customer advantage. Companies that deliver superior value to customers while maintaining defensive moats are more likely to sustain profitable growth over long periods. |
Enduring Economics Customer Advantage Competitive Advantage Durability Returns | |
| 2024 Q2 |
NetworkingUbiquiti operates in the networking technology hardware space, providing products like routing, switching, wireless access points, VoIP phones, and security cameras. The company competes against enterprise-grade networking equipment providers like Cisco's Meraki, Aruba Networks, and Ruckus Networks, but offers products at roughly one-third the price while maintaining higher profitability through operational efficiency. |
Hardware Infrastructure Enterprise Wireless Equipment |
QualityThe letter emphasizes Ubiquiti's focus on creating better-designed and priced versions of industry standards rather than radically new product categories. The company's outlier price-to-quality ratio is described as its greatest innovation and long-term competitive advantage, with products that are approximately 70% as functional as enterprise-grade equipment but at significantly lower prices. |
Design Value Competitive Advantage Innovation Products | |
| 2023 Q3 |
RobustnessManager emphasizes seeking robust businesses that spread risks across value chains or own key processes outright, avoiding fragile companies with single points of failure. Robust companies with pragmatic leadership are purpose-built to survive difficult terrain and act as hedges against unknowable risks. |
Diversification Adaptability Risk Management Value Chain Resilience |
IT ServicesDetailed analysis of IT services industry as technology enablers that benefit from digitization without technology risk. Industry has high base rate of success with most companies growing revenues and profits at 10%+ CAGR for decades, adapting through multiple paradigm shifts from custom development to cloud to AI. |
Technology Enablers Digitization Outsourcing Engineering Talent Adaptability | |
AIDiscussion of artificial intelligence impact on IT services industry, with bulls arguing AI will create more projects and bears fearing commoditization. Manager believes reality lies between extremes and industry will adapt as it has through previous technological shifts, with potential for higher billable rates offsetting reduced hours per project. |
Automation Software Development Technology Disruption Industry Adaptation Productivity |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Aug 18, 2025 | Fund Letters | Bonsai Partners | FEVR.L | Fever-Tree Drinks | Consumer Staples | Soft Drinks | Bull | London Stock Exchange | asset-light, Beverage, Brand, consumer staples, Distribution Partnership, Margin recovery, Premium Mixers, royalty model, supply chain, turnaround, UK | Login |
| Sep 4, 2024 | Fund Letters | Bonsai Partners | UI | Ubiquiti Inc. | Information Technology | Communications Equipment | Bull | NYSE | asset-light, capital allocation, Counter-positioning, founder-led, Hardware, networking equipment, Operational Float, Prosumer, Share Buybacks, SMB | Login |
| Feb 19, 2024 | Fund Letters | Bonsai Partners | ESTC | Elastic N.V. | Information Technology | Systems Software | Bear | NYSE | AI, Database Software, network effects, Open Source, SaaS, Search Technology, Systems Software, Technology Disruption | Login |
| TICKER | COMMENTARY |
|---|---|
| AMZN | Jeff Bezos recognized this early, famously noting that most companies are competitor-obsessed rather than customer-obsessed. From Amazon's earliest days, he set out to do the opposite, declaring his aim to build the world's most customer-centric company. Amazon, for example, exemplifies RCA by relentlessly improving in the areas e-commerce customers value most: low prices, broad selection, fast delivery, and frictionless transactions. |
| WISE.L | Wise is a company from our portfolio that demonstrates radical customer alignment. Wise recognized early on that its customers care most about low prices, speed, and transparency in cross-border transfers. Consequently, Wise built its entire organization around delivering leading performance in each of these areas. By designing the company to stay aligned with customers, Wise increases the likelihood of staying relevant with its customers in the future. |
| FEVR.L | Fever-Tree is the global leader in premium mixers, offering tonic waters, ginger beers, and other cocktail mixers. I've admired Fever-Tree for nearly a decade but held back from investing due to its persistently high valuation. However, late last year, an attractive opportunity emerged, leading us to initiate a position and eventually increase our investment as the thesis improved. We purchased our position at what I consider ~13x normalized trailing earnings, which is well below the company's historical average P/E of about 65x. In January 2025, shortly after our initial investment, Fever-Tree signed an exclusive partnership agreement with Molson Coors. The partnership excited me because other exclusive distribution deals have unlocked significant shareholder value for beverage brands. While the market yawned, we substantially increased our position. |
| KO | A lesser-known fact outside the beverage industry is that Coca-Cola is an asset-light business, owning minimal manufacturing and distribution infrastructure. Undoubtedly inspired by Coke's success, Fever-Tree and many other beverage companies also adopt an asset-light approach. Coca-Cola, Pepsi, Keurig Dr Pepper, Anheuser-Busch, and Molson Coors control the five high-volume U.S. beverage distributors. |
| TAP | In January 2025, shortly after our initial investment, Fever-Tree signed an exclusive partnership agreement with Molson Coors. Under the agreement, Molson Coors gains exclusive U.S. rights for Fever-Tree's product range, taking complete control of manufacturing, distribution, and sales. Molson Coors maintains more than 500,000 sales accounts, compared with the roughly 70,000 that Fever-Tree accessed through its earlier distributor. Molson Coors further aligned interests by acquiring an 8.5% equity stake in Fever-Tree. |
| MNST | The partnership excited me because other exclusive distribution deals have unlocked significant shareholder value for beverage brands, such as Monster Beverage's 2014 tie-up with Coca-Cola and Celsius's 2022 agreement with Pepsi. |
| CELH | The partnership excited me because other exclusive distribution deals have unlocked significant shareholder value for beverage brands, such as Monster Beverage's 2014 tie-up with Coca-Cola and Celsius's 2022 agreement with Pepsi. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
