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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Bonsai underperformed in 2H 2025 but maintains conviction in hidden moats built from capability stacks. Wise, a top holding, exemplifies this thesis with vertically integrated infrastructure, customer-aligned pricing, and automation creating a difficult-to-replicate advantage."
Bonsai Partners returned 7.5% net in 2H 2025, underperforming the S&P 500's 11.0% return. The letter explores the concept of hidden moats built from capability stacks—many small, interlocking competitive advantages that are difficult to see individually but powerful in combination. Manager Andrew Rosenblum argues these diffuse advantages create investment friction because they are hard to explain, but that friction is precisely where mispricing opportunity lies. The letter uses Wise, one of the fund's largest positions, as a case study. Wise has built a hidden moat through vertically integrated payment infrastructure, a pricing model that shares scale economies with customers, and extensive back-office automation. The manager views this capability stack as exceptionally difficult to replicate, particularly given Wise's scale as the largest non-bank cross-border payments provider. The letter also assesses stablecoins as a potential risk, concluding they could commoditize one layer of Wise's stack but are not clearly superior to Wise's existing infrastructure. The manager continues to monitor this development while maintaining conviction in Wise's structural advantages.
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