Introduction

Antin reported earnings on September 9th, and again, the company disappointed. The new fundraising cycle keeps delaying, and the company is loosing credibility as it’s not meeting the expectations. It’s disappointing as current expectations might not be met.

The main reason was the delay of the activation of Mid Cap II, a fund currently in fundraising, that has been delayed until end of the year. Management cited that the main reason behind this delay is that they want to have one investment ready to maximize efficiency for LPs.

Fundraising cycle keeps delaying as the company is not transacting as it expected.

Subscribe now

1. Mid Cap Fund II has been delayed until end of the year

While this is not the end of the world, it’s disappointing because Antin needs to start delivering in the fundraising front.

Mid Cap II’s activation slipped from Q2 to Q4 2026 because Antin ties fund activation to the fund’s first investment, and that first deal hasn’t happened yet.

This has one consequence: management fees will not be perceived until the fund is activated. However, for long-term investors, a delay of two quarters of a small fraction of management fees is not a big issue.

My reading:

1. Antin is not delivering on investments and divestments — Current environment has created distortions that are delaying the investment and divestment activity.

2. Investors are willing to invest in Antin’s funds, but are requiring a more efficient approach as investments are taking longer than expected for the Fund VI, and distributions are also delaying (Mid Cap I has not returned any capital yet to investors).

If management expects activation by Q4 2026, means that they currently have something in the pipeline at and advanced stage. Once the fund is activated we will know the target size and the current appetite for Antin’s funds.

The delay itself is not the issue, but rather the underlying messages.

2. Flagship VI will likely be delayed, unless company deploys capital fast

Antin still needs to deliver on two fronts to ensure they can raise the Flagship Fund VI:

1. Return capital to LPs from Fund III

2. Finalize the investments of Fund V (between 2 and 3 remaining).

Returning capital to investors will likely take several quarters, and recent performance is being quite weak

Antin reported the following slide, in which we can see that there are no ongoing processes for Fund III. The company will need to extend the life of the fund, which is a 2016 vintage. Extending the life of a fund is not a positive sign.

The longer the period, the more difficult to achieve he targeted IRRs. Fore reference, Antin reported gross multiples of 2.0x and 2.4x, for Idex and Solvtrans, respectively. However, these investments were made in 2018 leading to very modest IRRs between 9-12%.

The fund still holds CityFibre, FirstLight Fiber, Elanta and Kisimul. There are not ongoing processes according to the management, and press reports point to FirstLight Fiber as the potential next candidate.

Since the IPO in 2021, the company has made 7 exits, which represents around 1.4 exits per year. If teams keep that pace, it is unlikely we see a full divestment in 2027.

This adds even more pressure to the performance of the fund. IRRs are affected by timing, and investors know when there is timing pressures, with the risk of Antin becoming a forced seller.

Investment activity has been stronger than divestments, although it will be challenging to meet the 2027 target

The company has done around 2 investments per year. Antin needs to invest in 2-3 companies before the next fund can be launched.

Management targets 2027 for fund activation, but this seems tight, considering all the ongoing activity. After all the delays, 2028 seems the right year to forecast a more conservative scenario.

After hearing the Investor’s call, management didn’t provided a solid commitment to a Fund VI in 2027, rather citing it’s the base case.

3. Flagship Strategy is under severe pressure

Management adjusted the valuation of Fund III from 1.9x to 1.7x, reducing expectations form “Above plan” to “On plan”. More over, Fund III-B has been reduced from 1.7x gross MOIC “On Plan” to 1.4x “Below plan”.

The strategy is under severe pressure:

• Fund III will need to extend the life of the fund, which creates frictions with LPs as the company is not returning capital back, and every year beyond the investment horizon impacts the IRR

• Fund III-B while likely be a fund underperforming the strategy, while Fund III will likely not meet the returns of Fund I and Fund II of 2.5x and 2.6x MOIC, respectively.

• Fund IV is likely to start divestments. It’s a 2019 vintage, so starting now is slightly below the plan, but they can still have the strategy fully diverted by 2029.

• Flagship V, a 2022 vintage and has deployed €3.6bn of the €10.2bn commitments. This creates frictions with LPs as they have allocated funds to this strategy, while not receiving capital calls.

The strategy will likely face difficulties during the next fundraising cycle. This is affecting the entire industry. Other PE firms are creating continuation funds, which in my opinion, are a worst outcome for investors.

Antin did it with Fund III-B in 2020 and the results are clear, it’s the worst performer of all its funds.

The main issue is the delay in investing, which implicitly affects the future fundraising period of the next two funds:

• For Fund VI, it implies a delay in future fundraising of 1-2 years

• But, it will also impact Fund VII, as the current fund will take longer to divest.

It seems the company found its sweet spot in the mid cap fund, deploying significant capital in the last years, but it’s not happening with fund VI, which 4 years after inception, it has just deployed 60% of the committed capital.

4. Forget about the first carried interest from Fund III-B

Fund III-B is below target, which means that is highly unlikely shareholders will benefit from the first carried interest.

While this has not a material impact on valuation, we feel that taking the most conservative approach with carried interest is the right approach and we are adjusting some of the future targets considering the delays in Fund V.

While management still reports €500 million of potential carried interest, I’m slightly adjusting the figures to remain conservative and excluding any carried interest from Fund III-B.

5. Midcap Strategy: Should we be worried?

The launch of Mid Cap II has been delayed to the end of the year. Management cited that wants to maximize efficiency to LPs by making coincide the fund activation with the first investment.

Management cited that they have commitments held in escrow, but didn’t provide further details on fundraising activity.

This adds some uncertainty, but the outcome is likely to be seen by the end of the year. What seems clear is that investors are focusing on deployment times and want to avoid having their funds committed through longer periods.

6. Have Operating Expenses gone too far?

When CIC's Arnaud Palliez asked whether they'd launch cost-control measures given the fund delay, Walid was explicit that the delay "should not trigger any cost actions." The framing was that Antin has spent recent years building a scalable platform (investment teams, specialist functions, fundraising, operations), so cost growth is now naturally decelerating and operating leverage is starting to show — but they'll keep investing ahead of the next fundraising cycle.

Since the IPO, the headcount has nearly doubled, with personnel expenses increasing significantly each year. This has not been followed by a rise in management fees from fundraising, eroding margins over time.

While too soon to judge this, there is currently a misalignment between size of the teams and the size of the assets under management.

In a year with no exceptional developments, personnel expenses grew by +6.9%.

7. During September 15^th, multiple partners sold shares, partly increasing the liquidity of the stock

Adding to this weak performance, during September 15 a group of current and former partners placed a large block of shares at a material discount to the prior market price.

• The selling group placed 5.0 million Antin ordinary shares, equal to roughly 2.8% of the company’s share capital.

• The shares were sold through an accelerated bookbuild at €7.18 per share, for gross proceeds of about €35.9 million.

• Antin had closed the preceding session at €7.98, so the placement price represented a 10.03% discount to the prior close.

• In response, the listed shares traded around €7.54–€7.55, down 5.5% intraday.

It’s a bad timing, and a bad signal, considering share price it’s at historical lows. A 10% discount signals that there is no appetite for Antin — for whatever the reason.

• Some members of the Executive Committee, including Alain Rauscher, Chairman and CEO, purchased c.1.4 million shares at the offering price.

• Antin purchased c.0.7 million of its own shares at the offering price, pursuant to its share buyback program authorized by Antin’s shareholders at the Annual General Meeting of 10 June 2026.

The Sale follows the second expiry of the IPO lock-up, during which 25% of the shares held by the concert of partners were released. The Sellers and the members of the Executive Committee who placed an order in the Sale have agreed to an additional 90-day lock-up, subject to certain customary exception

This added extra pressure to the stock price, which is at historical lows.

8. Forecasting the future is more challenging than ever

On one side, we see headcount increasing in the last years, with the message that the company is preparing for a new cycle of growth.

On the other hand, investment activity is weak and might impact the future fundraising cycle.

Overall, fundraising activity is positive in the market, and firms are raising more funds than in past years.

However, the market is clearly pricing a deterioration of Antin’s business, and frankly, the company is not delivering to contradict this argument.

9. Market is anticipating a negative scenario with a massive multiple re-rating over the last years

Antin stock keeps declining, which raises the question of whether this is a value trap or not.

As seen in the chart below, stock performance is not matching the evolution of fundamentals of the company. Recent performance is driven by a huge multiple re-rating.

Consensus analysts believe that the company will earn €100m during the next year, and €150m in 2028. However, what the market is saying to us is that this company is no longer a high quality private equity firm.

There are factors that impact this view:

• First, Antin is a small company in the stock market, mainly due to low liquidity. With c.16% of free float and €1.3bn of market cap, this means that only €200 million is available.

• This illiquidity generates high volatility — for the good (in 2021) and the bad (right now).

10. At current valuation investors get a c.9-10% dividend yield

Dividend at €0.7 per share is confirmed — at least for this year representing a dividend yield of 9-10%.

But, depending on the outcome of the fundraising cycle of the next 2-3 years, this dividend might not be sustainable.

There are too many uncertainties, and either the market has gone too far, or EPS is expected to decrease by 50% following the next fundraising cycle.

11. At this stage, we need to model 3 different scenarios to quantify the outcome

I build three different cases:

• Conservative scenario: the company faces 5-year cycles, compared to 3-4 years historically which lead to a new fund every 6 years; lower fund size compared to current funds; No future NextGen funds.

• Base case: Fund life cycles moderate and company launches new funds every 5 years (4 years to invest a fund), and fund size is maintained across the 3 strategies

• Aggressive case: Same as base case but with an improvement in fundraising (+10% fund size in first cycle and +20% in the second cycle)

In a conservative scenario, current price will reflect a P/E ratio of 12-14x, excluding the value of carried interest (which I assume less than 50% of what management reports).

In the remain scenarios, P/Es are very attractive.

12. Expected Returns

Under these scenarios, I get very attractive IRRs.

Even in the conservative scenario, the IRR is double digit:

However, the conservative case is not a worst case scenario. Under a worst case scenario, returns can still be negative from here.

13. My views and conclusions

I bought Antin stock more than two years ago at an average price of €11.4 a share. Since then, the stock is down by 35% — the worst performer of my portfolio. Including dividends, performance is -26%.

• Under a conservative scenario, expected share price will be c.€9.4, 18% lower than my investment. Adding €1.3 of expected dividends, leads to -7% return, which adding back the current dividends received will imply a neutral return. This means recovering the money.

• In the rest of scenarios, implied returns are of 30-50%, which are still significantly below my expectations, as the implied IRR over a 5/6-year tenure period will be low.

The delays in the fundraising cycle have affected the temporary value of the company. While it can increase in the next 2-3 years,

Selling now at the lowest point I think it’s not a good solution. The high volatility can lead to a partial recovery over the next weeks, and it seems unlikely that the stock can keep declining, considering it’s trading at a very conservative valuation.

This bad performance is materially impacting the performance of my portfolio, but I believe it’s worth waiting, although the uncertainty is high.

Since we can get our money back and earn a decent return in the coming quarters, I decided to keep it as it is.

Time will tell if being patient will have a positive outcome.

14. Lessons learned

When a company is facing some headwinds — note that Antin is not fighting for survival, but rather to see if it will keep growing — it’s very important to review the main drivers of its business and be extremely conservative.

These are some of the mistakes I made.

But the most important thing is that whenever we have doubts, always factor the most conservative scenario.

More specifically for Antin and the Private Equity industry:

A fundraising cycle depends on performance and distributions.

• First, Antin is not returning all the capital back from prior funds. This was forecastable as they don’t do much exits every year. We could have reached the conclusion that Fund III will certainly be extended.

• Second, extending the life of a fund generally implies lower returns, as the IRR is highly dependent on timing.

• Third, and most important, before starting fundraising of a fund, it’s critical to invest the current one. Antin faces huge delay in Fund V, and while deployment of capital can be done fast if needed, it was also clear that by the end of 2026 it was very challenging to have all capital deployed.

The lesson is clear: if there are challenges, always forecast the most conservative scenario. For Antin, it’s a reduction of AUM in the next fundraising and delays. While it might not materially impact the valuation,

Best,

Phil

This is not investment recommendation.

Asymmetric Ventures

Disclaimer:

Disclaimer. Please read full disclaimer at the end of the page before reading the article. This publication is only for information and entertainment purposes. It doesn’t constitute financial advice.

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The valuations and analyses presented here are based on publicly available

Please remember that nothing in this post is investment recommendation

1. Executive Summary

Have you ever booked a hotel through Booking? Search for a flight on Kayak? Or maybe through Priceline? Ever used OpenTable? Agoda?

All these are brands owned by Booking Holdings, the world’s largest online travel intermediary.

We recently invested in this company due to its market positioning, long-term tailwinds and a reasonable valuation for a business like this.

Our investment thesis rests on five pillars:

• First, Booking.com, the world’s largest online intermediary that facilitates more than $185bn of gross travel bookings. It’s 1.5x larger than Expedia, the second largest group.

• Second, the tailwinds of the industry. Tourism is an industry benefiting from tailwinds driven by the expansion of middle classes, social media and the need to travel, new lifestyle based on experiences and the ease of travel.

• Third, a capital-light business generating strong cash flows with significant growth ahead.

• Fourth, capital allocation has been disciplined and shareholder-friendly, buying back huge amounts of stock, further increasing shareholder returns.

• Fifth, a reasonable valuation: c.23x earnings and c.18x FCF for a business compounding FCF per share at double digits. We always say that valuation matters — here it works in our favor.

The threat of AI and LLMs disrupting platforms is also impacting Booking, which has seen its valuation compress: from trading above 30x to c.23x earnings today, a sharp de-rating over the last year, partly driven by the conflict in the middle east and its impact on tourism.

Risks to the investment thesis are real and well-disclosed:

• The rise of Marriott and other major groups that are trying to bring customers to their own systems by offering lower prices and loyalty programs.

• The rise of large generative-AI travel agents (Google Travel, ChatGPT plugins, Perplexity) could disintermediate the search-to-booking funnel that Booking has so effectively monetized.

The business has been performing very well during the last years. However, the rise of AI has increased concerns over the long-term sustainability of the business — a repeating pattern across many other industries.

But, as we will see, LLMs are unlikely to disrupt Booking’s business and increasing AI capacities can only improve the platform, becoming even more relevant.

Several quarters ago investors were willing to pay above 30x, with a median P/E of 28x over the last 4 years. Today, business keeps delivering good results, but valuation has been significantly reduced.

We believe this can represent an interesting opportunity, so we have been buying shares and reviewing the company in depth.

Get 15% off for 1 year

Read more

Disclaimer. Please read full disclaimer at the end of the page before reading the article. This publication is only for information and entertainment purposes. It doesn’t constitute financial advice.

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The …

Read more

Please remember that nothing in this post is investment recommendation.

Index:

1. Introduction

2. FY26 at a glance

3. United States: now the largest market

4. United Kingdom: fewer doors, more revenue

5. Group financials: P&L, cash flow and returns

6. Analyst Q&A: main themes from the results call

7. Strategy Deep Dive

8. FY27 guidance

9. Recent news and industry context

10. Valuation snapshot

11. Conclusions

I. Introduction

Watches of Switzerland Group reported its fiscal year 2026 results (53 weeks ended 3 May 2026) on 14 July 2026, and followed the morning results call with an afternoon Strategy Deep Dive — a c.100-slide capital markets presentation covering every pillar of the growth plan, with dedicated sections from the CEO, the Deputy CEO (US), the UK President, Hodinkee founder Ben Clymer, Deutsch & Deutsch President Tad Deutsch, and the CFO. This note covers both events, the analyst Q&A, and what our financial model implies about the underlying trends.

CEO Brian Duffy framed FY26 as “a year of strong execution against what was a complex and changeable operating backdrop” — a backdrop that included US tariffs, sharply higher gold prices, brand margin changes and ongoing consumer pressure in the UK. Against that, the group delivered a record year: sales of £1.828bn, up 13% in constant currency, with an improving trend through the year (H1 +10%, H2 +17%).

The structural milestone of the year: the US surpassed the UK to become the group’s largest market by both revenue and profits, reaching 51% of group revenue and 62% of adjusted EBIT (including Roberto Coin wholesale). Management noted the group remains 95% domestic-driven, with very little international/tourist business since VAT-free shopping was removed in the UK post-Brexit in 2021.

Duffy closed the call on a confident note: “2026 was clearly a good year for us in terms of sales growth and in terms of developing our infrastructure and our portfolio of our brands and stores… 2027, as we’ve been discussing, has started well, allows us to kind of confidently confirm our guidance.”

Wosg Fy26 Results Final

1.98MB ∙ PDF file

Download

Download

Wosg Deep Dive 140726

23.1MB ∙ PDF file

Download

Download

Wosg Fy26 Results Statement Final

3MB ∙ PDF file

Download

Download

Over the last 2 years, I was looking like a fool by owning a Rolex retailer that “was going to disappear”. YTD, the stock is up +68%, and nearly +100% since we acquire the stock in March 2024.

A potential takeover?

An important factor currently affecting the share price are recent press articles reporting that WOSG management held talks over potential takeover offers to take the company private.

Full press article: https://www.reuters.com/business/finance/watches-switzerland-held-talks-over-potential-takeover-offers-sources-say-2026-07-13/

There are several important conclusions from this article:

• Private equity firms are looking at the company. This signals that the company remains undervalued, that cash flows are perceived as stable (to be able to leverage the buyout), and, there is still growth potential.

• One of the sources said the company was seeking an offer of significantly ​more than £7.50 per ​share (the stock currently trades at £7.8 per share, so any offer IMHO should be significantly higher).

II. FY26 at a glance

The headline KPIs (constant currency unless noted; FY26 was a 53-week year):

• Group revenue £1,828m, +13% constant currency (+11% reported); H2 accelerated to +17% vs +10% in H1

• US revenue £927m, +24% (H2 +27%); US retail +25%; the US is now 51% of group revenue and 62% of adjusted EBIT

• UK & Europe revenue £901m, +4% (+5% for the UK excluding the closed European showrooms)

• Adjusted EBITDA £202m, +5%; margin 11.1% (-50bps)

• Adjusted EBIT £155m, +6% constant currency (+3% reported); margin 8.5%, -60bps

• Statutory PBT £133m, +76%; adjusted PBT £143m, +5%

• Adjusted EPS 45.2p, +9% (+3.6p); effective tax rate 26.7% (-110bps, helped by a one-off Roberto Coin tax credit)

• Free cash flow £162m with 80% conversion (FY25: £98m, 51%); net debt reduced to £57m (0.3x adjusted EBITDA)

• ROCE 18.0% (FY25: 19.0%)

• Growth pillars: pre-owned +22%, ecommerce +21%, Roberto Coin +20%; Mayors Roberto Coin shop-in-shop sales more than doubled

• £66m of expansionary capex across 13 major projects; £39m spent on acquisitions (Deutsch & Deutsch plus the final Roberto Coin payment); £14m of buybacks in the year

Revenue CAGR FY15–FY26 stands at 15.5%, with adjusted EBIT compounding at 29.5% over the same period — a track record management leaned on heavily in the afternoon strategy presentation.

III. United States: now the largest market

Read more

Disclaimer. Please read full disclaimer at the end of the page before reading the article. This publication is only for information and entertainment purposes. It doesn’t constitute financial advice.

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The valuations and analyses presented here are based on publicly available

Please remember that nothing in this post is investment recommendation.

Introduction

• Antin trades at 11x EV/FCFF, yet is a high quality company providing stable and predictable cash flows.

• It’s an illiquid company, which explains part of the discount in valuation, with a free float of 16% (currently less than €400m potentially available in the market)

• Company will start a new fundraising cycle this year which should contribute to an uplift in AUM and earnings

• Current stock price provides margin of safety (company should be trading at least 20% higher), and in the meantime, it delivers a solid and sustainable 7% dividend yield.

• Investing in Antin today is like investing in an investment grade bond yielding 7% per year, which is in line with past market performance, but without the risk that passive investors face with indexes valuations at all time highs.

• Antin passes our Asymmetric test and represents ~5% of the portfolio.

I. Antin in a Nutshell

Antin Infrastructure Partners is a private equity company focused on infrastructure companies across Europe and North America.

The company focuses on infrastructure companies withing transport, energy & environmental, digital and social sectores.

Antin manages three different strategies:

• Flagship — The core strategy with the first fund launched 20 years ago. It current has ~€18.6bn of fee-earning assets under management (AUM). Last fund reached €10bn size.

• Mid-cap — A new strategy launched in 2021 focusing on mid-market infrastructure investments. As the Flagship strategy becomes larger and can’t target mid-market companies, the firm launched this fund to continue investing in this segment.

• NextGen — Strategy launched also in 2021 that invests in new businesses and technologies that require capital to scale.

Antin effectively covers the entire segment in the infrastructure space, from newer companies/technologies to very large investments.

Current investments are concentrated in the digital infrastructure space (fiber companies, data centers, etc.), and energy & environment (district energy, renewables, etc.).

Antin applies what they call the “Infrastructure Test”, which are the main characteristics that their investments need to comply:

1. Provide as essential service to the community

2. Exhibit significant barriers to market entry

3. Have stable and predictable cash flows, that are inflation-linked

4. Display robust downside protection, mostly insulated from the business cycle.

The industry of private equity has concentrated over the last decade, with major companies acquiring asset management companies and consolidating the industry. Antin ranks as the 9th largest asset manager and is currently in a good position with very large funds.

During the next decade there is a risk of Antin being acquired by one of the largest managers as the industry keeps consolidating.

Since inception in 2007, AUM have increased from €0.2bn to €33.8bn AUM:

• The Flagship strategy has increased from €1.0bn in 2008 to €10bn in 2022.

• New strategies launched to effectively cover a larger share of the infrastructure market

In the private equity, performance is key an Antin has achieved an investment performance of 22% gross IRR and a 2.5x Gross Multiple.

• However, it’s not only performance in terms of delivered IRR what matters, but also how long you take to deploy the committed capital and to return it back to investors.

• During the last years, this investment activity slew down, as 2022 marked one of the most challenging years in the history of the PE industry. From very high valuations, to a disruption in financial markets with rates increasing exponentially in a few quarters.

The company went public in 2021 at a valuation that was very high. Final IPO price was set at €24 per share, implying a P/E of ~33x and nearly 40x actual earnings. The stock reached an insane valuation of €34.5 per share during 2021 and today the stock trades at ~€10 per share.

• I started investing in March 2024, with multiple further acquisitions during 2024 and 2025, implying an average cost of €11.4 per share.

• Stock is down 12%, but the investment is only 6% down, as the company offers a 6-7% dividen yield.

Summary of the investment thesis

A forgotten company?

Antin has not performed as I expected when I first invested in 2024. This was mainly a mistake I made, as looking backwards, I should have factored an extended fundraising cycle. This has created uncertainties, and given the illiquidity of the stock, it looks that it’s becoming a forgotten stock.

• The firm was slow in deploying capital, which turns to be a positive signal as the investment committees seem to be focused on performance, rather than simply investing capital to earn management fees.

• During the last quarters, investment performance has accelerated, with the Flagship fund close to 75% of capital invested, and the Mid-cap strategy almost ready.

• Currently, the company is launching multiple sell-side process to exit matures companies of older funds. This will support the new fundraising cycle.

• For many quarters, executives avoided to give specific timings on fundraising, due to the uncertainties on investment performance (investments and exits). A reasonable approach to not overpromise and the under-deliver.

The market now is not looking into the details.

• New fundraising cycle begins at the end of 2026, which will effectively increase the AUM significantly during the next 3 years

• The cycle is supported by exits, which will trigger the first carried interest attributable to the company — an important milestone, although not material at this stage (~€50m in the next couple years)

• Earnings will increase in the next years, supporting not only strong cash flow generation but also the current high dividend distributions.

Antin is like buying an investment grade bond offering a 7% coupon. It’s very attractive, yet nobody seem to care

• Current DPS stands at €0.7 per share, representing a dividend yield of 7%

• This dividend is sustainable as cash generation sufficiently covers this pay-out

• During the next years, company will invest ~1% in its own funds (GP Commitment), but current cash and exits will provide cushion to not put at risk the dividend.

• Note that share buybacks are not a viable alternative due to the current illiquidity of the stock.

However, it’s more than just a simple bond. There is high margin of safety and potential high upside.

• The stock trades at 12x earnings, a low valuation for a high-quality business that provides stable cash flows over extended periods of time.

• In the private markets you will never see an asset management company with €30bn of AUM trading at 12x earnings and 7.4x EBITDA.

• There will be growth in earnings over the next years through the new fundraising cycle. While value might take time to come, the increasing cash flow generation will support the current 7% dividend yield.

II. 2026 Update on the Investment Thesis

Read more

Disclaimer. Please read full disclaimer at the end of the page before reading the article. This publication is only for information and entertainment purposes. It doesn’t constitute financial advice.

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The …

Read more

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The …

Read more

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The valuations and analyses presented here are based on publicly available

Please remember that nothing in this post is investment recommendation.

Dear reader,

This will be the last deep dive on Uber’s investment thesis. Today we focus on valuation.

To value Uber, we first need to add some context.

Uber is by far the largest mobility platform on earth.

It might not be number 1 in all the markets where they operate, but on aggregate, there is no company with similar size.

This obviously should command a premium vs. peers when discussing valuation. But… It might not be the case.

Uber is sometimes cheaper than competitors, despite having a superior market positioning.

Current valuation is not in the “value” territory, but offers some margin of safety, which for a company like this, it’s not common.

Investors need to have their own views on the risk of disruption by AVs in order to consider if current valuation is attractive or not.

Uber vs. Peers

Uber is larger than the sum of DiDi and Delivery Hero, the largest competitors in the mobility and delivery space.

This matters because when the focus in on the risk from AVs, many people underestimate the power of the platform and the benefits from diversification.

In mobility, only Didi is larger than Uber, as the company is the leader in China. Exclude Didi, and no company comes close to Uber.

In the delivery segment, Uber seems to be less ahead than competition.

• Door Dash is the #1 player in the US, and significantly ahead of Uber.

• Delivery Hero is the largest pure delivery competitor around the world, with focus on emerging countries.

• Uber is expanding its TAM across all geographies and becoming a last-mile logistic platform in the major cities.

As seen in these charts, Uber has a dominant position in Western economies.

A position that can continue to consolidate as all other companies are significantly below in terms of returns.

• Uber generates 3x more EBITDA than Door Dash, the second largest player in the mobility industry by EBITDA.

• Only Door Dash posts a higher 2024 Adjusted EBITDA margin of 17.7%, compared to 14.7% of Uber (in 2025 it’s closer to 17%). Adjust for SBC, and the gap is significantly reduced.

• The rest of the players post low-single-digit EBITDA margins, except Grab with 11%.

As a conclusion, in terms of size, Uber stands clearly above all companies. It might not be the largest player in all geographies where they operate, but it’s the largest platform in Western economies.

This is very important because it generates a moat over the company. What matters in this business is having a reliable source of permanent customers.

Uber reached 200m in the 4Q 2025, and there is still room for further growth.

Summary of Uber Financials

P&L

Uber is considered a mature platform given they are already present in every major city.

Despite this consideration, Uber is a growth company that is generating strong KPIs, and more importantly, it’s a very profitable company.

• Company surpassed the 200m active customers in the latest results.

• Gross bookings kept growing in the high teens (2025 gross bookings great at +18.1%)

Read more

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The valuations and analyses presented here are based on publicly available

Please remember that nothing in this post is investment recommendation.

I. Introduction To Uber Delivery

The delivery segment offers enormous opportunities and faces significantly less risk from AVs, as human interaction remains necessary due to courier involvement and the complexity of urban environments.

Growth over recent years has been spectacular, with additional growth levers emerging as the company evolves into a key logistics platform within cities.

While the market debate focuses on autonomous vehicles, what Uber is building in delivery is extremely important—they are becoming the core logistics platform in major cities.

Historically, the company was very aggressive in capturing market share in the food delivery segment. While we should expect this to continue, the platform is gaining significant scale and increasing operating leverage.

Over time, the platform is positioned to become the leading player in the majority of its markets, as competing against a global player like Uber becomes increasingly difficult.

EBITDA is expanding rapidly, and Uber is the leading player in many of the markets where they operate.

Post-pandemic, we witnessed a boom in delivery. While growth eventually moderated, Uber has continued growing on all fronts. From 2021 to 2023:

• More demand: +8% consumers and +11% trips per consumer

• More supply: +19% merchants and +29% couriers

As with mobility, expected growth comes from a combination of increased supply and demand, both benefiting from favorable tailwinds.

Delivery Is Accelerating Its Growth

The platform is expanding every quarter, benefiting from the same virtuous cycle as Mobility. The larger the offering, the more consumers are attracted, and the more consumers attracted, the more merchants join the platform, and so on.

The company is expanding the platform through different value propositions:

• Integrate Uber into loyalty programs from top companies like Amex, Delta, and Marriott

• Integrate Uber into restaurant and merchant management apps such as Deliverect, Olo, and Square

• Improve platform monetization and create additional revenue streams

• Strengthen last-mile logistics to become a logistics platform, not just a marketplace

All of this is amplified by the Uber One membership, which now has approximately 36 million users.

Consumer Value

Uber Delivery integrates with loyalty programs, credit cards, airlines, and travel brands such as Delta (2nd largest airline), Amex, Marriott (largest hotel brand in the world), and Revolut. This increases switching costs for both Uber and its partners.

Also, the company focuses on customer experience. As an example, recently the platform made a mistake and a rifer had to collect two different items, my burger and some grocery things for another. My burger came late and cold. I sent a message to Uber and immediately, without talking to anybody, the company issued an immediate refund.

Merchant Enablement

Uber aims to make it easier for restaurants and retailers to operate, grow, and scale on Uber. Uber integrates directly into merchants’ existing tools such as:

• Deliverect (connects delivery apps directly to a restaurant point of sale)

• Olo (a digital ordering and guest engagement platform used by large restaurant brands such as Shake Shack, Chipotle, and Five Guys)

• OpenTable (restaurant management platform owned by Booking Holdings)

• Square (a payments ecosystem for small and mid-sized businesses)

Platform Enhancement

Uber is improving monetization, advertising, and payment flexibility. Instead of earning primarily from delivery fees and merchant commissions, Uber is expanding into new high-margin revenue streams such as advertising and sponsored placements.

The company is partnering with:

• Criteo, a commerce media platform specializing in performance-based ads that allows merchants to retarget users to increase order frequency and improve unit economics without affecting delivery costs. Criteo acts as a demand amplifier for the platform.

• Instacart Ads, one of the most successful retail media networks. The partnership aims to make it easier for consumer packaged goods brands of all sizes to advertise on their platform, not just the largest brands they work with directly.

• Klarna, one of the largest Buy Now, Pay Later (BNPL) platforms, enabling customers to split and defer payments on delivery (especially useful for premium or expensive products). This allows Uber to access the BNPL space without assuming the associated credit risk.

Last-Mile Logistics

The last mile is the most challenging and expensive part of delivery. To expand delivery beyond Uber Eats, Uber needs to attract large retailers and enterprises that require higher logistics standards—scheduled delivery, multi-carrier routing, etc.

Uber is partnering with third-party providers to enhance last-mile logistics:

• Bringg, a company that acts as a “control tower” for delivery operations and routes orders across Uber, internal fleets, and third-party couriers. The platform is used by large retailers and grocers, and Uber aims to become one carrier among many within Bringg.

• Delivery Solutions, a multi-carrier management platform focused on retail and e-commerce that connects retailers with dozens of carriers, enabling same-day, next-day, and scheduled deliveries. By partnering with this platform, Uber can be selected automatically when same-day delivery is needed, local inventory is closest, or Uber offers the cheapest or fastest alternative.

• Nash, a last-mile delivery platform built for Shopify and similar platforms. Nash now integrates Uber directly into e-commerce checkout flows.

Instead of building everything in-house, Uber aims to make operations seamless for merchants and restaurants, eliminating all possible barriers. This strategy allows Uber Delivery to constantly expand its platforms and service offerings.

It’s not only about ensuring a great user experience but also making merchants’ and restaurants’ operations significantly easier.

Key Growth Levers for Coming Years

Read more

Disclaimer. Please read full disclaimer at the end of the page before reading the article. This publication is only for information and entertainment purposes. It doesn’t constitute financial advice.

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The valuations and analyses presented here are based on publicly available

Please remember that nothing in this post is investment recommendation.

Autonomous vehicles are a reality in many cities and will become increasingly prevalent over the next decades. The ecosystem is vast, encompassing full-stack AV companies, car manufacturers, technology providers, and more.

This analysis focuses on robotaxis and their implications for Uber.

If you want to skip the detailed analysis, here are my key conclusions:

• I believe Uber will successfully defend against threats from Waymo, Tesla, and other AV players.

• The company is laser-focused on becoming the “everything platform,” and its relevance in mobility should only increase over time.

• AVs will commoditize over time. As expansion will take some time, by the time regulation eases, multiple players will compete against each other.

• Greater competition in the AV space actually benefits Uber, as demand aggregators will play a crucial role.

• Some AV players will form partnerships with Uber; others will try compete directly (notably Tesla — whose results are yet unclear).

• The economics of a 20% take rate are viable, which is why management is actively exploring this pricing structure.

• In an adverse scenario, Uber might lose 15-20% of mobility revenue. However:

  • Mobility has potential to continue growing at double digits, mitigating the impact.

  • AV economics are more attractive.

  • The Delivery segment is experiencing significant TAM expansion.

  • Uber has substantial financial firepower to defend and expand the platform.

    • As of September 2025, the company held $8.4 billion in cash.

    • The company is generating approximately $7 billion in FCF after deducting stock-based compensation.

Bottom line: Even in a negative scenario, I believe Uber would generate similar cash flow to today’s levels. At approximately 25x FCF, this significantly reduces downside risk.

In the following sections, we’ll examine each major player in detail and discuss potential scenarios going forward.

Read more

Disclaimer. Please read full disclaimer at the end of the page before reading the article. This publication is only for information and entertainment purposes. It doesn’t constitute financial advice.

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The valuations and analyses presented here are based on publicly available

Please remember that nothing in this post is investment recommendation.

Dear readers,

Most of you are familiar with Uber and have a general understanding of their operations. However, I want to provide a comprehensive series of post that explain the business model and demonstrates the company’s profitability in detail.

I was genuinely surprised when I examined their financials closely and discovered just how profitable the company has become.

I had long held the mistaken belief that their aggressive marketing strategies would prove unprofitable. I was completely wrong.

The company currently trades at an attractive valuation amid concerns about the threat posed by autonomous vehicles (AVs). Understanding the current situation and the implications of AV expansion is therefore critical to evaluating the investment opportunity.

Spoiler: I invested in Uber in late November, and it now represents 3.4% of my portfolio.

While many of you may already be familiar with the company, I’ve dedicated considerable time to understanding it deeply, and I believe this comprehensive analysis is worth sharing.

Get 15% off for 1 year

Read more

Disclaimer. Please read full disclaimer at the end of the page before reading the report. This publication is only for information and entertainment purposes. It doesn’t constitute financial advice.

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The valuations and analyses presented here are based on publicly available

Executive Summary

Note: the following content do not constitute investment recommendation.

Introduction: an opportunity in the UK in a very resilient sector

• CVS Group, is a veterinary provider in the UK and Australia.

• In 2024, the CMA (UK’s watchdog), launched an investigation on the UK veterinary market.

• Stock immediately fell by more than 50% following the news.

• Investment thesis relied on the market overreaction and that worst case scenario was not likely.

• We bought shares at the time when the narrative about the company was most negative, at an average price of £9.5 per share.

• Flash-forward 18 months: risks are very limited, and company is better than it was. Current gains are just +10% (reaching +50% some weeks ago), presenting a new opportunity.

CVS Group - do not confuse with the US healthcare company - provides veterinary services across the UK and Australia

• The company owns 425 practices in the UK and ~50 in Australia.

• Company is rapidly expanding in Australia, where they entered ~2 years ago.

• The company generates £670 million in annual revenue, of which 89% comes from Veterinary practices, 4.5% from laboratories, and 6.5% from their online shop Animed Direct.

The UK Veterinary market is large and consolidated between large corporates, including CVS

• The UK has one of the largest pet populations, with an estimated of 36 million pets.

• There are 5,500 practices (i.e., one practice per 6,500 pets).

• In the UK, large corporate groups own ~60% of the market share. CVS has a 10% share. Some of the groups are backed by large private equity firms such as EQT.

The CMA Investigation: constant delays and a final resolution expected by May 2026, nearly 3 years after

• Initially, the CMA launched a market review in September 2023.

• After their initial review, the CMA launched an investigation in May 2024 to assess whether veterinary practices were charging excessive fees to pet owners.

• Similar to every investigation by public authorities, their initial claims were a statement against free market, claiming that companies were earning more than they should.

• Putting things into perspective: CVS Group earns an EBITDA margin of 20%, which is significantly below other critical services for a country such as fiber, where telecom operators earn significantly higher margins.

• CVS and many other groups invest millions every year in new equipment, refurbishing practices, etc.

• The statutory deadline has been pushed several times, and now it is expected to end in May, which is three years after their initial review - delays that are not reasonable and affect very negatively the market.

Initial claims by the CMA seemed excessive and market feared the worst case scenario

• Concentration - Was the sector excessively concentrated between corporates with high market shares? Could this force large groups to divest their practices?

• Pricing limits? limiting referrals, prescription medicines, etc.?

• In December 2024 I published my investment thesis on CVS: the CMA remedies couldn’t go as far as expected.

We analyzed the remedies proposed and past resolutions: market was overreacting

• Market feared forced sale of clinics. We analyzed the concentration and market share of CVS and that was not realistic.

• We analyzed past remedies imposed by the CMA - Market was fearing unprecedent measures.

• Overall, the investment thesis relied that remedies will have a limited impact on CVS, as the company didn’t dominate any specific region, nor was earning above-market margins.

CMA has published the provisional remedies, which are in line with the investment thesis:

• Provide a price list for specific services and treatments on the websites, and be clear if the practice is part of a large group.

• Provide itemized bills for treatments and services.

• Provide a written estimate for treatments that could reasonably be expected to cost more than £500.

• Inform pet owners that they can get written prescriptions and that medicines may be cheaper online. Cap the fee for providing a written prescription at £16.

• Requiring vets to give pricing breakdowns for pet care plans.

Remedies will have low-to-moderate impact on CVS, something largely discounted by current share price

• Choosing a vet is a function of convenience and confidence. Price is not the major factor in the decision.

• Remedies will not include force sales, and further M&A will be allowed.

• Main issue remains prescription medicines. This is mitigated by the fact that consumers can acquire them online (even through CVS website Animed), and that some others are required immediately.

• Remedies set will have some negative impact on CVS in the short-term, but will also arise some opportunities to further consolidate the industry. M&A will be posible.

• This impact will be offset during the next years with the development of the Australian business and continued investments in their practices.

How much revenue is at risk?

• Main risk is currently the prescription of medicines. CMA wants to encourage people to buy medicines online.

• CVS generates 20% of the revenues from medicines.

• There are mitigants to CMAs potential decision: CVS owns an online store and many medicines require immediate acquisition.

• CVS will still be able to charge a fee for providing a written prescription.

CVS is well positioned to capture further growth, from both organic and inorganic opportunities

• Company’s performance remains good. Revenue from veterinary practices keeps increasing every years, with a 2025 more challenging, but still delivering positive growth.

• EBITDA margin stands at 20%.

• Leverage is low, at 1.2x excluding leases.

• FCF stands at 10% of the revenue.

The Australian market opportunity will develop a new equity story

• Less regulated market, escaping current European regulations.

• A rich and stable economy, with similar culture.

• An under-developed veterinary market that allows for consolidation.

CVS remains a very interesting opportunity, yet share price is down by nearly 20% in the last weeks

• Company trades at an EV/EBITDA of 8.5x, significantly lower than what private equity firms were paying 5 years ago (12-15x EBITDA).

• Price-to-FCF stands at 12x, excluding expansionary capex.

• Company has decided to exit the AIM (UK’s alternative market) and move to the London Stock Exchange.

• The Main Market generally attracts a broader set of institutional investors compared to AIM. CVS Group’s board say the move will “improve trading liquidity”.

• Company is launching a £20 million share buyback program (2.3% of the market cap), a good movement from capital allocation perspective.

Market valuation is completely disconnected to real risks from CMA and from actual

In this post I will do a deep review of the current situation, the CMA review, and the current valuation for premium only subscribers.

Get 15% off for 1 year

Thank you,

Phil from Asymmetric Ventures

CVS Group Annual Update

Content:

1. Main Highlights of recent performance

2. Annual review of 2025 results

3. Valuation

4. CMA’s Provisional Remedies

5. Conclusions

Read more

Disclaimer. Please read full disclaimer at the end of the page before reading the report. This publication is only for information and entertainment purposes. It doesn’t constitute financial advice.

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The valuations and analyses presented here are based on publicly available

Dear readers,

Today I present the second part of my analysis of LVMH’s Fashion & Leather Goods division. This took considerable time, as I conducted a thorough analysis of all their competitors.

I’m introducing a new format using more bullet points with more direct messages. I hope you enjoy it. Please leave your feedback at the end.

Part I: The Fashion & Leather Goods Industry

The luxury sector is highly competitive, with several dozen brands competing against each other.

Yet, despite this competition, the sector remains highly profitable.

Several factors contribute to this profitable environment:

• Pricing Power: Compared to the mass market, prices increase annually to maintain status and desirability.

• Limited Threat from New Entrants: The majority of brands are decades old, and the two largest are century-old brands.

• Resilient Consumer Base: Customers acquiring luxury goods tend to be financially more resilient than mass-market consumers.

• Exclusivity: These brands are rarely found in wholesale channels or offering discounted products.

These companies earn extraordinary margins, yet only a few new players can enter the market, and with limited impact.

There exists a massive moat in the form of branding, heritage, and quality that no other brands can replicate.

While many customers belong to the top 1%, many do not.

The fact that these expensive items are associated with society’s elite—unfortunately, we tend to associate a Rolex with a successful life—is the core element surrounding these brands.

💬A middle-class worker will purchase a €2,000 Louis Vuitton bag rather than a €2,000 bag from a new brand attempting to compete against LV. The reason is simple: LV symbols elevate the person; the alternative might not.

For some, it’s aspiration; for others, it’s belonging to a selected club in society. These items generate emotions while wearing them. In a quote from Forbes, we can see what people are willing to sacrifice to buy an LV bag:

“During the worst of the downturn last year, he adds [an HSBC analyst], “some American women decided they would spend less on food or travel and buy a Louis Vuitton handbag.””

Many middle-class people perceive these articles as stores of value. This is partially true, as the depreciation of these articles is far less severe than that of mass-market brands.

Although purchasing requires significant effort for many people, they tend to become “recurrent” buyers. It might start with a small LV bag, then a silk scarf from Hermès, leading to additional purchases.

Industry Players and Key Figures

The industry is competitive, with many brands operating in the luxury space, but three brands stand above all others:

• Hermès: The king of luxury, earning the highest margins. Its financials are exceptional.

• Chanel: One of the most sophisticated brands in the fashion space.

• Louis Vuitton: The most popular and largest brand.

These three brands alone represent approximately €50+ billion of the total luxury industry. While the players are relatively similar in size, Louis Vuitton is the largest:

• Louis Vuitton: €21.5 billion

• Chanel: €17 billion

• Hermès: €15 billion

📌In 2022, Bernard Arnault announced that Louis Vuitton had crossed the €20 billion mark. Assuming +7.5% growth between 2022 and 2024 (in line with segment performance), Louis Vuitton revenues would be approximately €21.5 billion.

Analyzing the largest companies, LVMH has two in the top five: LV and CD. LVMH’s market share is substantial.

Read more

Disclaimer. Please read full disclaimer at the end of the page before reading the report. This publication is only for information and entertainment purposes. It doesn’t constitute financial advice.

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The valuations and analyses presented here are based on publicly available

Introduction

In this series of posts we will analyze the core business of LVMH’s business: leather & fashion. It’s the crown jewel of the luxury conglomerate, earning extraordinary returns. It accounts for ~50% of total revenues and ~75% of operating profits of the group.

Whatever happens to this segment is what will drive the earnings and valuation of the company. The segment is now under some pressure, which has negatively impacted the valuation of the company.

This giant has experienced a significant increase in revenues as the world becomes richer every year. Same as the wine segment, many of the brands are more than a century old (Louis Vuitton, Loro Piana, Loewe), while many others have been around for decades.

This resilience commands a premium over premium or mass market brands.

Today I bring a post about the history of each brand, the present and how management is preparing the company for the future.

After understanding the history of the different brands we will be able to position them in the luxury space and analyze their returns. That will come in Part II, next week.

One thing I admire from LVMH is that the most iconic creative directors have worked for their brands. This explains the influence of the Group in the fashion space. You will find familiar all the names of the different people that will appear in the stories.

Each brand has followed a different story and is at different momentum.

Please note this is a brief history of each brand, to better understand the portfolio and not just simply briefly describing each of them.

If you are not interested in the history of each brands, during the next week we will get into the nitty gritty: the numbers and the positioning of the brands.

Part I: Louis Vuitton and Christian Dior

1. Louis Vuitton

History of the Company

The history of Louis Vuitton (LV, or Vuitton) is a story of a craftsman, a revolutionary product, and the creation of a global luxury empire.

It begins not with fashion, but with the humble art of trunk-making in 19th-century Paris.

In 1837, a young man named Louis Vuitton arrived in Paris and became an apprentice trunk maker to Monsieur Maréchal.

Travel in that era was arduous, and luggage was often dome-shaped, which made it difficult to stack. Vuitton recognized a need for a new type of luggage that was both durable and practical.

In 1854, he opened his own workshop and revolutionized the travel industry by introducing the flat-topped trunk, a design that was waterproof, airtight, and easily stackable. This innovation, along with the development of the durable Trianon canvas, laid the foundation for his brand's success.

The brand's iconic patterns were born out of a need for security and a desire for distinction. As the brand grew in popularity, so did the number of counterfeiters.

In 1888, Louis's son, Georges Vuitton, introduced the Damier Canvas pattern, featuring the "L. Vuitton" inscription, to combat imitation.

When that, too, was widely copied, he created the world-famous Monogram Canvas in 1896. This intricate pattern, with its floral motifs and interlocking "LV" logo, was designed to be virtually impossible to reproduce, and it quickly became a symbol of status and authenticity.

The image above it's very important. The design of current bags is more than a century old. This is both extraordinary and resilient. Try to name different products that have the same design since the start of the 1900s.

During the start of the century the brand was expanding internationally. It opened stores in New York, London, and Buenos Airies. In 1914 it opened the largest travel goods store in the world on the Champ-Élysées

As travel was quickly expanding, the company adapted their products to cars, trains and airplanes.

After WWII, they introduced in 1959 a Monogram canvas more supple and durable, allowing the creation of handbags. This innovation led to the creation of icons like the Noé bag (originally planned to carry champagne bottles), that are iconic models today.

One of the reasons why LV is such a popular brand able to creative desirability around the world is the fact that these bags have been existing for decades. This explains also the premium that luxury brands carry, as their terminal value is huge.

Under Henry Racamier (son-in-law of Gaston Vuitton), the company pursued an aggressive international expansion, opening boutiques worldwide and went public in 1984.

Creation of LVMH

After the Vuitton family's long stewardship, the brand underwent a major transformation in the late 20th century.

In 1987, Louis Vuitton merged with Moët Hennessy to create the luxury conglomerate LVMH as a way to protect both companies from hostile takeovers and to diversify the business.

In the 1980s, especially in Europe and the U.S., hostile takeovers were very common. Big corporations and financial groups were aggressively acquiring brands, often against the will of their management.

The idea was to create a big group strong enough to resist hostile takeovers. Ironically, it set the stage for Arnault.

The Figure of Bernard Arnault

Read more

Disclaimer. Please read full disclaimer at the end of the page before reading the report. This publication is only for information and entertainment purposes. It doesn’t constitute financial advice.

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The valuations and analyses presented here are based on publicly available.

Dear reader,

A lot has been written about LVMH, yet many people still don’t fully understand this company. LVMH is a conglomerate of brands operating in the premium and luxury space. From fashion to Champagne, and even yacht manufacturing, LVMH is much more than just Louis Vuitton.

Now that the group is facing some pressure on revenue, the investment community continues to debate: Is LVMH luxury?

The question is simply wrong. Brands like Louis Vuitton are luxury brands — but LVMH is far more than just a debate over whether it's a luxury or non-luxury company.

It’s a conglomerate of dozens of independent brands. From champagne to yacht manufacturers. Yet, the market only focuses on Louis Vuitton - which makes sense as it represents a significant amount of the earnings, but LVMH is much more than that.

In this series of posts, we’ll cover each of the company’s business segments. I will do a deep dive of each division - something you won’t see in any other Substack account.

To do so, I’ll follow the same structure LVMH uses for reporting:

• Wines & Spirits

• Fashion & Leather Goods

• Perfumes & Cosmetics

• Watches & Jewelry

• Selective Retailing

• Other Activities

In the final post, I’ll bring everything together to form a complete view of the company — its present, and its future.

Executive Summary

Wines & Spirits represents the roots of LVMH. However, in recent years, it has become the weakest division, underperforming compared to the rest of the group.

Mr. Arnault has appointed the CFO of the Group as the new head of the division — a clear sign that a turnaround is expected. The goal is to improve profitability and avoid more quarters of negative growth.

This division continues under a partnership with Diageo - this is helping to mitigate the current negative environment, as 1/3 is not owned by LVMH.

The Champagne and Cognac businesses currently return a decent ROCE, but below other segments. In the past year, the ROCE of this division has dropped by more than 200 basis points (2 percentage points), while inventories have increased by over one billion euros.

While the division is currently under pressure, this business is several centuries old, doesn’t have any risk of disruption, and it’s extremely difficult to compete against brands like Moët et Chandon.

In this post, we’ll explore the brand portfolio, analyze the division’s profitability, and compare LVMH’s performance to competitors like Laurent Perrier and Rémy Cointreau — as well as to global peers like Diageo.

🔒Content below is for premium subscribers only. I’m currently offering a 15% discount or a 7-day trial.

Get 15% off for 1 year

Read more

Disclaimer. Please read full disclaimer at the end of the page before reading the report. This publication is only for information and entertainment purposes. It doesn’t constitute financial advice.

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The valuations and analyses presented here are based on publicly available information and our interpretation of such data. By reading this blog, you agree to release us from any liability

Introduction

Watches of Switzerland reported its full-year results last week, and I have to admit, the numbers were disappointing.

The market responded with a roughly 10% drop in the share price, driven by three key factors:

• First, weak performance in the U.S. Despite management’s attempts to downplay the issue, market participants quickly recognized that the U.S. business is under significant pressure.

• Tariffs—while largely forgotten by capital markets—continue to weigh heavily on sentiment around WOSG.

• Last, the company issued soft guidance, particularly around margins. Management expects EBIT margin to decline by up to 100 basis points, even as revenues are projected to grow between 6% and 10%. This suggests that retailers are feeling the squeeze, with Rolex likely absorbing some of their margin to mitigate the impact of tariffs.

In today’s analysis, we’ll review Watches of Switzerland’s full-year performance and evaluate whether the current valuation is justified.

Although this remains my top holding in the portfolio, I aim to provide a fully transparent and unbiased assessment.

If you missed the initial write-ups:

Index of Annual Review:

1. Revenue Analysis

2. Portfolio Evolution and Performance

3. Financial Analysis

4. Valuation: Value Trap or Asymmetric Opportunity?

5. Final Word

Read more

Disclaimer. Please read full disclaimer at the end of the page before reading the report. This publication is only for information and entertainment purposes. It doesn’t constitute financial advice.

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The valuations and analyses presented here are based on publicly available.

Index:

1. Introduction

2. The Aviation Market and Engine Suppliers

3. The Lifecycle of an Engine

4. Commercial Engines & Services

5. Competitive Advantages and SWOT

6. Management: Larry Culp’s Outsider Performance

I. Introduction

Dear Investors,

Today I am pleased to present one of my latest investments: GE Aerospace.

GE Aerospace emerged from multiple spin-offs at GE. It is the company that retained the ticker symbol GE and has quickly become one of the leading companies in the aviation sector.

The stock was trading at $50 per share in 2021 and climbed significantly to reach $200 per share in January 2025. Following volatility triggered by the trade war, the stock experienced a decline to $160 but swiftly recovered to approximately $200 per share.

GE Aerospace holds substantial competitive advantages along with a robust business model, ensuring stable cash flows over the coming decades. The company is uniquely positioned as the primary supplier for the world's best-selling airplanes.

While GE Aerospace designs and manufactures engines for commercial aviation and select military aircraft, it primarily operates as a services company.

In this first segment, we will concentrate exclusively on commercial aviation, which represents 70% of the company's total revenue.

Initial acquisition date: April 2024 Average acquisition price: $184.6
Ticker: GE
Market cap: £247 billion (share price of $231.8 as of May, 16)

II. The Aviation Market and Engine Suppliers

GE primarily focuses on commercial aviation, alongside some military aviation activities. Their core business is commercial aviation, where they supply engines for the majority of Airbus and Boeing aircraft.

Similar to aircraft manufacturing, the engine industry is an oligopoly dominated by three main companies.

Commercial Aviation: Facts and Trends

Introduction

The commercial aviation sector is dominated by Airbus and Boeing, which account for the vast majority of commercial aircraft production. Other manufacturers compete primarily within regional markets.

Aircraft manufacturers do not produce aircraft engines; instead, specialized companies invest billions into research and development to create them. Currently, three companies dominate globally:

• GE Aerospace: Leads the narrowbody segment through its joint venture with Safran, CFM International.

• Rolls-Royce: Major competitor in the widebody segment.

• Pratt & Whitney: Significant player in the narrowbody segment.

Next Generation Engines

The current trend is toward manufacturing narrowbody and widebody twin-engine aircraft, marking the end of the ultra-large aircraft era. New aircraft require larger, more efficient engines.

The latest generation of aircraft engines significantly improves fuel efficiency but may result in slower production rates. These modern engines often encounter initial service-entry difficulties, creating additional pressures on overhaul facilities and parts suppliers.

Hundreds of aircraft are projected to be grounded due to issues with Pratt & Whitney’s PW1000G engines following the discovery of quality defects in powder-metal components, prompting mandatory inspections.

Meanwhile, CFM International’s LEAP engines require modifications to enhance performance under hot and dusty conditions. Rolls-Royce’s Trent XWB-97 has faced criticism due to its frequent inspection intervals, potentially affecting Airbus A350 operations, as it is the aircraft's sole engine option.

Despite these challenges, the long-term outlook remains positive.

Commercial Fleet Forecast

GE generates most of its profits through engine maintenance rather than sales, making fleet size a critical factor. A larger fleet translates to increased profits.

The aviation industry suffered significantly from the pandemic, impacting airlines and manufacturers financially. While trends have shifted, recovery is expected over the coming years.

Key factors for GE’s profits include:

• Fleet Growth: A larger fleet implies a higher installed base of GE engines, determined by new deliveries and retirements.

• New Deliveries: Newer engines, being larger, generally require more maintenance.

Available reports:

McKinsey & Co - Why aftermarket and service are vital to OEMs—and how to excel

McKinsey & Co - What does the future hold for commercial-aviation maintenance?

Oliver Wyman - Global Fleet And MRO Market Forecast 2025-2035

Boeing - Commercial Market Outlook 2024–2043

Airbus - 2024 Global Market Forecast

Projected Fleet Growth

Publicly available forecasts:

• Oliver Wyman: +2.5%

• Fleet MRO: +3.1%

• McKinsey: +3.4%

Annual fleet growth is anticipated at approximately 3-4% over the next decade.

Deliveries and Retirements

Annual aircraft production and deliveries exceed 2,000, representing about 6-7% annual growth, primarily narrowbody aircraft.

Annually, around 700 aircraft retire (approximately 2% of the fleet), mostly narrowbody. This results in about 1,300 net new aircraft annually, or approximately 2,600 engines, indicating 3-4% fleet growth each year.

Given its dominance in narrowbody aircraft, GE is expected to capture at least half of this market.

GE might capture at least half of the market, with its dominant position in the narrowbody.

The MRO market

Engine maintenance constitutes half of maintenance, repair, and overhaul (MRO) expenditures. McKinsey forecasts a 0.6% annual growth rate, excluding inflation, over the next decade.

However, actual long-term growth may exceed this due to:

• Fleet expansion at 3-4% annually, increasing the installed engine base.

• Higher maintenance costs of next-generation, larger engines.

• Inflation rates around 2-3%.

GE participates in four of the top five platforms projected for highest MRO spending, including the A320neo and B737 MAX.

Read more

Disclaimer. Please read full disclaimer at the end of the page before reading the report. This publication is only for information and entertainment purposes. It doesn’t constitute financial advice.

The information provided in this blog is for informational purposes only and should not be considered as financial, investment, or professional advice. The valuations and analyses presented here are based on publicly available information and our interpretation of such data. By reading this blog, you agree to release us from any liability

Dear reader,

A year ago I published my investment thesis about Watches Of Switzerland Group. During January 2025 I updated the analysis and today I bring the latest part: Rolex and the Swiss Watch Industry.

In case you missed the initial write-ups:

In this part III, we will cover the luxury watches industry. From what makes a mechanical watch desirable, to why Rolex is the most iconic brand.

Index

• Part I: The Swiss Watch Industry

• Part II: The Future of The Industry

• Part III: Rolex

• Appendix

Part I: The Swiss Watch Industry

Origins and Early Development

The Swiss watch and clock industry originated in Geneva in the mid-16th century, gradually expanding throughout the Jura Mountains of Switzerland. For centuries, Switzerland's industry primarily focused on clocks and subsequently pocket watches, gaining a very strong reputation for its high quality products.

Emergence of the Wristwatch

Cartier was among the first companies to introduce wristwatches at the beginning of the 20th century. However, wristwatches only gained widespread popularity after World War I.

Prior to the 1920s, wristwatches were uncommon, with most individuals preferring pocket watches. Early innovators, including Rolex and Cartier, pioneered the development of wristwatches despite significant challenges:

• Manufacturers needed to ensure precision despite the considerably smaller size of wristwatches.

• Wristwatches were vulnerable to environmental factors like dust and humidity.

These issues make complex to built a reliable wristwatch in a time with no smartphones and watches everywhere.

Post-WWI Growth

After WWI, Rolex and other Swiss brands began to innovate and create watches that were precise and reliable. During the following decades, these companies introduced the features known today: sealed, and automatic watches.

During the WWII, Swiss brands manufactured watches for the different armies. It was a more technological war than WWI that required much more precision. Rolex, for example, was a key supplier to the British Royal Air Force.

During the decades of the 1950s and 1960s, there were many innovations in the mechanical wristwatches making them very reliable watches. Because Switzerland remained neutral during the WWII, they were able to introduce themselves in the major market: the United States.

Brands like Rolex and Omega had a lot of success after the war. Rolex was sending watches to the U.S. presidents, Omega supplying NASA astronauts, etc.

It were buoyant decades for the Swiss watch industry, until the late 1950s, early 1960s, where a new revolutionary system was introduced: the quartz watch.

Quartz Revolution and Crisis

In the late 1950s and early 1960s, the advent of quartz technology significantly transformed the industry. Quartz watches, powered by battery-operated quartz crystals, offered unprecedented accuracy, dramatically reshaping market dynamics:

• Mass production techniques made quartz watches affordable, attracting numerous competitors.

• By 1978, quartz technology dominated, severely impacting the Swiss mechanical watch industry and leading to widespread bankruptcies and market exits.

• Hong Kong emerged as a major exporter of electronic watches.

The system, compared to automatic watches, is significantly less complex, allowing for mass production and lower expenses. New watches will be significantly cheaper, and even more precise.

Response and Revival

Same as with other revolutions, as this new technology advanced and mass production techniques were developed in the 1970s and 1980s, watches became much cheaper and easier to manufacture, attracting a huge number of new players.

By 1978, quartz watches overtook the Swiss mechanical watches, plunging the Swiss watch industry into the “quartz crisis”. As a result, many famous Swiss watch house disappeared. In the decade of the 1970s, and beginning of 1980s, the number of Swiss watchmakers dropped from 1,600 to 600.2

Outside Switzerland, the history repeated: this new industry attracted a huge number of players, especially in the U.S., where the vast majority of firms went bankrupt and Hong Kong became the largest exported of electronic watches.

The crisis defined the Swiss industry of today:

• Rolex decided not to move to quartz watches. Maybe because they are led by a foundation, they were not interested to rush into the new technology and decided to continue manufacturing their mechanical watches.

• Other brands like Omega tried to enter the market, becoming a big failure and loosing its dominant position in the market.

• In order to survive, the two biggest Swiss watch groups decided to merge in 1983 to create The Swatch Group. This movement will allow the Swiss watch industry to revive and today, the Swatch Group is the largest manufacturer in the world.

• The high-end watches became highly valued by auction houses. Watches like the Daytona wear by Paul Newman was sold by $17.8 million. This will revive the industry too, as people identified strong value in these timepieces.

The emergence of the Apple Watch

Prior to the launch of the Apple Watch, there were only specialized fitness watches, mainly designed for runners and triathletes.

Apple created a new market that will compete directly with traditional wristwatches: the smartwatch.

Although by that time the utility of a watch was already close to zero, watches were part of someone’s outfit. Now, smartwatches track our sleep, calories burn, and make us 100% connected to notifications.

Because we only use one wrist for a watch, smartwatches have displaced cheaper or premium watches. This has significantly affected the low price and premium brands.

Since the launch of the Apple Watch in 2015 and the emergence of smartwatches:

• Luxury watches (above CHF 3,000) have increased from 1.6 million units in 2015 to 2.0 million units in 2024

• Exports of watches with pricing below CHF 500 have decreased by more than 50% since 2015

• Premium watches (between CHF 500 to 3,000) have decreased by 25% since 2015

Companies like Swatch Group have seen their revenues decrease since 2015, despite owning the Omega brand (top 3 brand in the Swiss watch industry).

Watches of Switzerland sells mainly watches of the CHF 3,000+ category, and some between CHF 500 to 3,000, being Rolex, Patek and Audemars the main brands sold in their stores.

Although the smartwatch can’t be seen as a direct competitor to Rolex, smartwatches compete with watches for a place in our wrist. The low-end brands like Tissot, Longines or Tag Heuer are probably suffering the most. For similar price range, if consumers need to decide between mechanical watch and smartwatch, the answer is simple: functionality will be preferred, as these watches do not provide any status.

For the true luxury brands, a smartwatch is not a direct competitor in the majority of the cases, and since the introduction of Apple Watch, the high-end industry has only increased its popularity and desire.

Probably, the Apple Watch introduced to many people the habit to wear a watch, which ultimately benefit companies like Rolex, as many people will understand its power, and will move from a notification/sport monitoring watch, to a timepiece that elevates the person.

Figures of the Industry

Currently, the top 50 Swiss watch brands produce over 15 million watches annually, achieving a wholesale market value surpassing CHF 30 billion (~€33 billion).

Luxury brands like Rolex, Patek Philippe, and Audemars Piguet focus exclusively on limited-production mechanical watches, consistently raising their prices, and limiting the supply of its products (i.e., they never match supply to demand).

Despite the competition posed by smartwatches, the luxury segment remains robust. Swiss watch exports are c.20% higher than 2015, with a positive trend since the pandemic.

By region, the U.S. remains as the largest market, representing 17% of total exports, while Asian countries China, Japan, Hong Kong, and Singapore represent ~30% of total exports.

Market Participants

The Swiss watch industry features a diverse landscape of brands in both mechanical and quartz categories:

• Independent Brands: Rolex, Patek Philippe, and Audemars Piguet remain influential, independently-operated brands.

• Luxury Conglomerates:

  • Swatch Group: Largest watch manufacturer globally.

  • Richemont: Owner of luxury brand Cartier.

  • LVMH: Major brands include Hublot and premium brand TAG Heuer.

Morgan Stanley estimates Rolex as the largest industry player, accounting for approximately one-third of total industry revenue. The top brands by unit sales and revenue are Rolex, Cartier, Omega, Patek Philippe, and Audemars Piguet.

According to Morgan Stanley, Rolex has a market share of 30%. They are the absolute leaders of the market, followed by Cartier and Omega. They are 3x bigger than the second market participant.

Watches of Switzerland Group (WOSG)

WOSG maintains a strong market position, especially in the U.K. and the U.S., representing key brands such as Rolex and Patek Philippe.

After the introduction of the Rolex CPO program, the share of Rolex is expected to remain very high.

According to Morgan Stanley, the share of wholesale for these three brands is 100%, 85%, and 12%, of total sales, respectively (i.e., Rolex sells 100% through retailers, and Patek 85%, while AP only 15%).

As of today, WOSG is very well positioned selling the top brands in the U.S. (the largest country, representing ~17% of total exports, twice the amount to China).

The data from the Federation of the Swiss Watch Industry FH provides important takeaways for WOSG investors:

• The U.S. plus the U.K. are larger than the sum of China, Japan, and Hong Kong.

• These two regions remained resilient in the past two years, while exports to China have fell by 25% during 2024.

Growth in the U.S. remains very strong, while the U.K. has been more affected by recent macroeconomic environment.

• The exports of Swiss watches to the U.S. have increased by +12.4% since 2022.

• In the U.K., exports of Swiss watches have increased by +5.9% since 2022. Although 2024 was seen as a bad year, the value of the exports only fell by -1.6%, as Swiss companies are able to offset lower volumes with price increases.

However, it makes no sense to measure the performance of the sector in one year. Luxury brands think in the next decades, not the next quarters. The positioning of the brand and desirability of the product is what will guide the profits in the future.

Looking at long-term trends:

• The value of Swiss watch exports to the U.S. has multiplied by 2.4x since the 2000s.

• In the U.K., the value has multiplied by 4x since the 2000s.

Please note these are aggregated data that includes the whole spectrum of Swiss watches, from low price quartz to high-end mechanical watches. Some segments like the low-end/premium have been impacted by the appearance of smartwatches, affecting the figures.

Brands like Rolex have significantly outperformed the market, as they are focused in a luxury product which price has exponentially increased in the last decades. Although the market is focused on the recent price declines of the secondary market, Rolex watches already saw significant price increases prior to pandemic.

Here are some examples of the value of different Rolex watches:

Part II: The Future of The Industry

Read more

Read more

Read more