Q3 2025 Letter – A humble Quarter
Falling behind this time, but still running the marathon
Hey partners,
Let’s keep it real: Q3 wasn’t our flashiest quarter. The S&P 500 sprinted ahead with +12%, while our portfolio delivered +9%. Year-to-date, the S&P sits at +14%, and we’re at +16%—so we’re still ahead, just not by a huge margin.
Here’s the mindset that matters: I don’t manage this portfolio to “win” every quarter, and I don’t even expect to beat the market every year. My goal is to compound wealth over a five-year stretch—and ideally far beyond that. The long-term growth of our portfolio is what really counts, and so far, we’re on track.
Think of it this way: a sprinter may shine over 100 meters, but a marathon is a different challenge. My investing strategy is about endurance, not bursts of speed.
What truly matters isn’t a quarter’s performance—it’s the businesses we own. Are they creating more value than last year? Are revenues and earnings compounding healthily? Are reinvestment opportunities strong? That’s where the real, lasting growth comes from.
The answers remain encouraging:
Revenue growth: +19.7% year-over-year
Return on Capital Employed (ROCE): 24%
Forward earnings yield: 3.8% (vs. 3.4% for the S&P 500)
In plain English: our portfolio companies are growing faster than the average index company, at a cheaper valuation. That’s the “gap” I want to sit on top of.
Yes, Q3 put us behind. But the marathon is still very much in play.
Another development this quarter: we launched a new side portfolio called Income Roost. The idea isn’t to chase high-yield, low-growth businesses that stop compounding. Instead, it’s about companies that still grow but also share cash back with us through dividends. It’s a mix of resilience and growth that can complement the main portfolio. We initiated our very first position in this strategy — more details on that for paying readers below.
So if you’re new here, welcome! If you’ve been around for a while, you know the drill: patience, discipline, and conviction.
Let’s dive into the company-by-company details