Latest / The Dutch Investors / #74 | Investing Lessons from Analyzing 34 Companies | Deep Dives 2025 Recap | Part 3

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#74 | Investing Lessons from Analyzing 34 Companies | Deep Dives 2025 Recap | Part 3 · The Dutch Investors

• 0:00
  SPEAKER_00: Hi again and welcome to the final episode of the Dutch Investors for 2025.
• 0:08
  SPEAKER_00: This is part three of our investing lessons of companies we've analyzed.
• 0:13
  SPEAKER_00: As we approach the end of the year, this is the ideal time to wrap up our investing lessons from 2025.
• 0:20
  SPEAKER_00: In part 1 and part 2, we move from pipes and toilets to Warhammer miniatures to mega yachts and Taiwanese chip fabs.
• 0:29
  SPEAKER_00: No matter the company, we use the same process every single time.
• 0:33
  SPEAKER_00: We put in the work at least 50 hours of work per deep dive with three pairs of eyes giving different perspectives and opinions on a company.
• 0:43
  SPEAKER_00: In part 3, this one, we finish our lesson series with the companies we haven't touched on yet.
• 0:50
  SPEAKER_00: Enjoy! So we pick up where we left off.
• 1:23
  SPEAKER_00: We can imagine you're getting bored with hearing the same stories about the same companies in this industry over and over again.
• 1:31
  SPEAKER_00: Luckily for you, this semiconductor company is quite different.
• 1:36
  SPEAKER_00: Basie is a Dutch global leader in advanced semiconductor assembly, specifically hybrid bonding, which is the future of 3D stack chips.
• 1:47
  SPEAKER_00: Their machines are so precise, they align chiplets at sub 100 nm accuracy, a technical feat only a handful of players can deliver.
• 1:58
  SPEAKER_00: The mode is undeniable.
• 2:00
  SPEAKER_00: But Basie's customers, TSMC, Samsung, Intel, and VIDIA are the most demanding in the world.
• 2:09
  SPEAKER_00: But there is even more to it.
• 2:11
  SPEAKER_00: Advanced packaging is currently only 4% of the entire semiconductor market.
• 2:18
  SPEAKER_00: Even if you dominate it, the pond is still quite small.
• 2:23
  SPEAKER_00: Long-term growth doesn't depend solely on great execution for BACE, although that helps.
• 2:30
  SPEAKER_00: Growing over decades also depends on whether the market itself is expanding.
• 2:35
  SPEAKER_00: That's why trends like chiplet architectures and 3D stacking matter so much for BACE.
• 2:43
  SPEAKER_00: If these technologies take off, the pond gets deeper.
• 2:48
  SPEAKER_00: If not, even a category king can only grow so far.
• 2:52
  SPEAKER_00: BACI taught us that you can be world class in a niche, but if the niche doesn't grow, you won't grow much either.
• 3:02
  SPEAKER_00: Lesson 25.
• 3:07
  SPEAKER_00: Some companies battle competitors.
• 3:10
  SPEAKER_00: EdenRed battles regulators.
• 3:13
  SPEAKER_00: And that entirely changes how you should think about its competitive advantage.
• 3:18
  SPEAKER_00: EdenRed has one of the strongest two-sided networks in Europe and Latin America.
• 3:24
  SPEAKER_00: Employers, merchants, and millions of users all tied together through meal vouchers, mobility solutions, and digital benefits.
• 3:34
  SPEAKER_00: In most industries, this would create an incredibly powerful competitive advantage, and it is really strong.
• 3:42
  SPEAKER_00: But Brazil kept merchant fees and considered opening the market.
• 3:48
  SPEAKER_00: France regularly reviews exclusivity rules, Romania changed its voucher system, and every time regulators intervene, they directly change the economic engine of EdenRed.
• 4:01
  SPEAKER_00: If the government decides to rewrite the incentives, even a strong network effect can be weakened overnight.
• 4:08
  SPEAKER_00: We don't like that at all.
• 4:10
  SPEAKER_00: EdenRed taught us that a moat built on regulation is also very vulnerable to regulation.
• 4:19
  SPEAKER_00: Lesson 26.
• 4:20
  SPEAKER_00: Keep it boring and simple.
• 4:24
  SPEAKER_00: Retail isn't dead if you ask us.
• 4:26
  SPEAKER_00: Although we are going online more and more.
• 4:30
  SPEAKER_00: European discount chain action shows that when you combine obsessive execution with value discipline, brick and mortar can still do great in a world that is moving digital.
• 4:42
  SPEAKER_00: Action is far from luxury and doesn't rely on branding.
• 4:46
  SPEAKER_00: Action wins by operating its stores by focusing on efficiency.
• 4:52
  SPEAKER_00: It sticks to great low prices, relentless cost control, fast store openings, and scale economies shared directly with customers.
• 5:02
  SPEAKER_00: While many retailers blame Amazon or macro headwinds, Action built one of Europe's strongest retail machines by doing one thing exceptionally well: delivering unbeatable value again and again.
• 5:17
  SPEAKER_00: 3i Group, and including Action, taught us that retail modes are about being consistently better, faster, and cheaper than everyone else and returning it to customers.
• 5:30
  SPEAKER_00: Lesson 27.
• 5:31
  SPEAKER_00: Valuations still matter.
• 5:35
  SPEAKER_00: LAM Research is one of the rare companies that executes resiliently across cycles.
• 5:42
  SPEAKER_00: It returns close to 100% of free cash flow to shareholders.
• 5:47
  SPEAKER_00: It has grown earnings per share at roughly 20 to 25% kegger over the last decade.
• 5:53
  SPEAKER_00: It pours billions into RD to maintain its leadership in edge and deposition.
• 6:00
  SPEAKER_00: That mix, high reinvestment, plus high returns, plus disciplined buybacks, is the secret recipe of a compounder.
• 6:09
  SPEAKER_00: But price sensitivity still matters, but for a different reason.
• 6:14
  SPEAKER_00: If you overpay for a mediocre business, time is your enemy.
• 6:18
  SPEAKER_00: The business cannot grow fast enough to bail you out, and you likely suffer permanent capital loss.
• 6:25
  SPEAKER_00: If you overpay for a great business like LAM, you turn a compounder into a bond.
• 6:31
  SPEAKER_00: You don't necessarily lose a lot, but you endure years of stagnation while earnings growth plays catch up to your entry price.
• 6:40
  SPEAKER_00: Furthermore, with a semicap equipment stock like LAM Research, the real danger isn't just the valuation itself.
• 6:47
  SPEAKER_00: Another big component is cyclicality.
• 6:50
  SPEAKER_00: If you pay a premium on peak cycle earnings, you face the double whammy of shrinking earnings and compressing multiples.
• 6:59
  SPEAKER_00: LAM taught us that great capital allocators create massive value, but only a disciplined entry price ensures that value flows to you rather than the previous shareholders.
• 7:12
  SPEAKER_00: So the lesson exceptional capital allocation magnifies returns.
• 7:17
  SPEAKER_00: But valuation determines how much of that return you actually get to keep.
• 7:23
  SPEAKER_00: Lesson 28.
• 7:27
  SPEAKER_00: This lesson isn't about the iconic luxury brand Ferrari.
• 7:31
  SPEAKER_00: Sorry.
• 7:32
  SPEAKER_00: Apart from the name, which is just a coincidence, the companies don't have a lot in common.
• 7:38
  SPEAKER_00: Both companies have Italian roots and both are related to the luxury segment.
• 7:43
  SPEAKER_00: While Ferrari produces the iconic red cars and sells luxury goods, Ferrari Group transports luxury products.
• 7:52
  SPEAKER_00: The company has become a luxury logistics company with worldwide operations.
• 7:58
  SPEAKER_00: You can think of expensive Rolex watches, precious stones, diamonds, and jewelry.
• 8:04
  SPEAKER_00: Although Ferrari Group doesn't share their customers due to safety concerns, we're pretty sure you can think of companies like LVMH, maybe Hermes, Richmond, or even Kering.
• 8:18
  SPEAKER_00: Ferrari Group is the definition of a concealed champion.
• 8:22
  SPEAKER_00: On the surface, it looks like a dull logistics company, moving boxes between warehouses.
• 8:28
  SPEAKER_00: But if you look a little closer, you'll see a business with 59% gross margins, 21% eBit margins, near perfect free cash flow conversion, and 100% customer retention.
• 8:42
  SPEAKER_00: How is all of that possible?
• 8:44
  SPEAKER_00: Because their niche is both high value and unattractive to competitors.
• 8:50
  SPEAKER_00: Transporting diamonds, luxury watches, gemstones, and high-value art across borders is operationally intense and catastrophic if things go wrong.
• 9:02
  SPEAKER_00: Most logistics players avoid this category entirely.
• 9:06
  SPEAKER_00: Ferrari Group embraced it.
• 9:09
  SPEAKER_00: These positions are won by expertise and trust accumulated over decades.
• 9:14
  SPEAKER_00: A niche that's too complex, too risky, and too tedious for anyone else to recreate.
• 9:20
  SPEAKER_00: That's powerful.
• 9:21
  SPEAKER_00: Competitors fell because they don't even want to try.
• 9:25
  SPEAKER_00: Ferrari Group taught us that some of the strongest modes live in places no one else dares to operate.
• 9:34
  SPEAKER_00: Lesson 29.
• 9:35
  SPEAKER_00: Data gravity.
• 9:38
  SPEAKER_00: In most software as a service companies, short SaaS, upselling depends on adding features, or improving the user experience, or convincing customers to expand usage.
• 9:51
  SPEAKER_00: In the digital forensics niche, this works differently.
• 9:56
  SPEAKER_00: Once evidence flows into Guardian, which is Celebrite's secure evidence management platform, I know that's a mouthful, the entire investigative workflow starts orbiting that stored information.
• 10:10
  SPEAKER_00: We call this data gravity, and it's one of the most powerful lock-in effects in software.
• 10:17
  SPEAKER_00: Police departments cannot risk breaking chain of custody.
• 10:21
  SPEAKER_00: They can't migrate cases mid-investigation, they can't expose sensitive datasets to new tools without months of validation.
• 10:30
  SPEAKER_00: Entire departments would need retraining.
• 10:33
  SPEAKER_00: So when Guardian, Celebrite's tool, becomes the system of record, agencies naturally expand into other Celebrite tools.
• 10:42
  SPEAKER_00: Like UFET, Celebrite's extraction tool, Celebrite Premium, which is a solution for lawful access, Pathfinder, which is Celebrite's analysis tool, and eventually InsideJets, which is their cloud solution.
• 10:57
  SPEAKER_00: This workflow lock-in is a lot stronger than app level switching costs.
• 11:03
  SPEAKER_00: Once an agency like the FBI's evidence sits inside Celebrite's ecosystem, switching is no longer a technical choice.
• 11:13
  SPEAKER_00: It becomes a legal, operational, and risk management decision.
• 11:17
  SPEAKER_00: And that's why churn is low and net retention rate above 120%.
• 11:24
  SPEAKER_00: Celebrite taught us that data gravity is one of the most powerful lock-in forces in software.
• 11:32
  SPEAKER_00: Lesson 30.
• 11:33
  SPEAKER_00: Sticky as glue.
• 11:36
  SPEAKER_00: You could argue about some industries or companies being too boring to analyze.
• 11:41
  SPEAKER_00: Some industries reward excitement.
• 11:44
  SPEAKER_00: Well, that is not the case for Waltus Kluwer.
• 11:47
  SPEAKER_00: Waltus Kluwer operates in legal, tax, accounting, and healthcare compliance.
• 11:53
  SPEAKER_00: I know, try to stay awake.
• 11:55
  SPEAKER_00: Areas where getting things wrong is far pricier than paying for the tools themselves.
• 12:01
  SPEAKER_00: And this creates naturally sticky customers, resulting in low churn and recurring revenue.
• 12:08
  SPEAKER_00: The products and services are deeply embedded into the workflows.
• 12:12
  SPEAKER_00: Walters Kluwer showed us that boring businesses can still be compounding machines.
• 12:18
  SPEAKER_00: When your software is difficult to rip out and updated continuously to keep up with regulation, you don't need breakneck growth to win.
• 12:26
  SPEAKER_00: You just need to keep showing up year after year.
• 12:30
  SPEAKER_00: Walters Kluwer taught us that the more boring the industry, the more we like it.
• 12:36
  SPEAKER_00: Lesson 31.
• 12:38
  SPEAKER_00: Multiple arbitrage.
• 12:40
  SPEAKER_00: Diploma PLC is one of the best examples of multiple arbitrage we've studied.
• 12:46
  SPEAKER_00: They acquire small, niche, high margin distributors at attractive valuation, often around 6 to 9 times EBIT.
• 12:55
  SPEAKER_00: Plug them into their decentralized system, improving pricing and procurement, and watch the market instantly re-rate those earnings at diplomas higher multiple.
• 13:06
  SPEAKER_00: Value is created the moment the ink drives.
• 13:09
  SPEAKER_00: Great capital allocators don't need to make massive deals over and over again.
• 13:14
  SPEAKER_00: They just need to require consistent, repeatable ones.
• 13:18
  SPEAKER_00: Because Diploma keeps deal sizes small and incentives aligned, they can repeat this formula dozens of times without degrading quality.
• 13:28
  SPEAKER_00: It's highly disciplined compounding.
• 13:31
  SPEAKER_00: It's not easy to achieve.
• 13:33
  SPEAKER_00: They rarely make headlines but have built enormous shareholder value so far.
• 13:38
  SPEAKER_00: Diploma taught us that small, repeatable acquisitions compounded through multiple arbitras beat one big swing every single time.
• 13:49
  SPEAKER_00: Lesson 32.
• 13:50
  SPEAKER_00: Valuations always matter.
• 13:54
  SPEAKER_00: Alphabet is a one-of-a-kind business.
• 13:57
  SPEAKER_00: I don't think we could argue about that.
• 13:59
  SPEAKER_00: It has search dominance, YouTube, Waymo, Android, Maps, Gmail, Chrome, Google Cloud, and so much more.
• 14:10
  SPEAKER_00: And a compute infrastructure no other company on Earth can replicate, at least for now.
• 14:16
  SPEAKER_00: It's one of the best businesses ever created.
• 14:20
  SPEAKER_00: But exceptional companies can still disappoint investors when expectations become too high.
• 14:26
  SPEAKER_00: At certain points in history, Alphabet's rated evaluations that assumed endless growth, with no regulatory friction.
• 14:35
  SPEAKER_00: When the stock price already reflects greatness, the upside becomes muted, even for such a high-quality company like Alphabet.
• 14:44
  SPEAKER_00: A world-class business isn't automatically a world-class investment.
• 14:49
  SPEAKER_00: The price you pay determines the return you get.
• 14:52
  SPEAKER_00: Alphabet taught us that the strongest modes don't always lead to the strongest returns if you overpay.
• 15:01
  SPEAKER_00: Lesson 33.
• 15:03
  SPEAKER_00: Monopoly-like pricing power.
• 15:06
  SPEAKER_00: JR Central is a Japanese railway company.
• 15:09
  SPEAKER_00: It operates one of the most profitable railway lines in the world, the Tokaido Shinkansen in Japan.
• 15:16
  SPEAKER_00: It faces virtually zero direct competition.
• 15:20
  SPEAKER_00: Yet the growth profile is surprisingly limited.
• 15:24
  SPEAKER_00: JR Central's growth can come from basically three components.
• 15:29
  SPEAKER_00: The number of people taking the train, the frequency these people take the train, and increasing ticket prices.
• 15:37
  SPEAKER_00: There's very, very little upside in all three components.
• 15:42
  SPEAKER_00: Investing in JR Central becomes even more unattractive when you realize they've massively invested in the Chuo Shinkansen project, whose results and utilization are still highly uncertain.
• 15:55
  SPEAKER_00: They might even cannibalize their own business model.
• 15:58
  SPEAKER_00: JR Central taught us that monopolies are extremely powerful, but they don't always result in pricing power.
• 16:06
  SPEAKER_00: Some assets are designed to be reliable, not really scalable.
• 16:10
  SPEAKER_00: The lesson to take away from JR Central is that a monopoly doesn't always guarantee pricing power.
• 16:19
  SPEAKER_00: Alright, lesson 34, and also our final lesson of this three-part series.
• 16:29
  SPEAKER_00: One of the last companies we analyzed in 2025 was XOR, a holding company with a big stake in companies like Ferrari, yes, this time the Red Car Maker, Philips, and a couple others.
• 16:43
  SPEAKER_00: Investors love to calculate the net asset value, NAV, compare it to the stock price, and scream undervalued.
• 16:53
  SPEAKER_00: In the case of XOR, the math is seductive.
• 16:56
  SPEAKER_00: If you subtract the value of the Ferrari stake, the market is practically giving you Stellantis, CNH, and Philips for free.
• 17:06
  SPEAKER_00: It looks like you're buying euros for 50 cents.
• 17:10
  SPEAKER_00: But in financial markets, free lunches are very rare.
• 17:14
  SPEAKER_00: We think the massive discount exists for two very specific reasons: asset quality and governance.
• 17:22
  SPEAKER_00: First, the so-called free assets might actually be melting ice cubes.
• 17:29
  SPEAKER_00: As we discussed, Stallantes is fighting for survival in a cyclical car industry against fierce Chinese competition.
• 17:38
  SPEAKER_00: CNH is loaded with debt and losing ground to John Deere.
• 17:42
  SPEAKER_00: If these companies don't turn it around, that free value could turn into a liability.
• 17:49
  SPEAKER_00: Second, and perhaps more importantly, is the family tax.
• 17:54
  SPEAKER_00: The Agnelli family holds over 85% of voting rights.
• 17:58
  SPEAKER_00: As a shareholder, you are purely a passenger.
• 18:02
  SPEAKER_00: You cannot vote for a breakup, you cannot remove management, and you cannot force a cell to unlock that value.
• 18:09
  SPEAKER_00: You trust the money to the Agnelli family.
• 18:13
  SPEAKER_00: You simply have to trust that John Alkin knows better than you do.
• 18:18
  SPEAKER_00: And the market applies a discount because you have zero control over your own capital.
• 18:25
  SPEAKER_00: XOR taught us that a huge discount to net asset value can scream undervalued, but it can also be a warning sign, so not always a buying opportunity.
• 18:36
  SPEAKER_00: We hope you enjoyed this three-part series, our final episode of 2025, and what a year it's been.
• 18:45
  SPEAKER_00: Next year, we'll have 26 brand new deep dives ready for TDI members.
• 18:51
  SPEAKER_00: We cannot wait to get back to work and are excited to keep growing the community together.
• 18:56
  SPEAKER_00: If you're ready to expand your investing universe and start 2026 with a head start, we would love to welcome you.
• 19:03
  SPEAKER_00: So close your laptop, put away your phone.
• 19:07
  SPEAKER_00: The best investment you can make this week isn't in the stock, but in the moment.
• 19:12
  SPEAKER_00: Enjoy the silence, enjoy the company, and be in the moment with your friends and family.
• 19:19
  SPEAKER_00: We'll be here next year.
• 19:21
  SPEAKER_00: We'll see you on the other side.
• 19:23
  SPEAKER_00: Best wishes from Bauke, Matthijs, and myself.
• 19:27
  SPEAKER_00: Bye everybody.