Latest / The Dutch Investors / #71 | Investing Lessons from 34 Stock Deep Dives | What 1600 hours of research taught us | 2025 Recap | Part 1

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#71 | Investing Lessons from 34 Stock Deep Dives | What 1600 hours of research taught us | 2025 Recap | Part 1 · The Dutch Investors

• 0:00
  SPEAKER_00: Hi everybody and welcome back to another episode by the Dutch Investors.
• 0:05
  SPEAKER_00: Merry Christmas to all of you.
• 0:08
  SPEAKER_00: Since starting the Dutch Investors back in April of 2024, we have released over 70 deep dives.
• 0:15
  SPEAKER_00: By working together, the three of us all analyze a business each month.
• 0:20
  SPEAKER_00: Our TDI members get a new deep dive every 14 days.
• 0:24
  SPEAKER_00: And by doing this, we ensure that every single analysis contains over 50 hours of quality research, more than enough to determine if a company is worth it to look further into or not.
• 0:38
  SPEAKER_00: The goal is to expand our investing universe rapidly, for ourselves and for our TDI members.
• 0:46
  SPEAKER_00: As the universe of companies expand, so do the odds of finding exceptional businesses that attract evaluations.
• 0:54
  SPEAKER_00: After spending over 1600 hours researching companies this year, it is safe to say that we learned a lot.
• 1:02
  SPEAKER_00: In this episode, part one of investing lessons from the companies we've analyzed, in this episode we'll share our insights and lessons with you after analyzing 34 different companies this year.
• 1:15
  SPEAKER_00: So sit back, grab a drink, and enjoy.
• 1:41
  SPEAKER_00: When we first looked at advanced drainage systems, we were impressed by the market leadership and healthy margins in the growing stormwater management industry.
• 1:51
  SPEAKER_00: However, as we dug deeper, we realized that the core business is built on commodity products.
• 1:57
  SPEAKER_00: Even with ADS's scale, their products are easily replicated and sold cheaper by competitors, meaning current profit margins are constantly vulnerable to erosion, especially if high demand attracts new, aggressive, potentially Chinese entrants.
• 2:16
  SPEAKER_00: Current financial success is just a snapshot.
• 2:19
  SPEAKER_00: Without a truly durable, competitive advantage, the business is inherently too competitive.
• 2:26
  SPEAKER_00: Sustained winning is about the long-term ability to protect that success from the future challenges, which is why a focus on lasting defensibility is paramount.
• 2:36
  SPEAKER_00: So the lesson we took away from analyzing advanced drainage system was high profit margins and a strong market position don't guarantee a strong mode.
• 2:48
  SPEAKER_00: Lesson 2.
• 2:49
  SPEAKER_00: Quality behind the wall.
• 2:52
  SPEAKER_00: We were fascinated by how Gaberit, a company whose key products are literally installed behind the wall, achieves such impressive margins.
• 3:01
  SPEAKER_00: The secret is its genius pool strategy.
• 3:05
  SPEAKER_00: Rather than relying solely on wholesalers, Gaberit targets the professionals who install the products, such as plumbers and sanitary engineers.
• 3:15
  SPEAKER_00: They achieve this through an extensive network of training centers, where they build loyalty and trust, training over 60,000 professionals in 2023 alone.
• 3:28
  SPEAKER_00: This strategy is effective because quality is paramount for the installer.
• 3:33
  SPEAKER_00: A Haberit product failing behind the wall means a costly, time-consuming repair for the plumber.
• 3:40
  SPEAKER_00: Given Haberit's 50-year guarantee, professionals are incentivized to choose the reliable brand and simply pass the cost onto the end customer, who is largely unaware of the choice.
• 3:52
  SPEAKER_00: This unique, installer-focused model creates a competitive advantage that rifles find almost impossible to replicate.
• 4:01
  SPEAKER_00: So the lesson we took away from Hebred was a clever pool strategy can build a powerful competitive advantage, even for a product that's out of sight.
• 4:13
  SPEAKER_00: Lesson 3 B The Toll Bridge.
• 4:17
  SPEAKER_00: The most profitable business usually aren't the ones selling the product.
• 4:23
  SPEAKER_00: Usually it's the gatekeepers who charge the toll for access.
• 4:28
  SPEAKER_00: Think of companies like Agen, Stripe, Visa, MasterCard, and MSCI.
• 4:36
  SPEAKER_00: They all show you how powerful and profitable this toll bridge model can be.
• 4:42
  SPEAKER_00: MSCI's role, designing and licensing the 16,000 indices it manages for recurring fees, is far more profitable than owning the underlying assets.
• 4:53
  SPEAKER_00: Its competitive advantage is built on insurmountable switching costs.
• 4:58
  SPEAKER_00: Once an asset manager structures a product around an MSCI index, migrating away becomes nearly impossible, demanding millions of transactions, upsetting clients, and creating massive operational risk.
• 5:13
  SPEAKER_00: This entrenchment is so profound that even entire countries lobby MSCI just to be included in an index, as Peru once did, to avoid being downgraded.
• 5:26
  SPEAKER_00: The lesson we took away from MSCI is that the most profitable businesses tend to be gatekeepers who charge non-negotiable tolls on essential digital infrastructure.
• 5:39
  SPEAKER_00: Lesson 4.
• 5:40
  SPEAKER_00: Passing on savings.
• 5:42
  SPEAKER_00: One of the strongest modes out there is Scale Economy Shared, where cost advantages are deliberately passed on to the customers to lock in their loyalty.
• 5:53
  SPEAKER_00: HICO's Flight Support Group embodies this by developing aircraft parts that match OEM original equipment manufacturing quality, but at a 30-50% discount.
• 6:06
  SPEAKER_00: As production increases, development costs are recouped faster, making the next part cheaper.
• 6:17
  SPEAKER_00: An irresistible proposition in an industry with razor-thin margins and zero tolerance for safety incidents.
• 6:25
  SPEAKER_00: However, this model requires something unique.
• 6:30
  SPEAKER_00: It requires restraint.
• 6:32
  SPEAKER_00: Heico must balance sharing cost while avoiding retaliation from powerful OEM competitors or partners, like General Electric or Rolls-Royce.
• 6:44
  SPEAKER_00: By capping its market share around 30% per product, Heiko profits massively without triggering a full-scale price war.
• 6:53
  SPEAKER_00: This strategy results in a 75% market share in the PMA space, establishing Heiko as the smartest, safest, and cheapest choice for its customers.
• 7:06
  SPEAKER_00: The lesson we took away from Heiko is that scale economies shared are rare because they require restraint.
• 7:15
  SPEAKER_00: Lesson 5.
• 7:16
  SPEAKER_00: Loyalty programs are not modes.
• 7:20
  SPEAKER_00: Loyalty programs are very powerful growth engines, but they are not modes.
• 7:26
  SPEAKER_00: They can boost frequency and generate data, but they don't stop competition.
• 7:33
  SPEAKER_00: Ulta's Ultimate Rewards with 44 million active members drive 95% of sales.
• 7:41
  SPEAKER_00: It's a textbook success due to its tiered system, personalization, and ability to upsell services.
• 7:50
  SPEAKER_00: However, loyalty in beauty is fragile, as customers are prone to experimentation and price sensitivity.
• 7:58
  SPEAKER_00: Points alone cannot create lasting attachment, a reality proven by competitors like Sephora or Douglas.
• 8:05
  SPEAKER_00: The true mode in Beauty is the brand and the physical experience.
• 8:11
  SPEAKER_00: The loyalty program acts merely as an amplifier, when Ulta consistently reinvests to keep its stores modern, vibrant, and fun.
• 8:21
  SPEAKER_00: When that reinvestment stalls, the loyal base becomes vulnerable, as Ulta has recently experienced.
• 8:29
  SPEAKER_00: Ultimately, loyalty programs improve a good business, but durable loyalty must come from brand power and superior customer experience.
• 8:38
  SPEAKER_00: Ulta Beauty taught us that loyalty programs amplify competitive advantages, but they rarely create them.
• 8:47
  SPEAKER_00: Without brand and experience, loyalty is just a discount.
• 8:53
  SPEAKER_00: Lesson 6.
• 8:54
  SPEAKER_00: Selling a dream.
• 8:57
  SPEAKER_00: Luxury companies are fundamentally different from others.
• 9:01
  SPEAKER_00: They grow on brand prestige, exclusivity, and emotional appeal, not just efficiency and cost cutting.
• 9:10
  SPEAKER_00: Their focus is on craftsmanship and providing the dream, which translates directly into pricing power and higher margins, yet present a unique set of management challenges.
• 9:24
  SPEAKER_00: We observed two successful models within luxury.
• 9:28
  SPEAKER_00: Mono brands like Hermes or Ferrari rely on a singular vision, an exceptional management to maintain tight control and command premium valuations, a luxury feeling.
• 9:41
  SPEAKER_00: The luxury holdings like LVMH and Caring offer superior resilience by spreading investments across diverse portfolios, in theory.
• 9:51
  SPEAKER_00: Furthermore, holdings often appear to be a lot cheaper and undervalued compared to mono brands because of the difficulty in assessing their hidden brand value, but also of their complexity.
• 10:04
  SPEAKER_00: Because managing 50 brands is a lot more difficult than managing a single brand.
• 10:10
  SPEAKER_00: They also possess a significant advantage in acquiring and integrating new brands, giving them optionality for expansion that mono brands don't have.
• 10:21
  SPEAKER_00: Mono-brand houses like Hermes, Brunello Cuccinelli, or Ferrari commonly build deeper emotional resonance, tighter control over product, pricing, quality, and storytelling, which compounds their brand power over decades.
• 10:37
  SPEAKER_00: But while these pure luxury icons may be the strongest businesses in the industry, higher quality, luxury holdings like LVMH, Kering, or Richmond are typically far more attractively valued.
• 10:52
  SPEAKER_00: A world-class company isn't automatically a world-class investment if the price already reflects perfection.
• 11:00
  SPEAKER_00: For those that want more luxury, we have lots of episodes on the luxury industry, including an LVMH deep dive.
• 11:08
  SPEAKER_00: The lesson we learned from LVMH is that owning one great brand is art.
• 11:14
  SPEAKER_00: Owning 50 without killing them is strategy.
• 11:19
  SPEAKER_00: Lesson 7.
• 11:20
  SPEAKER_00: Local monopolies.
• 11:23
  SPEAKER_00: Mobruk is one of those companies you'd never brag about at a dinner party.
• 11:28
  SPEAKER_00: Unless your friends get excited about incinerating hazardous waste.
• 11:33
  SPEAKER_00: But in investing, these dirty work businesses can actually be shiny stars.
• 11:40
  SPEAKER_00: They operate inside local monopolies, protected by heavy regulation, political barriers, and the simple reality that no rational competitor wants to touch the market.
• 11:52
  SPEAKER_00: Mobreck takes industrial, medical, and hazardous waste that almost no one else can process and neutralizes it through specialized treatment or high temperature incineration.
• 12:05
  SPEAKER_00: Industries like this waste treatment, sewage systems, quarries, and the animal byproduct processing build some of the most durable modes in the world.
• 12:16
  SPEAKER_00: Nobody wants new facilities built near them.
• 12:19
  SPEAKER_00: Politicians avoid approving them, and the result is a natural shield against competition.
• 12:25
  SPEAKER_00: Think of waste management in the US, Vefessa in Germany, or Darling ingredients.
• 12:31
  SPEAKER_00: They aren't glamorous companies like Ulta Beauty, but their modes are rock solid, precisely because the competition never shows up in the first place.
• 12:42
  SPEAKER_00: It's a dirty business.
• 12:44
  SPEAKER_00: Fascinating, right?
• 12:47
  SPEAKER_00: So the lesson we took away from Moebruk was that sometimes the best businesses are the ones that nobody wants to do.
• 12:56
  SPEAKER_00: Lesson 8.
• 12:58
  SPEAKER_00: Build in basements.
• 13:01
  SPEAKER_00: Games Workshop is one of the strangest success stories.
• 13:06
  SPEAKER_00: The company has no advertising campaigns, no real influencer marketing, and no push into 10 different product categories, does no AI and no push into 10 different product categories.
• 13:20
  SPEAKER_00: All they have is one universe, one game, and an army of loyal fans who can't get enough of it.
• 13:30
  SPEAKER_00: Warhammer came from hobbyists obsessing over miniatures in the 1980s.
• 13:36
  SPEAKER_00: It grew from garages with friends who cared more about the world they were building than the money they could make.
• 13:43
  SPEAKER_00: That bottom-up passion became a multi-billion dollar IP that simply cannot be copied today.
• 13:51
  SPEAKER_00: When people paint their characters, cosplay as them, and argue about their lore as if it's real history, you're not just selling a piece of plastic.
• 14:01
  SPEAKER_00: For those that are eager to know more, we have a full Games Workshop deep dive available on the Dutch Investors Podcast together with Sonny from Secret Source Investing.
• 14:11
  SPEAKER_00: It's still one of my favorite episodes.
• 14:14
  SPEAKER_00: The lesson we took away from Games Workshop is that the best and most valuable ideas do not always come from boardrooms.
• 14:23
  SPEAKER_00: Sometimes they come from basements.
• 14:27
  SPEAKER_00: Lesson 9.
• 14:28
  SPEAKER_00: Copy paste.
• 14:30
  SPEAKER_00: Investors love talking about long runways, and it makes sense.
• 14:35
  SPEAKER_00: We like them as well.
• 14:37
  SPEAKER_00: Growing from 20,000 stores to 40,000 stores is a lot harder than growing from 10 to 20.
• 14:44
  SPEAKER_00: But the long runway means nothing unless you can copy and paste it somewhere else.
• 14:49
  SPEAKER_00: It has to work outside of your hometown.
• 14:52
  SPEAKER_00: Portillos is a monster in Chicago.
• 14:56
  SPEAKER_00: AUVs that embarrass almost every other national chain.
• 15:01
  SPEAKER_00: But the real question is whether those economics can survive the trip to Texas, Florida, Arizona, and the rest of the United States.
• 15:13
  SPEAKER_00: But if Portillos can consistently hit 6 to 8 million AUV in new markets, the compounding math becomes very obvious, and the upside is enormous.
• 15:26
  SPEAKER_00: If they can't, then what you really own is a regional cult brand.
• 15:30
  SPEAKER_00: It's beloved, profitable, but ultimately lacks a growth path.
• 15:36
  SPEAKER_00: We recorded this deep dive with Brett from Chit Chat Stocks for those interested, and it's available on the Dutch Investors Podcast.
• 15:43
  SPEAKER_00: The lesson we learn from Portillos is if you do a few things a little better, have a long enough runway, and your concept can be copied and paste, and let time do the work, patience tends to pay off.
• 15:59
  SPEAKER_00: Lesson 10.
• 16:00
  SPEAKER_00: Profiting from trust.
• 16:03
  SPEAKER_00: HIMS is trying to fix one of the most broken systems in the United States.
• 16:08
  SPEAKER_00: Healthcare.
• 16:09
  SPEAKER_00: Instead of reinventing medicine, they're removing something different.
• 16:14
  SPEAKER_00: They're removing friction and shame.
• 16:18
  SPEAKER_00: These two are real barriers that keep people from getting real help.
• 16:22
  SPEAKER_00: Their bet on telehealth is writing a massive structural shift.
• 16:28
  SPEAKER_00: Revenue has grown at an impressive rate, and the founder still owns a large stake in the company.
• 16:35
  SPEAKER_00: That combination alone makes the business worth watching.
• 16:39
  SPEAKER_00: For decades, issues like hair loss, anxiety, and erectile dysfunction lived in silence.
• 16:46
  SPEAKER_00: People don't want to go to a doctor and sit there and talk about their problems.
• 16:51
  SPEAKER_00: HIMS stepped into that silence, into that awkwardness, with something pretty simple: privacy and empathy.
• 17:00
  SPEAKER_00: They made healthcare feel less awkward, more private, and far more approachable.
• 17:07
  SPEAKER_00: In an industry where trust is the product, HIMS built a brand around making people feel human, and that's proving to be a powerful business model so far.
• 17:17
  SPEAKER_00: HIMS taught us that removing friction is good, but removing shame is even better.
• 17:25
  SPEAKER_00: Alright, the 11th and final lesson of this episode is be the infrastructure.
• 17:33
  SPEAKER_00: Microsoft may not build roads, bridges, or physical infrastructure, but in the digital world it is the infrastructure.
• 17:43
  SPEAKER_00: Our analysts Matthijs en Bauke spent over 80 hours, resulting in 60 pages and a two-hour podcast dissecting the company.
• 17:52
  SPEAKER_00: And the conclusion was pretty clear.
• 17:55
  SPEAKER_00: Most modern organizations cannot function without Microsoft.
• 18:00
  SPEAKER_00: Windows runs the machines.
• 18:03
  SPEAKER_00: Outlook handles communication.
• 18:16
  SPEAKER_00: You could replace one of these tools, maybe two, but try ripping out the entire stack across thousands of employees and the business grinds to a halt.
• 18:28
  SPEAKER_00: This is deep, systemic embeddedness.
• 18:32
  SPEAKER_00: Microsoft became the default, and once something becomes the default, it becomes nearly impossible to dislodge.
• 18:40
  SPEAKER_00: Nothing lasts forever, but the digital infrastructure Microsoft built will be very, very difficult to replace.
• 18:49
  SPEAKER_00: Microsoft taught us that if you build the infrastructure, not just a product, you become unreplaceable.
• 18:58
  SPEAKER_00: Make sure to listen to part 2 and part 3 when they're ready, because behind every single company lie a few valuable lessons.
• 19:08
  SPEAKER_00: Sometimes it's a lesson about a mode, about a mistake, sometimes it's just a great reminder of what matters most.
• 19:16
  SPEAKER_00: That's why we study companies for ourselves, for you and for our amazing TDI members.
• 19:23
  SPEAKER_00: And if you're ready to expand your investing universe, ready to learn, we would love to welcome you.
• 19:30
  SPEAKER_00: Because every business has a lesson worth remembering.
• 19:34
  SPEAKER_00: That's it for today.
• 19:36
  SPEAKER_00: As always, stay curious, keep learning, and Merry Christmas.
• 19:40
  SPEAKER_00: We'll see you in the next one.