Giles Capital Weekly - Week 15
Welcome to another edition of Giles Capital Weekly. Trump's "Liberation Day" tariffs triggered what can only be described as a global panic attack. The S&P 500 shed 9% in a week, with tech and energy stocks bearing the brunt. By Wednesday, though, Trump appeared to have blinked, rolling back parts of his tariff plan with a 90-day negotiation window. Markets rebounded, but the question remains: is this a tactical pause or a fundamental rethink? Meanwhile, fascinating sideshows abound. Private equity firms are watching investors flee their funds at steep discounts, oil has sunk below $60, and some bond market signals suggest we might be heading toward something far more serious than a garden-variety correction.
My top picks for this week highlight two exceptional companies with compelling fundamentals. From D Invests, Willscot Holdings stands as the market leader in modular and storage rentals across the United States with impressive 20%+ operating margins, 40%+ EBITDA margins, and predictable recurring revenues, while their rental assets' 20-30 year lifespans and 50%+ residual values create superior capital efficiency. From Kroker Equity Research, Allianz SE demonstrates remarkable financial strength with record 2024 results - revenues reaching €179.8 billion (up 11.2%) and operating profit hitting €16.0 billion - supported by diversified insurance and asset management operations, disciplined underwriting (93.4% combined ratio), and a strong capital position (209% Solvency II ratio) that enabled an 11.6% dividend increase.
Americas
Stock Picker's Corner on Salesforce (🇺🇸CRM US - $245.05 billion) Cloud-based AI software provider showing strong insider conviction with Director Oscar Munoz purchasing $1.5 million in shares at $257.28, his second major buy in a year, indicating potential value after the stock dropped 28% from its peak of $369.
Jimmy's Journal on Booking Holdings (🇺🇸BKNG US - $150.51 billion) Booking operates a dominant travel platform spanning 2.7M+ properties in 220+ countries with diversified offerings beyond accommodations, trading at an attractive 18x 2026E P/E despite generating $7.8 billion in FCF in 2024 (12.8% increase from 2023).
GB Capital on The Trade Desk (🇺🇸TTD US - $24.47 billion) Analysis of The Trade Desk's unique position in digital advertising with their demand-side platform processing over 11 million ad impressions per second, maintaining a 95% client retention rate over the past decade and a compelling ROIC despite recent market volatility.
Value Degen on Rocket Companies (🇺🇸RKT US - $23.79 billion) Analysis of Rocket Companies' acquisition strategy, acquiring Redfin and Mr. Cooper to build a comprehensive mortgage ecosystem expected to generate $9 billion in normalized EBITDA at just 5.3x normal EBITDA.
D Invests on Willscot Holdings (🇺🇸WSC US - $4.53 billion) Willscot leads the U.S. modular and storage rental market with approximately 50% market share, benefiting from excellent unit economics including 20%+ operating margins, 40%+ EBITDA margins, and a capital-light model with long asset lifespans of 20-30 years.
Waterboy on Rayonier (RYN) (🇺🇸RYN US - $3.8 billion) Timberland REIT trading at a 27.8% discount to NAV ($24.38 vs. $33.77 NAV per share), with management recently authorizing a $300M share repurchase program representing 7.9% of market cap.
Modern Value Investing on Park Hotels & Resorts (🇺🇸PK US - $1.93 billion) In this Q1 2025 portfolio update, the author highlights Park Hotels as a compelling new 10% position, presenting exceptional value with hotel rooms priced at $76.8k versus $792k replacement cost, generating $64k annual revenues per room and offering a 21.6% FFO yield with a 10.5% current dividend.
Undervalued and Undercovered on New Fortress Energy (🇺🇸NFE US - $1.62 billion) Infrastructure play on natural gas demand in Latin America, with bond-like cash flows once projects are operational, positioned to generate billions in annual adjusted EBITDA from Puerto Rico and Brazil operations alone.
Waterboy on Orion Properties (🇺🇸ONL US - $103.8 million) Deep value analysis of a distressed office REIT trading at a 14.2% implied cap rate, with secured long-term leases from credit tenants and a management team prudently slashing the dividend to preserve cash.
Wolf of Oakville on Pyrogenesis Inc. (🇨🇦PYR CA - CA$79.34 million) Critical review of the company's financials, highlighting 26.7% revenue growth but continued net losses and concerning accounts receivable aging, trading at 5.5x revenues despite improvements.
Deep Value Insights on Coffee Holding Co. (🇺🇸JVA US - $19.5 million) Coffee Holding Co. is trading at compelling valuation metrics including 0.59x book value, 5.37x earnings, and 4.87x EV/EBIT with a 20% discount to NCAV, while generating strong cash flow from selling wholesale coffee beans and branded products.
The Newell Street Journal on Sonim Technologies (🇺🇸SONM US - $9.23 million) Special situation opportunity with ruggedized phone manufacturer trading at $1.46 per share versus a $4.00 tender offer price from Orbic North America, representing 250% potential upside if the deal completes.
Europe, Middle East & Africa
Kroker Equity Research on Allianz SE (🇩🇪ALV DE - €126.51 billion) German insurance giant with 16.9% return on equity in 2024, combined ratio of 93.4%, and a Solvency II ratio of 209%, demonstrating strong capital adequacy and sustainable profitability.
Assymetric Ventures on Watches of Switzerland Group (🇬🇧WOSG GB - £820 million) Leading luxury watch retailer down nearly 45% since December on tariff concerns, with 2/3 of its value in the UK business and a forward FCF of £100 million despite US tariff headwinds.
The Outsiders' Corner on MBB SE (🇩🇪MBB DE - €768 million) German holding company up 50% YTD with significant stakes in Friedrich Vorwerk (49.5%, €520M value), Aumann (€91M) and Delignit (€15M), plus €553M in net cash, yet trading at only €768M market cap.
Hidden Market Gems on GRENKE AG (🇩🇪GLJ DE - €717 million) German small-ticket equipment leasing company trading at 0.6x book value with 9.5x P/E despite strong growth with 17% CM2 margins and expansion into the US market.
Compound & Fire on YouGov (🇬🇧YOU GB - £315.95 million) Analysis explaining the decision to remove YouGov from the investment watchlist due to its low Company Score of 54%, low net margins of just 0.3% despite high gross margins, and high goodwill (41.7% of total assets) signaling potential overpayment for acquisitions.
Favona Hathaway on Akwel SA (🇫🇷AKWEL FR - €192.75 million) French auto parts supplier trading at 0.69x NCAV with 72% of market cap in net cash, 0.56x adjusted tangible book value, and a forward EV/EBIT of just 1.36x.
Asia-Pacific
Iggy on Otto Energy Limited (🇦🇺OEL AU - AU$43 million) Otto Energy offers a compelling undervalued opportunity trading at 0.5x FCF, with AUD 51M cash on balance sheet, upcoming AUD 40M tax-free capital return, and continued cash flow generation of approximately AUD 6M annually from oil and gas operations.
Elliot's Musings - Recession Fears Mount After Trump's Tariff Surprise Detailed analysis of the market's reaction to Trump's tariffs, explaining why this correction might be more painful than previous ones given limited monetary policy options and already-stretched consumer balance sheets. The bond market insights are particularly illuminating. (25 min read)
Quality Investing with René Sellmann - Forced Liquidations Still Looming? Jeffrey Gundlach's Market Warnings Comprehensive breakdown of bond king Jeffrey Gundlach's market outlook, including warnings about credit spread widening, cash positioning strategy, and the Fed's challenging balancing act. Worth reading for its deep dive into potential systemic risks ahead. (12 min read)
Rock & Turner - Howard Marks: Investing in a time of Trump Distills wisdom from Howard Marks' recent interview on navigating the new economic landscape, emphasizing probabilities over predictions and discipline over forecasts. Offers a thoughtful blueprint for investing through political and economic uncertainty. (7 min read)
Rock & Turner - The Canadian LNG Gold-Rush Exploration of Canada's developing LNG export economy and the infrastructure buildout required to capitalize on growing global demand. Presents a compelling long-term thesis for Canadian energy that's particularly timely given current global trade disruptions. (9 min read)
Ian's Insider Corner - 11 Questions About Tariffs & The Market's Response Thoughtful Q&A format examining key questions investors should be asking about the recent tariff announcements, with particularly insightful analysis on China's position and bond market implications. His examination of Mexico as a relative winner is especially thought-provoking. (35 min read)
Dragon Invest - Blood on the streets: My opinions on the current trade war Compelling analysis comparing Trump's tariff policy to Evergrande's final desperate moves, with detailed examination of how China, Vietnam, Thailand and India might respond. The author's deep dive into three Chinese companies (Geely, Anta, Hwatsing) positioned to navigate these disruptions offers a thoughtful counterpoint to Western-centric trade war analyses. (15 min read)
Value in Vietnam - A Conversation with Cao Nguyên Insightful interview with Vietnamese value investor Cao Nguyên who shares his approach to investing in small, illiquid Vietnamese companies with strong management alignment and often substantial hidden real estate value. Offers a refreshing perspective on finding opportunity in markets most Western investors overlook. (8 min read)
Dungeon Investing - A hitchhiker's guide to the Anime Galaxy Comprehensive guide to investing in Japan's anime industry, exploring revenue streams, key players, and growth metrics with detailed breakdowns of companies like Toei Animation, IG Port and Nippon TV. An excellent primer on anime economics with actionable insights on this overlooked investment sector. (20 min read)
Continuous Compounding - What to buy in this market crash! Practical guide to navigating the current market turmoil with specific focus on Japanese companies insulated from tariff impacts. The analysis of Round1's US expansion strategy, SK Japan's limited US exposure, and Glory's cash-handling business provides concrete examples of how to identify businesses that can thrive despite trade tensions. (8 min read)
Generative Value - Salesforce & AI Strategy Excellent deep dive into Salesforce's history, AI strategy, and competitive positioning, with a fascinating analysis of how established software companies might navigate the AI transition. The discussion of Salesforce's platform evolution offers valuable lessons for any tech investor. (15 min read)
Digital Finance Briefing - From Token to Ticker: Circle's Bet on Public Market Trust In-depth analysis of Circle's upcoming IPO as a watershed moment for stablecoins, examining its business model generating $1.68 billion in 2024 revenue (99% from interest on reserves), valuation expectations of $5-10 billion, and key risks including interest rate sensitivity. Essential reading for understanding the institutionalization of digital finance. (13 min read)
Kingswell - Terry Smith Is Never Boring Insightful collection of wisdom from Fundsmith's Terry Smith, covering volatility's emotional toll, Meta's successful contrarian purchase, index fund mechanics, and dividend philosophy. His candid observations about surviving in the investment business and the "labels are unhelpful" commentary on growth vs. value offer timeless lessons for serious investors. (12 min read)
The Setup Factory - Obliteration Day - Welcome To The Bear Market Of 2025 A technical analysis of the recent market breakdown, comparing indicators to previous bear markets and explaining why a quick V-shaped recovery seems unlikely without new catalysts. Particularly useful for its comprehensive examination of bearish technical signals. (16 min read)
Quality Investing with René Sellmann - Three Probability Lenses on America's Market Outlook Fascinating examination of historical U.S. stock returns through three probability frameworks—frequentist, propensity, and subjective Bayesian—with insights from Michael Mauboussin on the limits of prediction in complex adaptive systems. Intellectually rigorous approach to understanding market returns that goes beyond simplistic forecasting. (14 min read)
The Pareto Investor - The 80/20 Rule: A Proven Strategy to Outperform the S&P 500 Intriguing analysis of how concentrating investments in market leaders can dramatically outperform broad indices, citing research by Professor Hendrik Bessembinder showing a tiny fraction of stocks generate the bulk of market returns. A compelling case for focused investing. (9 min read)
Compound & Fire - Seizing Opportunity in Market Chaos Analysis of three starter positions initiated amid market chaos, focusing on The Trade Desk's programmatic advertising dominance, ASML's semiconductor equipment moat, and M&A Research Institute's AI-driven efficiency in Japan's succession crisis. The author's disciplined approach to market volatility provides valuable perspective on finding quality amid uncertainty. (10 min read)
Stock Picker's Corner - Facing the Bear: I Just Bought Stocks A personal account of buying quality growth stocks during market panic, with the author sharing specific purchases made for both himself and his college-bound son. A practical example of maintaining conviction and long-term perspective during market chaos. (10 min read)
Market volatility marked Q1 2025 with diverging performance between U.S. and global markets. These letters reveal contrasting investment approaches to small-cap strategies, software investing frameworks, and geographic diversification during uncertain economic conditions.
Royce Investment Partners: U.S. small-caps underperformed large-caps in Q1 2025 with the Russell 2000 falling 9.5% versus the Russell 1000's 4.5% decline. Management remains constructive on small-cap leadership potential and sees downturns as opportunities. Long-term Russell 2000 Value and Growth indexes both returned 6.1% for the 10-year period. Letter discusses:
Uncertainty factors including tariff implementation inconsistency, inflation concerns, and declining consumer confidence
Small-cap valuation advantage versus large-caps based on EV/EBIT metrics with stronger expected earnings growth
Hertford Capital: Achieved a Q1 2025 return of +2.26%, outperforming its reference index which increased by +1.13%. Since inception in mid-2018, the fund has gained +20.54% with an annualized return of +2.80%. Letter discusses:
Fortnox AB (🇸🇪 - SEK52.21 billion) - New Position: Cloud-based SME software provider with 70%+ operating margins, strong double-digit organic growth, and network effects enabling pricing power
European software investment framework focusing on monopoly-like positions, pricing power, and proprietary data advantages for AI leadership
Night Watch Investment Management: Portfolio depreciated by -2.11% net of fees in Q1 2025. The fund employs a global value strategy focused on catalysts, inside ownership, and unique names across multiple regions. Letter discusses:
DPC Dash (🇭🇰1405 - HK$12.50 billion) - Existing Position: Exclusive Domino's Pizza franchise in China with 1,000 stores, 30-35% annual store growth, $200K store opening cost and $100K operating profit per store
Geographic diversification strategy between U.S. (overvalued at 21.3x P/E), Europe (fiscal stimulus potential), and China (consumer recovery opportunity)
Haypp, Marex, Mr. Cooper and Brookdale Senior Living as largest contributors to performance
Thanks to Buy Side Digest (buysidedigest.com) for compiling investment letters, which is where I sourced these letters.
Currently, I’m only featuring free content. If you're a writer producing free, insightful investment analysis and would like to be considered for inclusion, feel free to reach out. What would you like to see in future editions? Let me know in the comments.
Disclaimer: This newsletter is for informational purposes only and does not constitute investment advice. All opinions expressed are those of the quoted authors and do not necessarily reflect the views of the newsletter creator. Always do your own research before making investment decisions.
Thanks! These weekly letters are so good!
Appreciate the recommendation once again !!!!