Dear subscribers, the Emerging value portfolio has delivered a boring and low performance in H1 2026: 8% vs 9% for the SP500. Quite a miracle when I saw the bubble in the market.
Since I started the newsletter I am at 17% CAGR but the SP500 also.. interesting times where I really like my performance but the SP500 did extremely well also.
The market:
I believe that there is an insane bubble in the semiconductor buildup sector, worse than everything I saw in 15 years, but that the rest of the market is pretty fairly valued. Quality and “compounders” are undervalued.
Activity:
I did a lot of reshuffling in this half, mainly to position it for the years ahead and to focus increasingly on the current opportunity set: in my opinion emerging market tech is way too cheap with multiple names under 10 times earnings. I don’t care really much about the market and the economy if I see 100% upside to most names just on current earnings.
I wrote in the past that buying and never selling is a good strategy, but greed is making me more active because I see that I can capture some extra gains by positioning my portfolio cheaper. I want to go for that other 100% and then the million.
I kept concentrating in the highest opportunities, despite my large number of historical positions.
Movements:
I sold some slow performing nano caps because of the low relative attraction, higher capital increase or key man risks, versus companies with > 1 billion USD in market capitalisation.
I sold some smaller positions in small caps: Portmeirion (large loss). Portmeirion is a small cap holding. I believe Portmeirion is still cheap, and it conducted a capital increase. I did not have the capital to contribute to both Intrum and Portmeirion capital raises and I focused on the better one.
Savonnerie de Nyons: Largely flat, nano cap with growing earnings and dividends but I prefer larger caps now in general due to liquidity and less governance risk.
So, legacy European small caps is a segment I am reducing.
Ly Corp: Still bullish on this Japanese name, but concentrating the portfolio a bit further: Japanese tech conglomerate managed by Masa Son that owns Yahoo Japan, Line Corp, PayPay and grows with good management and acquisitions. AI play with Line corp. Cheap on price to cash flow because earnings are not showing the real earnings power. P/E 15
Additions to: 3 growing EM companies under 10 times earnings (details below). But one of them is recently reviewed Inter&Co.
In the full review, I will show my recent additions, the whole portfolio with Emerging market value stocks and hidden champions, then a few sentences on each position.
The weighted average P/E ratio is 14, EV/EBITDA is 6.8, net income margin 13.6% and estimated revenue grow 19%. (Koyfin). I believe that the most correct number from this Koyfin estimate is the EV/EBITDA average.
There are about 50 positions and the top 10 is 48%, and the top 20 is 69%.
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