2025 Performance | Outperforming the S&P 500 by 39.8%
Here's where I still see asymmetric opportunities
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2025 has been an exceptionally good year for my portfolio. The value increased by 43.8%, outperforming the S&P 500 by 39.8ppts and the ACWI by 35.1ppts. This brings my cumulative performance since inception in 2023 to 118% which is a 62% outperformance versus the S&P 500 and 69% versus the ACWI. All performance metrics are measured in EUR terms, thus the portfolio experienced significant headwinds from FX effects as the USD devalued by ~13% over 2025. The EUR denomination is also the reason why the return for the S&P 500 might look too low for you at first glance. A good reminder that currency fluctuations should not be disregarded in evaluating return potentials as well as risk.
While the gain for the year was extraordinary, I still see tremendous upside potential in some of my holdings. Nevertheless, the main problem I face is a too large cash cushion. I was always big in cash, not because it is part of my strategy, but because I couldn’t find enough opportunities to deploy. Now, after selling Carvana - my previously largest position - my cash exposure grew to 34%. While I’m willing to wait for a good pitch, I’d prefer deploying the cash. Thus, the work continues to uncover low risk, high upside opportunities.
The appreciation of the portfolio was mainly driven by Carvana and Falcon Metals, which I both exited over the course of 2025 as the share price multiplied. I remain optimistic about Cavana’s business, however, the stock seemed to get ahead of itself (Check out my post on the Carvana exit) trading at a P/E >100x. I still monitor the company, and would be excited to add it back to the portfolio as a long-term compounder, however, this would require a substantial price decline.
Moreover, Warrior Met Coal and Prosus contributed major gains in 2024. Contrary to my exited positions, I still see substantial mispricing of these two assets which is why I remain to hold a large exposure in Warrior and Prosus (More details below). Of course, not all positions performed well. My top detractors have been the assets on Local Monopolies and on O&G Exploration. Regardless of performance, one has to closely monitor whether operations of companies in the portfolio are heading in the right direction. I can say that despite the disappointing share price development, the underlying operations are solid and improving. I remain highly optimistic about both assets as the underlying value far surpasses the market prices. Both offer highly asymmetric opportunities now even more so as the share price decline reduces downside risk while increasing upside potential.
With the rearview look completed, let’s tackle something that’s more fun: Opportunities with continued upside potential.
Opportunities
I’m very happy about the positive development of the portfolio, however, I’m even more excited about the positive outlook for my holdings. Just because some themes worked well over the last couple months does not mean that there is no more money to be made. Let’s take a brief look at the areas where and why I see upside potential.
First and foremost are offshore drillers. The fundamental thesis rests on the scarcity of drillships coupled with an inevitable increase in demand. The utilization of rigs decreased in 2025, but the dayrates are still steady at, or above, 400k which allows for meaningful cashflows. In mid-December, the sector sold-off over oil price concerns, however, prevailing prices allow for most resources to be profitable. Additionally, global resources in place are decreasing. As onshore fields can’t fill the gap the only alternative is to increasingly shift towards offshore which requires drilling rigs. For now, most management teams expect improved conditions in mid-2026. Even if that were to prove false, the long-term outlook is promising. Since a slight increase in dayrates is pure profit, the FCF upside to moderate rate increases is meaningful. That’s why offshore drillers are among my highest conviction bets.
Met coal miners also had a great run in H2 2025 which was mainly attributable to the Premium Low Vol Coking Coal Index recovering from trough levels. At a price of ~175/t, most miners struggled to make profits which sent the sector tanking. However, the index recovered to ~210/t which is roughly the marginal cost producer price level. Commodity market theory dictates that prices gravitate towards marginal cost plus a premium. Historically, this premium has been ~38% for met coal, implying a price of ~260/t, a 24% increase vs. prevailing levels. Similar to offshore dayrates, incremental increases in met coal prices are - for the vast amount - profits which increase FCF. While pricing dynamics are a short-term view, the long-term demand for met coal is solid as blast furnace (BF) capacity has a long lifetime (+30 years) and met coal can’t be replaced in the steel production using the BF route. Thus, miners will see steady demand for decades. Contrary, supply is likely to decline as the push for decarbonisation reduces investments in all coal project (throwing the baby out with the bathwater).
This asset has not yet performed as expected, but I’m break-even from the cost basis. While the market does not favour the company, it is posting double-digit growth rates, EBIT margins of ~20% and is nearing the end of major CapEx programs allowing for a reinstate dividend. Beyond the good operational performance, the embedded value of unique assets with monopoly status is huge. The pricing power is currently getting pushed through, providing me with confidence that higher growth rates and margin expansion can be obtained. The increasing profits will then be distributed to shareholders; an enticing yet disguised growth asset far away from the AI boom.
This O&G exploration asset has been a roller coaster, periodically up by double digits and now down by 23% despite positive news flow. The reason for the negative sentiment is simple: short-termism. The market was hoping for a monetization event of the key asset putting a clear headline valuation on the company. Instead there was an asset-swap deal which made the embedded value opaque. Investors grew increasingly impatient prior to the announcement and lost hope of value realization after the announcement, as evidenced by discussions on several investor boards. However, if one were exited about the asset pre-announcement, one should be even more excited afterwards. Many retail investors were in the stock because they hoped for a quick 3-10x (dependent how bullish a scenario the investors underwrote), but with the fast lane towards that return blocked, selling took over. Now the asset has an O&G major as operator on board which wants to push development forward. The asset has not changed, but the quality of the operator increased and the stock price decreased. A very intriguing setup. But a cautionary note: This is my highest risk asset which I sized appropriately. There is tremendous value but also a likelihood of development falling through. I nevertheless believe that the highly skewed upside warrants a closer look.
Prosus had a great year in 2025 with the share price increasing by close to 40%. This is a stark outperformance, which warrants the question why I remain so optimistic about the large-cap stock valued at EUR ~130bn. Prosus is offering an opportunity to own Tencent at a great discount for a look-through valuation in the teens. This is very cheap for one of the probably best businesses globally. Additionally, Prosus trades at a large discount to NAV - roughly 35% - and plows a lot of money into share buybacks - the largest of any tech company in the world - which in itself is value accretive for the Tencent look-through ownership. And as cherry on top, the company copies Tencent’s ecosystem approach by creating a portfolio of lifestyle commerce businesses (e.g. travel, food delivery, classifieds) in LatAm, Europe and India. The collection of businesses is growing rapidly and break-even profitable which offers positive option value for years to come. I am genuinely puzzled why Tencent or Prosus don’t receive more attention from equity investors.
This serial acquirer is trading at a large discount to NAV. The majority of its market cap, ~80%, is invested in a listed asset and ~30% of the market cap is held as net cash on the balance sheet. While the company further holds a collection of private assets the real value is in the management team. The company is majority owned (~70%) by its founders and has a superb track-record of compounding at 17% p.a. since two decades. Continued growth is ensured by industry tailwinds and government investments coupled with capital deployment in M&A. Double digit EBITDA margins fuel ROCE >30%, which renders the company an attractive candidate for a potential multibagger: low entry price, high quality, long growth runway, high returns on capital and skilled owner-operators.
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