Here's my 1-page mental model for understanding the semiconductor ecosystem👇 Covering: - design software $Cadence Design(CDNS)$ $Synopsys(SNPS)$ - equipment $ASML Holding NV(ASML)$ $Lam Research(LRCX)$ $KLA-Tencor(KLAC)$ - chip designers $NVIDIA Corp(NVDA)$ $Advanced Micro Devices(AMD)$ - chip manufacturers $Taiwan Semiconductor Manufacturing(TSM)$ $Texas Instruments(TXN)$ $Mi

Portfolio at the end of December and the end of 2023. No new positions.2023 performance: 31.1%5yr FCF per share CAGR = 20% FCF ROC = 32% FCF Margin = 34% FCF Yield = 3.34% Share price linearity (5yr) = 0.87ImageThere were no outright sales or purchases. The top contributors to performance were $Alphabet(GOOG)$ $Alphabet(GOOGL)$ and $ASML Holding NV(ASML)$ . $Microsoft(MSFT)$ was the only detractor from performance.My best performing stocks this year have been $NVIDIA Corp(NVDA)$ $Fair Isaac(FICO)$

10 of the 12 companies I invest in are listed in the US.But only 44% of their revenue is derived from North America. $Fair Isaac(FICO)$ has the most US exposure, while $KLA-Tencor(KLAC)$ has the least (27% China, 24% Taiwan, 18% Korea).You can be globally diversified just by owning US stocks. $Fair Isaac(FICO)$ $Novo-Nordisk A/S(NVO)$ $Constellation Software, Inc.(CONSF)$ $Microsoft(MSFT)$ $Cadence Design(CDNS)$ $MSCI Inc(MSCI)$

Three reasons why very few companies are capable of sustaining a high return on capital over a long period of time:1. Economic downturns - few companies are resilient to these due to exposure to commodities and interest rates (eg banks and energy companies).2. Reinvestment opportunities - companies lacking reinvestment oppportunities typically pay out a large chunk of their earnings as a dividend, rather than reinvest (eg consumer staples).3. Pricing power - few companies are capable of raising prices without losing sales to their competition.ImageValuation reflects both future growth and current multiple. I personally focus on future growth. I see a lot of value currently in $Applied Materials(AMAT)$ and $Fo

Fundsmith’s factsheet says no sales or purchases this month.We know from their 13F that they bought Edwards Lifescience Could this be for their Smithson fund instead?$Sabre(SABR)$ $VeriSign(VRSN)$ $Fortinet(FTNT)$ $Masimo(MASI)$ $Qualys(QLYS)$ $Verisk Analytics(VRSK)$ $MSCI Inc(MSCI)$ $Cognex(CGNX)$

Here's our factsheet for November.FCF ROC = 27%FCF Growth = 17%FCF Margin = 25%FCF Yield = 2.53%November return = 2.3%YTD = -17.4%Sartorius Stedim Biotech was sold due to valuation concerns (FCF yield = 0.4%) and was replaced with the Italian immunodiagnostics company Diasorin.Adobe$Adobe(ADBE)$ and Nemetschek$Nemetschek AG(NEMTF)$ were replaced with Paychex$Paychex(PAYX)$ and TechnologyOne$Technology One, Ltd.(THNOF)$ . This maintains our SAAS exposure, but increases the predicability and stickiness of their FCF.Here's a snapshot of the portfolio's valuation.$Visa(V)$

What are the highest quality companies in the Fundsmith/Smithson investable universe?I took the complete set of holdings from both funds and ran it through one of my custom quality filters.Here are the ones that rise to the top 👇🏼👇🏼 $Nemetschek AG(NEMTF)$ $MSCI Inc(MSCI)$ $Qualys(QLYS)$ $IDEXX Laboratories(IDXX)$ $Mettler-Toledo(MTD)$ $Microsoft(MSFT)$ $Novo-Nordisk A/S(NVO)$ $HMS Networks AB(HMNKF)$ $Technology

What influences share prices?Here’s my mental model for understanding equity markets.In corporate finance there are three rules for maximising value: 1. Buy high return assets 2. Finance assets with low cost debt 3. Only return capital to investors if there are no suitable investments These principles should guide both how managers run their businesses and how investors find and manage investments. Maximise the highest possible return by investing in the highest returning assets.What would you add?https://twitter.com/long_equity/status/1634308890622849030

Portfolio at the end of April 2024.April performance: -5.7% YTD performance: 11.0%FCF ROC = 35%FCF per share CAGR (5yr) = 22% FCF linearity (5yr) = 0.90FCF Margin Expansion (5yr) = 5%FCF Yield = 2.95%Interest expense = 6% of operating profit Change in share count (5yr) = -9%If FCF per share keeps growing in the high teens, then it’s a fair price to pay for quality.There were no outright sales or purchases. $Novo-Nordisk A/S(NVO)$ was the only contributor to performance. The top detractors from performance were $MSCI Inc(MSCI)$ and $Cadence Design(CDNS)$ .Imagehttps://twitter.com/long_equity/status/1785424822237106511

Here are the holdings of the BlackRock Unconstrained portfolio.I’ve highlighted the companies that I own and would invest in.Any thoughts on the portfolio? $Novo-Nordisk A/S(NVO)$ $ASML Holding NV(ASML)$ $Alphabet(GOOG)$ $Alphabet(GOOGL)$ $Ansys(ANSS)$ $Cadence Design(CDNS)$ $Intuit(INTU)$ $MasterCard(MA)$ $Microsoft(MSFT)$ $S&P Global(SPGI)$

Here are the Japanese companies currently featuring in MSCI's World Quality index.Which Japanese companies are you bullish on?I'm currently researching:• Tokyo Electron $Tokyo Electron Ltd.(TOELF)$ • Advantest $Advantest Corp.(ADTTF)$ • Lasertec (my favourite) $Lasertec Corp.(LSRCF)$ • Disco Corp $Disco Corp.(DISPF)$ • Maruwa (not on the MSCI list) $MARUWA CO LTD.(MAWAF)$ Imagehttps://twitter.com/long_equity/status/1785265758877933774

Stock exchanges are great compounders1. They have index beating returns with low volatility.2. A portfolio of exchanges can offer global diversification.3. Exchanges benefit from the strongest of all economic moats: network effectsLSE and ASX have the strongest fundamentals $LONDON STOCK EXCHANGE GROUP PLC(LSE.UK)$ $Advanced Semiconductor Engineering(ASX)$ $Hong Kong Exchanges and Clearing(00388)$ $OTC Markets Group Inc.(OTCM)$ $MarketAxess(MKTX)$ $SINGAP

Here's our latest list of global quality compounders.Imagine having access to 18 quality growth metrics for each of these companies - including their FCF yield valuation and share price linearity?If that's something you would be interested in (including monthly deep dives too) $Alphabet(GOOG)$ $Alphabet(GOOGL)$ $Amazon.com(AMZN)$ $Apple(AAPL)$ $Microsoft(MSFT)$ $Meta Platforms, Inc.(META)$ $NVIDIA Corp(NVDA)$ $Visa(V)$

Here are the revenues of five US companies with market capitalisations greater than $1 trillion.Revenues:—• Amazon $Amazon.com(AMZN)$ - $437bn• Apple $Apple(AAPL)$ - $302bn• Alphabet $Alphabet(GOOG)$ $Alphabet(GOOGL)$ - $234bn• Microsoft $Microsoft(MSFT)$ - $172bn• NVIDIA $NVIDIA Corp(NVDA)$ - $35bnWhat do you take from this?Of the 500 companies in the S&P 500, over the last 10 years only: ⦿ 187 companies beat the S&P 500 ⦿ 47 companies grew by more than 20% pa ⦿ 10 companies grew by more than 30% pa ⦿ 2 companies grew by more

1.NARROW MOAT companies with network effects (the strongest competitive advantage):• Deutsche Bourse• eBay$eBay(EBAY)$ • MarketAxess$MarketAxess(MKTX)$ • Nasdaq$NASDAQ(.IXIC)$ • PayPal$PayPal(PYPL)$ • Roper Tech$Roper(ROP)$ • Sabre$Sabre(SABR)$ • Singapore Exchange$SINGAPORE EXCHANGE LIMITED(S68.SI)$ • Sonova$Sonova Holding AG(SONVF)$ $SONOVA HOLDING(0QPY.UK)$ • UnitedHealth$UnitedHealth(UNH)$

Here's my portfolio breakdown and valuations as they currently stand.$Microsoft(MSFT)$ $Visa(V)$ $S&P Global(SPGI)$ $MasterCard(MA)$ $MSCI Inc(MSCI)$ $L'Oreal Co.(LRLCY)$ $Constellation Software, Inc.(CNSWF)$ $Amazon.com(AMZN)$ $Costco(COST)$ $Intuit(INTU)$ $Cadence Design(CDNS)$ $Mettle

This is the mental model I use when analysing a company’s quality and valuation.Model models allow complex data to be quickly and accurately turned into actionable insights. They provide a thought process for filtering the signal from the noise and for separating out what’s important from what’s not important.We only hold companies that can: (i) invest their capital at significantly higher returns than their cost of capital (value creation); and (ii) raise their prices without impacting demand (price setting). Their returns on capital must be high, consistent and unleveraged, with competitive advantages, ideally switching costs and network effects, preventing high returns from being competed away. We pursue a long-term strategy that aims to minimise transaction costs and defer capital gain

1.Here are some of the companies that I would be happy to own, but don’t currently own:- Texas Instruments$Texas Instruments(TXN)$ - Diasorin$Diasorin S.R.L.(DSRLF)$ - Paychex$Paychex(PAYX)$ - Expeditors International $Expeditors(EXPD)$ - Zebra Tech$Zebra(ZBRA)$ - Aspen Tech$Aspen Technology(AZPN)$ - CSL$Carlisle(CSL)$ - Zoetis$Zoetis(ZTS)$ - Synopsys$Synopsys(SNPS)$ - Autodesk$Autodesk(ADSK)$ - IDE