H1 Update

The portfolio was up 10% in the first half of 2026, measured in SEK. There is little new to report and there were no meaningful portfolio changes during the quarter - or even during the first half. I am very happy with this kind of performance, as I am loosely aiming for 15% per year. Year to date, the portfolio is up around 19%.

The main drivers have been Argent and Karooooo, but RFM and AS Company have also performed quite well. Most importantly, none of the holdings has suffered a major drawdown. Currency movements have had a small positive effect, and the strong dividend contributions should not be overlooked.

This is how the portfolio looks at the time of this writing:

Why Aimia? My view in short

After H1, I bought into Aimia, as mentioned in an earlier note. My thesis for Aimia is extremely simple:

1. Rhys Summerton is underrated and not widely known, but a very good capital allocator (in my view). He also has the right incentives, since he owns a significant amount of Aimia.

2. The company is quite cheap and has some structural advantages, although not unique ones.

3. The strategy is good. I would call it sophisticated simplicity. I am not sure about execution yet, but it’s the serial acquirer story with a twist: acquiring listed and unlisted businesses through a modern, Graham-like value framework with a hint of activism and a preference for net cash companies.

I have started with a small position. The money came partly from cash but mainly from a reduction in Karooooo. Why did I reduce? Well, it has had a very strong run, and on top of that, Zak disclosed on Nasdaq’s website that he intended to reduce his stake. Karooooo remains a large holding, but it is back around the weight it had earlier this year. These decisions are difficult to make. It is the constant struggle, discussed earlier, between deep value and GARP.

Disclaimer: I own shares in Aimia, and everything I write here reflects my own interpretation. I may have gotten some things wrong - that happens. I am happy to be corrected or challenged where appropriate. It’s 100% my words, not Aimias.

A few good writeups

Aimia is relatively unknown outside Canada, but I am actually a little late to the small but dedicated “write about Aimia on Substack” party. I recommend reading these write-ups about Aimia. I agree with the general view presented in these write-ups, sorted by publication date:

• Hugo Vikström (use translate)

• Underlying Value

• SDOS

• Kairos Research

But above all, read the management information circular (Letter from the Executive Chairman) for Rhys Summerton’s own description of Aimias history and intended future. This 2025 Milkwood-interview may also be important to read.

My view in more detail

Background

The starting point for my interest in Aimia is that I “know” Rhys in a sense, having been an Argent shareholder for five years. I have at least seen what he has done, together with Treve Hendry. Aimia is, to some extent, a bet on Rhys.

This is also an investment where the phrase “past performance is not a reliable indicator of future performance” is actually a positive for Aimia. My checklist says that a company should not have a history that scares you. But this is a new company operating under the old name and “new Aimia” is more unproven than the other companies I own. It’s a bit like when a mismanaged soccer team gets new owners, new manager, a new strategy, and start applying common sense. Given time, things will change to the better.

Reading the management information circular, this is almost exactly what I like: buying small, cheap, net-cash companies, and maybe taking some of them private (to increase FCF yield by removing listing costs). And why not target orphaned listed stocks, particularly in the UK, that trade even more cheaply than private companies - especially after taking their cash into account? And then improve them, mostly by better capital allocation. That is a very good, simple idea.

The low-risk serial acquirer model

In Argent’s history, and potentially in Aimia’s future transactions, I see the serial-acquirer model being applied sensibly and adapted to low - or really quite normal- risk-taking. Here I may be a bit critical to the concept of serial acquirers, perhaps too much, but I want to make a point how different Argent, and probably Aimia is.

There is a great deal of interest (sic!) in the serial-acquirer model. But if you invest in a “normal” serial acquirer I think you face two typical risks:

1. High valuation

2. High debt

First, I think there is a popularity premium, at least if you go for companies i e listed in Sweden where this is a thing. I understand the attractive elements but think there are hidden risks. To start with: Why should a company buying ten P/E 10 companies “magically” be valued at P/E 30. A collection of 10 mediocre businesses should perhaps have a more mediocre valuation, despite increased diversification?

Secondly, for some unclear reason, most companies are burdened with debt and are neither agile nor prepared to act during difficult times. Some are not even self-sufficient or shock resistant and it is rather unhealthy. They almost live on a diet of debt and share issuances - the opposite of cannibalism. Despite the somewhat disgusting name, “cannibals” are healty companies that reduce their share count.

In some cases there are additional risks:

• additional popularity premiums;

• “100-bagger” status for mysterious reasons;

• corporate-governance concerns;

• high debt combined with cyclicality;

• Compulsory buying even if no good deals.

It does not make sense to me why some serial acquirers are - or have been - so popular. But I think Aimia, post-2025, does make sense. Aimia could resemble early Buffett-style investing, without the obligatory Buffett quotations that so many companies like to use. The focus on net cash, low valuations, FCF yield and old-school, out-of-favour book value is refreshing. Graham might have liked it.

Is there really an edge, owning this?

My “edge”- or, less dramatically, my specific knowledge or advantage - is based on the following:

1. Buying something small and illiquid. Below USD 300 million, many large investors are excluded. One (good) reason why liquidity is so limited is that the board owns around 43% of the outstanding shares. That percentage increases through buybacks.

2. Knowing the Argent and Milkwood story well, including the blueprint Summerton has followed.

3. Not having the same emotional history with Aimia’s past. I approach Aimia with a relatively clean slate and can judge the new Aimia without prejudice. (Or maybe there is “positive prejudice” in the form of confirmation bias).

4. Reading everything I can find about Aimia over the past few months, including listening to the AGM several times. Few investors appear to have done that, since it has 59 views on Youtube and several of them are mine (haha).

5. Having a good, small network of investors interested in Aimia with whom I can discuss the company - and, of course, reading and thinking carefully about the Substack write-ups.

None of these points is especially unique. But taken together, they are necessary for me to build conviction in something that remains somewhat unproven and new. Conviction is a bit harder for this one. Nine out of ten stocks I buy screen well. Aimia does not. But it is cheap, and it is promising. I strongly support what they are trying to do: Finding inefficiencies in the markets and capitalize on those. For now I have trust in management. I think things will be clearer after a few deals.

And the management is not spinning stories. They could have talked about SpaceX as a customer of their rope business, but they don’t. They remain firmly on Earth. I actually like the rope business. In one sense, it is a “picks and shovels” investment - except here it is picks, shovels and ropes. Overall, this management prefers ropes over rockets, and I share that view.

Confirmation bias risks

Like me, Rhys prefers really cheap companies and dislikes debt. He looks at unusual places, like UK and South African microcaps. I know that the similarities end there: he is good, while I am trying to become good one day. But Rhys is one of very few global managers interested in - and owning - Argent Industrial, a company that is my absolute favourite stock in the world. I could see at path forward, that Aimia might become “Argent” on a larger, global scale.

That’s a great opportunity, but also a great risk of me getting affected by a few biases. Blueprints and pattern recognition are mostly good but also dangerous. Every time you start referring to an investor only by their first name, that could be a warning sign. So I might stop doing that. Rhys Summerton it is - or simply Summerton. There is, of course also the risk that this case is dependent on one single person. That’s the largest risk.

But I firmly believe that Summerton is genuinely underrated and deserves much more attention from global value investors, and investors generally. He stands for a modern Graham-style investing with a touch of activism, adapted to today’s markets.

Opinions?

What is your opinion about Aimia, and with that I mean “new Aimia”? And what is your view of serial acquirers that don’t rely on debt? I must say that I like both.

I know I am somewhat critical of conventional serial acquirers - perhaps too critical. But compare some of them with Argent and Aimia’s new strategy, and you might become critical too.

I don’t like expensive stocks. My rule of thumb is that a stock should be able to double and still be cheap. But sometimes, even a P/E of 25 can be considered cheap. Consistent growth and a strong market position in a growing market are worth paying up for. At least sometimes. But when? Maybe if the company is unique.

My take in short

How many SaaS-like companies beat the Rule of 50, trade at less than P/E 25, are small caps, have no SBC, are proven market leaders expanding into ASEAN, pay a dividend, have net cash, are founder-led, are almost 100% vertically integrated, grow consistently at 15-20% or higher, and have low churn? Very few. Karooooo is the only one I have found that checks this many boxes.

I think it’s worth owning despite a clear set of risks, with culture and competition being the largest. Fast forward five years and you will (probably) see strong, profitable growth, with Asia playing a much bigger role. They differentiate themselves and have clear economies of scale.

My take, the longer version

Karooooo is the market leader in South Africa (+40% market share). It is a tech company, so things can change, but the market structure in fleet management/telematics seems likely to end up being oligopolistic with a few big players, as in South Africa today. South Africa is a mature market, but there is still a good amount of growth left. The bigger long-term growth engine, however, is ASEAN.

Their simple plan is to replicate the South African success in ASEAN. And they could do it. Not many global companies focus on this area. Most focus on the US and to a lesser extent Europe. Karooooo is also a vertically integrated low-cost provider, which is another thing that makes them different. They have a good chance of succeeding because they are focused, early, and own the customer. Growth will also come from Europe and South Africa, but ASEAN is clearly most important in the long term.

If you own the customer, and those customers are reluctant to switch and have no need to switch because competitors are neither cheaper nor better, you can simply sell more to each customer over time. They are a first mover in good markets. Growth should come from both more customers and, in the longer term, more sales to each customer. The end market is a good one, growing at 15%+, so there is room for strong long-term growth. That creates competition risks, but Karooooo has the competitive advantages, mindset, and focus to capture their fair share of growth. It isn’t only their name that sticks out. They think differently, both in terms of geographies and company structure. Not many small-cap companies can, financially, be compared to Autodesk, Microsoft, and Descartes. Continuing on that bullish tone, they are a bit like Costco for fleet management solutions.

There are obvious risks, like valuation, technological change, culture, and competition that you have to be aware of and I think a lot about. But it’s a really underfollowed stock, especially compared to its size, history, market position and numbers. It’s worth owning despite the risks. Disclaimer: I own the stock (as you could have guessed).

What they do: The Mobius fund take

Mark Mobius’ fund has bought the stock. Here is a quote from them:

Additionally, MEMF initiated a position in Karooooo (Cartrack), a high-quality, recurring-revenue telematics platform with strong structural growth drivers and company-specific execution catalysts. Industry demand is supported by fleet digitalisation to manage rising fuel, labour and maintenance costs, alongside increasing regulatory adoption across multiple regions. Cartrack’s vertically integrated model underpins high customer stickiness (c.95%), high recurring subscription quality, and attractive unit economics. Upside is driven by identifiable levers, including ARPU expansion through cross-sell of premium modules such as Cartrack Tag and AI Video, contractual price escalators in South Africa, and improving sales and installation capacity following recent investment in headcount, which should support stronger subscriber growth over time.

What they don’t do

More than once, I find Karooooo doing things that are not mainstream. They do things differently and independently, and I think that is a hallmark of Zak Calisto and/or a (good) part of the corporate culture. They are good at saying no.

• They have only a symbolic presence in the US market, mainly to track their competitors. The US is the biggest and most popular market for telematics and fleet management, but they choose carefully where to compete. They do not seem to listen to the “management consultant” playbook.

• They do not use agents. They try to own the customer. If they are active in a market, they own the whole customer value chain: products, sales, installation, and support. This is vertical integration at its best. I think their accounting package is the only outsourced software.

• They have no stock-based compensation. That is quite unusual for this type of company.

Valuation and numbers

This is not a deep value stock at all; this is more GARP. But if you actually look at the numbers, there has been consistent double-digit growth in revenue and EPS historically, and I see that continuing when I look forward. This is a “compounder”, an overused word, but this really is one. I think it has had constant growth since the start (2004) and that there is a good element of predictability here.

One important thing is that you should look at both Karooooo and their earlier listing as Cartrack (not shown in these numbers). My point is that financial success and good numbers, are apparent, over a very long history. And by the way, I think the forward numbers for revenue and EPS are too pessimistic, or simply not updated.

Seven key risks and my counterarguments

I am a reluctant owner to every stock I own, so I will focus on that. Don’t think I will ever be just positive, that’s the largest risk, not seeing any risks.

1. Valuation risk

A valuation of P/E 25 isn’t cheap, so why own? First of all, it really is P/E 25, it isn’t adjusted, with no real debt, SBC or other things to account for. But there is a valuation risk for sure. Growth must continue. Margins mustn’t collapse. The pleasant trio of long and strong history, reasonable valuation (I think it’s ok) and a positive future give me hope that the risk isn’t in fact that big. If Karooooo grows revenue and EPS by 15-20% and the valuation stays the same, you get 15-20% CAGR, that’s the oversimplified thesis.

And now some highly subjective comments on relevant peers (simply why I don’t own them instead):

• Powerfleet, I have a strong view that Karooooo is a better choice for many reasons: numbers, history, debt, insider ownership, and the markets they focus on. I am also simply not as interested in stocks or stories that can be and have been described on X as “financial engineering”, even if this is a person who owns Karooooo. They have a negative P/E.

• Samsara is too big (for me) and has a very high valuation, at least if you go by classical value measurement. P/E >300

• Ituran: Related party transactions/management compensation are too high in my view. I just cannot own. Looks interesting otherwise. P/E 22

• Opter. I think this is an example of a type of local company, that could more easily be challenged by AI and larger competitors, at least if they expand beyond the Nordics. Still, this is somewhat liked and talked about in Sweden. Not sure how much room there will be for local players in a more consolidated fleet management world. P/E 22

A word of caution: All these could be great investments, perhaps much better than Karooooo, but they are just not for me. Still, it makes sense to mention my big question marks and objections here.

2. South Africa-risk

70% of income is from South Africa. Many may stop there and instinctively shy away from this company. But then you miss something. You have to think about three very important factors.

1. The revenue/income history is very consistent. This is as “safe” as it gets when it comes to South African income, the revenue is non-cyclical, and highly predictable (they won’t go away or shrink in bad times, shown by history).

2. South Africa is not going in the wrong direction, actually it may be going in the opposite direction due to two important changes. The political situation (ANC+DA rules) is a clear improvement from Zuma times. And the electric utility situation is significantly improved in recent years. Load shedding isn’t affecting businesses and citizens that much. But the perception of South Africa isn’t always updated (people think of a messy political situation and even messier electricity situation). There are problems yes, but a country in free fall? No, instead green shoots. But the situation should be monitored.

3. The country weights and corresponding country/currency risks will be materially different in 3-5 years for Karooooo. Today it’s 70% South Africa, in 3-5 years it might be <50% due to ASEAN growth. There might be a perception shift that will happen, sooner or later, that this is a global company with an African base/roots. South Africa will be less important over time.

Maybe I should add some additional comments about why South Africa is both natural and a good place for Karooooo. If you read about Hidden Champions, there are often clusters of companies from one region. This industry has strong roots in South Africa, partly because of theft and security problems. The competitor MiX Telematics also comes from South Africa and is now a part of Powerfleet. For those interested in Hidden Champions, the South African background is a good sign.

3. Overall competition

Competition is real and natural. Software can change quickly. Old and new competitors can create price pressure. There may even be free or cheap solutions that might be “good enough”, although I think these are too simple and lack the data. ERP systems could maybe broaden their offering and offer into bundled solutions (not sure about that, maybe a long-term threat though).

Car manufacturers could try to push their own solutions, but they are naturally more limited to their own vehicles and ecosystems. Karooooo seems like a better solution to me structurally since companies often have different types and brands of vehicles. Mercedes, Volvo, or Toyota will naturally be limited to its own brand while Karooooo is brand-agnostic. It is also not only about cars. It is about transport, goods, workforce, logistics, safety, and efficiency. The most important competitive question is whether Karooooo’s advantages are durable enough and competition might come from new angles. This is something that I monitor closely. If something happens that will put pressure on Karooooo, and similar companies, I think USA is the market to look at. If Karooooo’s services aren’t needed (for whatever reason) in the US (the most modern market), I will get sceptical.

As long as churn doesn’t rise and margin doesn’t fall, I think Karooooo is holding up well, and those are the most important measures I follow. They are the clear leader in South Africa with about 40% market share. I don’t see any large AI-risk, since this is a bit of hardware and software combined. Data is a key to success.

4. Not unique products? No pricing power?

You can, in a slightly simplified view, think of Karooooo as the Costco of fleet management services. Scale advantages increase with more customers and are shared with customers (by not raising prices). I think the products and offerings over time are quite similar to other multinationals. What makes Karooooo unique is the business model, vertical integration, owning the customer etc. And some products are in fact unique, the Cartrack-tag for instance. It must also be harder for smaller players to offer complete solutions/broad offerings. What I mean is that the tier 1 companies, the multinationals, share similar offerings over time.

Also, and this is important: The data could be a “moat” that could give them an edge, at least to smaller, new entrants. Given their experience and data pool it should be hard for smaller players to build and adapt at the same rate.

They have not raised prices for a long time (about 15 years). That could be a smart move, a land-grab strategy to win customers in new markets. It could also be a sign that they completely lack pricing power. My interpretation, perhaps too positively skewed, is that this is the right strategy and that there may be some untapped pricing power. In theory at least there are some switching costs and a first mover advantage. If you use and like Karooooo, they might become mission critical. Certainly, the numbers would look even better with 3% to 5% annual price increases. But the question is how much churn would rise then, and what is normal/expected in the market they operate in.

5. Family involvement

There is some family involvement (“nepotism”?) going on. This article in The Edge touches indirectly on this.

For my part, this is a family company, and involving your children is not wrong at all. I see them as extraordinarily experienced for their age and the company is literally in their DNA. They have grown up discussing it, they know the company inside out. In the bigger picture, this is just something to accept in family companies. Still, this could be a reason that some funds avoid the company, I am not sure.

6. Corporate culture – my yellow flag

Glassdoor reviews are not great and bad corporate culture is one of the largest risks in my view. Karooooo (a small sample) has 3.0 of 5 and Cartrack (a larger sample) has 2.4 of 5. Mix has 3.5, Samsara has 4.0. Looking at the reviews, you often hear comments about bad management, and toxic culture. I think there is a real culture risk here. It might be that Zak, or the culture he created, almost might be a bit despotic, and there are certainly high demands and a bit of rotation of people. They say themselves that it’s a startup culture.

Glassdoor summary (for Cartrack)

• Management & leadership – Many reviews highlight poor management practices, including micromanagement and a lack of support, leading to a toxic environment where employees feel disposable.

• Work environment & culture – There’s a recurring theme of a disorganized and stressful workplace, with high turnover rates and a culture that prioritizes profits over employee well-being.

• Career & growth – While some employees appreciate the commission structure and learning opportunities, many express frustration over limited recognition and unclear paths for advancement.

• Work-life balance – Employees report a lack of work-life balance, with pressures to meet strict targets and minimal flexibility, which can lead to burnout.

What to do with this? Maybe it really is toxic. Maybe employees are pushed too hard. But if the work environment is crappy and people are not happy, cracks should really have begun to show after 20 years. If you look at the numbers, both as Cartrack (from 2014), and as Karooooo (from 2021), they are excellent and consistent. Zak has built this from scratch since 2004. It is a good creation (in terms of what is delivered to the shareholders, and 5% churn is not high). This company is a world leader starting from nothing. One explanation for the bad reviews is that it’s simply not a company for everyone. Not for all investors, not for all fund managers, and not for all employees.

But it is too much to just ignore. In the future, even more rapid change could require a good culture. I don’t like these risks if true and representative and I think they should do more to retain (good) employees. My point: The retention rate for customers is 95% and that’s a strong number, it’s strange if churn for employees is neglected.

Being fined by authorities is also something that isn’t a good sign culture-wise: I see this as an isolated event; I haven’t seen this before, and the sums are not large, but more of this and I will be skeptical to their business practices. Combined with the Glassdoor reviews and corporate culture risks, this is a yellow flag, with a hint of orange for me. This is something I think about and don’t like.

The most important reasons why I own anyway:

• The bad reviews are mostly concentrated in sales, if I got that right. It doesn’t have to be representative of the “core” of the company. And people change jobs more often in that department.

• The numbers for the company tell a completely different story than the Glassdoor reviews, and this hasn’t had an effect so far, so there is no “construction flaw” in the company since the history is long and good.

• The reviews haven’t gone from good to bad, they were already bad years ago (strangely enough this is a positive). A sudden drop would have been worse. This is maybe just how the company is run.

• You get a feeling that standards are high and that the culture just does not suit everyone.

But this point, combined with competition, is what I follow most closely. Especially worse reviews from here, combined with signs of stalling growth and/or any new fines would make me sell.

7. Corporate governance related to the owner

There have been some related-party transactions historically. I do not see them as even a yellow flag, based on the amounts and context. Some good funds own the company, but not all South African investors seem to like him. Why? There seems to be a love-or-hate element around Zak Calisto himself, and he has in some sense moved his capital to Singapore. I speculate, even if I probably shouldn’t, that not everyone likes that. Maybe some employee dissatisfaction could be one part of the story as well (but I am speculating again).

For me, five things are some strong counterarguments to the character and governance risks related to a large controlling owner like Zak:

1. There is no stock-based compensation.

2. There has been no criticism that I am aware of regarding the JSE/Nasdaq listing (Cartrack to Karooooo). He did not enrich himself or hurt minority shareholders as far as I know.

3. In recent years, he sold stock. A lot, actually. Yet he has not raised prices for 15 years. A normal “corporate” guy might have raised prices to accelerate short-term growth and the share price before selling. He did not. This speaks of character and integrity. I guess he does what he believes is right for the company.

4. There is a real legacy and large family ownership. He wouldn’t hurt the company by bad behavior since he would hurt his legacy, and his family’s wealth. The children being involved is a good thing in this context.

5. Good South African and global funds do own the company. Desert Lion, Saltlight, even Mobius, Ashmore and Holberg. That shows me that the problems and risks I highlight are a matter of taste, not that this is a company that should be avoided. My rule of thumb is that you never as an international investor should buy stocks that are hated and avoided locally. If these funds start selling, that should have “signal value” for me, and I might join them.

A great resource: Interview!

I can highly recommend this interview. I will give some nuggets and quotes. It’s just what I found most valuable even if the whole interview really is worth listening to. Note: I hope I got the quotes right, and please listen for yourself. Also note that they are a few years old, but you get a good understanding of the business!

General good quotes

These are some quotes that show some uniqueness in the company.

• Our value proposition is really the strong ROI that we have. People often ask, what is the ROI? It’s a very complex thing to actually determine. What we normally find, the investment of the customer upfront is the monthly fee, and the real benefits the customer get is in the first month, maybe a bit more in the second month, and in the third month the benefits are just keeping going on. The ROI is over 1000% for most customers.

• We are vertically integrated and everything sits on one single platform, even the way we run our business our internal systems are also one platform. Our only third party software is our accounting package.

• All the customers that are using our technology, we own the customer, the customer is not own by a third party.

• If you look at our operating margins they are well above any of our peers both in South Africa and abroad and that gives us a lot of pricing power should the market become competitive in terms of pricing.

• Africa (outside ZA) is not a real focus area for us but it supports our south African customers that are doing logistics up into Africa or going on tourism.

• When we went to Europe we were the first company to be on cloud compared to our peers.

Some Q & A, and my own take on that

Q: South African market, growth has remained robust in an economy that is basically going sideways to slightly backwards. You dominate the south African market, what would you consider that the TAM is, the size of the opportunity still available to grow in, in South African market?

A: The statistics are a little bit blurry, anything between 10 and 12,5 million vehicles. We have got on our platform in south Africa just over 1,4 million vehicles. We estimate there is about 3,5 million vehicles in south Africa installed, it could be as high as 4 million vehicles (me: that’s 35-40% market share). We believe that we are very much focused on Green market opportunity although we take business from our peers. And I certainly believe that we could triple our business in south Africa, given that we only got let’s say 11 or 12,5% of the total addressable market in south Africa. So to eventually land in 33% or 35% I don’t think that’s unrealistic. And we havn’t really got into a very competitive mode where we start to trying to get our competitors customers. Because we certainly got the margins to be able to do that and we certainly got the technology to do it as well. I certainly believe it wouldn’t be too say we can triple our business in south Africa.

My own take: Since South Africa is about 70% of sales, this is hugely important. And ASEAN growth isn’t just a project to get growth while South Africa has run out of steam. No: there is a lot of growth left in South Africa (there is just even more growth in Asia). Also, South Africa today could be what Asia will look like in the future, just at the next stage, when the market is more saturated. This tells me that the Asian growth story is very long term.

Q: How would then your commercial offering then differ to some of your competitors, you know is it kind of fighting for market share with a relatively similar offering, is there something particularly unique to Karooooo cause obviously a lot of it is just entering a new market you get to win market share and that ‘s how you can get a very high growth rate for a long time or is there some kind of specific very neat little competitive advantage that you think you have in some of those markets?

A: We certainly have got niche offerings in our platform and our platform is very, very comprehensive. I would say just every month we either improving on things or adding new features, adding new stack on our platform, it’s forever evolving. Having said that, in the industry that we’re in, even if you’ve got an edge over your competitor in terms of technology, I would say that in Europe and in South Africa all of our competitors are continuously looking at what we are doing. So even if you got the edge, within 6 months they are going to have it. They are going to copy you or do something slightly different, so it really is just about continuously innovating than saying I’ve got this feature, this differentiates us.

My own take: This is key to understanding the business. It’s both a good, and a bad thing. The large companies in this space aren’t that unique in their offerings. So they have no “moat” then? I think the large ones have that. In South Africa, a mature market, there still are only a few large players (Karooooo is the largest). And being a low-cost provider, as Karooooo is, is the right way to go. The key is being a low-cost provider with scale advantages, and to be first or early, and focus on a limited number of key markets and own the customer!

Q: This is more relevant to the south African market, do you get a discount on insurance if you have one of the Karooooo trackers?

A: The insurance companies are paying much lower ARPU:s and the unit economics don’t work for us. So our model is very different. Most of our consumer customers come directly to us, we’ve got a very strong brand, we’ve got a very strong value proposition, our service is well known and the insurance companies that do send the business to us are for their high risk vehicles, so the mass market they give it to our peers and the high risk vehicles they give it to us.

My own take: They really choose where to play. Not growth for the sake of growth. They avoid markets that have bad unit economics and are selective. That’s good!

Q: Why are you not operating in South America and Mexico, there’s also large markets, consumer and commercial, maybe just talk to us about the expansion outside of south Africa, I know you mentioned in the remarks with your slides, the move to Singapore to tap the kind of South East Asia, why didn’t you go for South America? (huge populations in both regions) What was more attractive about the south east asia opportunity?

A: What I’ve learned in doing business it’s the south African mindset is very unique, it’s very different to anywhere else in the world. Probably the most similar mindset to south African mindset are the Europeans. I believe very long term, Asia will be the fast growing GDP per capita and it will have a huge emerging market that will become first world markets over the next 25 years so Having said that, If we one day needed to consolidate the business we’d obviously find somebody that’s very strong in Latin America and in North America and consolidate with them. But I don’t think you can go to these markets and run them on remote control.

My own take: Asia for the win: that is a worldview I share. I also like that quote about not running on remote control. Again, they choose where to play.

More reading and info?

Want some more info about Karooooo? Please see their latest presentation and the long interview mentioned above (Unlock the Stock). If you are in a hurry, I recommend this short recent YouTube video as a quick overview as a start. If you like to listen, here is a recent podcast.

Final thoughts

Karooooo is not risk-free. It is founder-led, South Africa-heavy today, culturally demanding, and not cheap for a deep value investor. There is technology risk, competition risk, corporate culture risk, and key-person risk around Zak Calisto.

But it is also rare. A founder-led, SaaS-like company with net cash, no SBC, strong growth, high margins, a dividend, vertical integration, customer ownership, and a large ASEAN opportunity is not something you find every day. It may look expensive at first glance, but if Karooooo keeps compounding, keeps expanding in ASEAN, and keeps owning the customer, today’s valuation may not be expensive at all.

For me, Karooooo is a rulebreaker: not cheap enough for my deep-value soul, but too good to ignore. What is your opinion? Under what circumstances would you own a company at a P/E of 25? Are other SaaS companies more tempting? And what is your take on bad Glassdoor reviews?

I am trying to find simplicity when valuing stocks. I have moved from a sophisticated but diffuse style to a more simple approach with rule of thumbs. I’ll just start with two “lenses” or end goals that should be mentioned from the start:

• Significant undervalued right now - deep value

• Significant long term potential, if you look ahead - GAvRP

Often companies are somewhere in-between, but these are the two broad lines for the companies that passes the quality filter (in the earlier post) and the valuation filter (in this post).

Quality, valuation & momentum - a background

This is were I come from. A undefined but rule based world of red, yellow and green for all types of cases. In theory it goes like this: Once the basic requirements are met and the company is of interest, it is a matter of deciding the company’s quality, valuation and business momentum. A buy/hold/sell decision depends on that. And it is business momentum, not momentum in the share price.

Note: This is a clear blink to Grandeur Peak, it’s their model that I have tried to learn. I have made some changes, not shown here, that there is a price limit for everything, even for exceptional businesses with the strong momentum.

The obvious risk is that you could justify “buy at any price” especially for top quality and top momentum. I don’t agree with that. But the graphs shows in a pedagogic way that if you go for higher quality, you will get fewer decisions. Quality is usually consistent, while valuation and business momentum vary more over time. It’s also a very good framework for reasons to sell: a drop in quality, business momentum or worse price.

I still like this, but even more as a background idea. Since I have tendency for overthinking and being slightly colorblind when it really matters, I decided to try something easier for me. That’s rule of thumbs.

Rule of thumb 1: Double and still cheap?

For my deep value names, I have more and more moved to this simple question, where I don’t really need any calculator:

Could this company double and still be cheap? If you can answer yes without doubt I think you could have a deep value stock that could be worth owning. And if it passed my quality checklist, it should be safe enough. Price is most important, but the company should be of good or high quality, cheapness alone isn’t enough.

Often it is that simple, could it double and still be cheap right now? But there are sometimes near time growth that’s safe enough to account for. I could stretch things and think double and still be cheap within 12 months, including that growth. That’s ok to do, but it’s often not needed. Simplicity is best.

This is a lot of emphasis on valuation rather than quality and business momentum (growth). This is deep value and how I think about the bulk of my portfolio and a yes implies both big upside and downside protection. For deciding cheapness, I look at P/E, EV/EBITDA, FCF-yield and P/B among other metrics, in combination.

Rule of thumb 2: Exceptions for exceptional stocks

If there is significant long term potential, I could use GAvRP. For growth names (+15% REV/EPS), I think like this: Is this Growth At a Very Reasonable Price or not? I “estimate” a long term CAGR and compare that number with the valuation. The difference is that I here dare to look a few years ahead and then must be sure enough about future growth.

How sure am I that on revenue and EPS growth the coming 3-5 years? How much do I pay for this growth? This decides the multiple contraction risk. Is this such an exceptional and predictable stock that it is worth making exceptions? The real danger is that growth stalls and multiples falls.

For example: I think Karooooo will grow revenue and EPS 15-25% for 5+ years. That’s both in line with history, and a quite realistic future. It’s trading at P/E 25 and I don’t think it should be traded at anything lower than P/E 25. And compared to others, a P/E of 50 isn’t unreasonable at all. I don’t like relative valuation, but the point is that there shouldn’t be a big multiple contraction risk, as long as they perform. I guess this is my new way of capturing exceptional quality stocks with good business momentum and then accepting a higher price (the graph to the far right earlier above).

At the moment, Karooooo is the only one where I am comfortable looking a few years out, and the only really growthy stock I own. It’s a rule-breaker, it would have been easier if I “just” owned the 8 other stocks. But this is something I must own. And I might add stocks in this category. For the deep value names, there is on the contrary no “demands from the future”, they are more here and now. It is more dangerous with growth, since P/E 25 implies looking 25 years ahead (who can do that?). But there is also value in growth, but you must be certain that you must make an exception.

Rule of thumb 3: Think like buying your nearest café!

I have presented two models, for two different company types. Let me present a third way. If you would buy a real company, how would you do that? I think price and dividend capacity is very important then.

If you buy the nearest café I think most people would be sensible with their own money. How much is the price, how many times earnings? What amounts of dividends would I get? Could I get an extra dividend from cash reserves? Is there large needs for investments? That affects the price I pay. Will I get 12% a year or 2% a year in regular cash distributions in the foreseeable future?

This is real world calculations, leaning towards low P/E and high FCF-yield and the opportunities for extra dividend payouts etc. It’s simply Buffett’s buying the whole company with a twist: Try, in theory and just for fun (remember, this is not financial advice), buying your nearest café, and think the same about the stock you are nearest to buy. If only 2% FCF yield, you need a very strong growth plan - and even then, I’d remain skeptical. But a 10%+ FCF yield is often attractive (7 of my 9 companies have that right now). This simple example shows why I’m mostly a deep value investor.

And about dividends, I think it’s extremely important not to look at dividends per se, but total dividend capacity (FCF yield). What is produced, not distributed. Things like debt and capex cannot be ignored.

My hurdle is 10% CAGR in each investment

It’s really simple. Every investment should be able to return at least 10-15% annually (ideally 15%) without big risks. The company and valuation must support this, and I should see a clear path to double digit returns. This could come in different forms, growth, dividends, FCF-yield, even some revaluation (but that’s not reliable to count on ). Even low P/B (book value) and a growing B could work. It’s a combination.

Cheapness is good. Extreme cheapness is best: No-analyst stocks, but no-brainers if you just care to look at P/E, EV/EBITDA, FCF-yield and their large cash piles. No trigger or catalyst is needed if the valuation is more than right. A CAGR of 12–15% from each holding should be possible; a stable 5–10% might be nice, but it’s often not good enough.

If I think like this, companies that meet the criteria are harder to find. But it’s easier to hold if you really find them and you might get conviction that they really are unique. But you have to lookout for confirmation bias.

Hidden value? Not to be forgotten

Note! It’s not THAT easy. Sometimes you find a company returning let’s say 8% a year going forward, but having great hidden values. I e property, investments or other things that, if realized could give a 50-100% return. That could be very important. This is not only downside protection, it’s also potential.

You can also find companies that in theory could be liquidated and returning more than the market value today. This is like if the cafeteria above would have some inventory (that don’t grow old) or could rent out or sell off an unused part of the building. I deal with this by accepting i e 8%-cases with big potential upside, lumpy upside, by adding i e 3-5% for these possibilities if they are so real that they could happen within 5 years.

Other ways to “skin the cat”? Opinions?

How do you do this? Do you look at IRR, Share price potential (DCF:s) etc? And do you have different valuation methods for different types of names? The subject is a bit hard and somtimes confusing, I thought of naming this post: Price is what I pay, value is what I can’t get :)

But I am on the hunt for improvements and simple rules. One could be that never pay more than i e P/E 15 (TTM) for a “value” name and P/E 30 (TTM) for any “growth” stock. That could work. Or at least never pay more than x times sales, how good a company ever might be. I prefer classic valuation metrics and a combination of them. I think it’s dangerous to look only at cashflow, sales, EV/EBITDA etc, since every number shows one truth and tells one story. In the end you always must make an overall assessment if the price is fair. For calculations, this is a good guesstimator.

Perhaps I should use more excel, and present simple formulas. But I don’t think that suits me and I am more into Greek stocks than Greek letters. My simple, not so unique, point is that you shouldn’t need a calculator if you find something you really want to own. You know it when you see it. My conviction isn’t just in the numbers. I own the stocks I simply must own, looking at risks, quality and valuation combined.

Best regards, and all input is…valuable!

Gustav

Q1 ended with the portfolio up 3% in SEK terms. Given the turbulence in the markets, I am happy with that. Performance has been stable, and there are signs of resilience -although those may yet prove to be famous last words. That could change quickly, of course, with more than 40% of the portfolio concentrated in two South African microcaps. Still, so far, so good.

I use the portfolio function from Financial Times to track the portfolio’s development, which is especially helpful when using more that one broker. Beyond that, I mostly rely on Fiscal AI for more detailed portfolio-level information and for its excellent screener.

Changes

There has not been much activity. Just one trade: a small increase in Karooooo.

Current portfolio

At the time of writing, this is how the portfolio looks:

What I’m thinking

My watchlist is now down to around ten names. Recently, I have added a few companies from Brazil and Malaysia, and I am also looking in Japan. The same focus I apply to the portfolio - where I own just nine stocks - now applies to the watchlist. I am trimming it down and raising the bar.

I have also opened an account with IBKR to get access to new markets and to be ready if they open up even more interesting ones in the future. For now, I still only use Avanza and Pareto, but IBKR is a real option.

As you might notice, I am slow to make changes. That is not because I am asleep at the wheel. It is because new investments usually require me to sell something first - and I really like what I own. Still, things can change. In the best case, a lucrative bid creates an opening. Otherwise, portfolio changes will likely happen gradually, unless something materially changes in any of my companies (or in my mind).

Best regards

Gustav

Now it’s time to describe my strategy and investing checklist. I hope for input and discussions so that it could be improved. I use checklists as a first quality filter. The companies I own don’t have to be exceptional - cheaper, good-quality businesses is often better to own. But they must always meet a certain standard and, importantly, have no major flaws.

In practice, I eliminate the reasons not to own a company, one by one. I am a reluctant owner of every stock I hold. I simply end up with the companies I feel I have to own - where I cant find any good reasons not to own. Yes, I am picky, but I have to be. Starting from a theoretical universe of 45,000 companies and aiming at 10 holdings means the bar must be high - both in terms of quality and valuation.

I start with business quality (via checklists), and then look much closer at valuation. My approach certainly excludes many good investments - but I believe in focus. What I look for is what statistically should work well: smaller companies, lower liquidity, lower valuations - and overall low risk. Think “Benjamin Graham stocks”, but with a tilt towards obscure small caps, since most value is found there today.

Basic requirements? The must-haves

All companies I consider share certain characteristics. You could call this a quality filter, a value lens, or simply the part of the market where I prefer to hunt.

Every company must meet the following:

• Listed and operating primarily in a democracy. I use democracy index, flawed democracies is ok, but it must also be a country that I am willing to visit.

• Some non-cyclical elements in the business, not pure mining, oil, or other price takers. But some service companies could be ok, if they are less cyclical.

• Easy to understand business and risks, so no pharma, gambling, or banks. I tend to avoid waste management and telecom (corruption risk) and car manufacturing.

• Small or microcap, maybe midcap (< $10bn).

• Low debt (<1x EBITDA). In special cases <1.5x, if temporary

• Market leader (local or regional) preferably in a boring niche

• Decent track record (rev and EPS history that doesn’t scare you). No recent IPO

• Some form of competitive advantage (or at least no clear disadvantage). Ok ROE, 10% as a rule of thumb, could be lower if supercheap.

• Meaningful insider ownership (not ownerless). Free float <80%

• Acceptable governance (no accounting red flags, identifiable owners etc) 10 year clear record for corporate governance issues and scandals.

• Independent company (it shoudn’t be a listed subsidiary) Incentives must be right.

• Somewhat undiscovered and underfollowed, preferable boring. Not widely discussed on social media and well known. If so, it’s to popular for me

• Even if underfollowed, there can’t be promotion from people who can’t discuss facts or see flaws. If they own, I won’t. They are drawn to risks I don’t like.

• Neutral or positive society impact (no “shady” sectors like gambling, cigarettes, vaping etc). Don’t like them, so I will not learn enough, and I hate regulation risk

• Must pass the sleep well test: It should potentially qualify for being a +10% holding, if the stock just was cheap enough

• Reasonable valuation, actually cheap in some way. Most important of all points!

If a company passes this, it becomes interesting. Many of these criteria reflect both rational considerations and personal limitations. For example, I am not good at turnarounds and cyclicals, I don’t understand banks and find it difficult to assess what might happen in authoritarian regimes. I am also a geopolitical coward and don’t like those risks. And debt is always a risk, especially for small companies. I want at least ok management/owners since I take big positions. And I also actively look for inefficient parts of the markets. Institutions are obsessed with liquidity. I’m not.

I’ve hopefully reduced the risk of being fooled, and of buying a company whose low valuation is simply a reflection of low quality. To summarize, this will result in: Unknown, somewhat non-cyclical, market leaders with low debt, competitive advantages, often run by a family/founder. If my universe was about 45 000 companies from start, perhaps 5 000 companies remain now. When looking at a company that fulfills these basic criteria, my main question is: Is the valuation cheap enough?

What do I really like? The good to haves

These are characteristics I really like in a company. I could “pay up” a little if much of this is true, and every point makes the company more interesting:

• Hidden Champion, dominating a niche, totally unknown market leaders

• Strong competitive advantages, wide moat. Multiple sources, not just one

• Net cash and a long, good, history. Consistency and predictability

• Stable double-digit growth

• Active in full democracies and/or good demographics

• Fully non-cyclical, defensive, timeless products and demand. Small regular purchases, with low technology risks (consumer staples, niche industrials)

• When customers want to have the product itself - not just use it because it solves a problem that in the future could be solved in another way.

• Good and ROE and ROA, and increasing

• Strong free cash flow, low Capex, high dividend/reinvestment capacity

• Family-owned, or funder led, preferably free float of 20-40 per cent

• Low turnover in management. Strong corporate culture

• Long-term megatrend, e.g. demographics, digitalization (but not obvious)

• Significant win-win products (low regulatory risk)

• Some favorite small cap fund owning the company, an “ok-stamp”

• Super-boring and unique. A bad company name is a plus

• Nanocap, microcap i.e. relatively undiscovered, no analyst coverage

This is present to varying degrees in all my investments. I am willing to compromise and it is a matter of ‘give and take’ in relation to the valuation. If a company have all good to haves, I would pay more. Of the 5 000, I tend to look at the perhaps 1 000 ones with most good to haves.

Then valuation: Yes, we are supposed to haggle!

This post describes what I could buy, how I narrow it down from 45 000 to 5 000, or perhaps 1 000 strong candidates to look at. But what do I buy? Well, price and potential are the most important factors. It’s that simple. And within my investable universe I think like this:

A company should be undervalued to own, preferable significantly undervalued. Good returns must be possible with defensive assumptions. A quality checklist could easily work in the other direction, inspiring to quickly buy the “best” companies expensive, and assume that time will do the rest. No! As value investors, we are supposed to haggle, to quote Monty Python. That’s our job, and must be done properly! The best companies are not the best investments.

As long as a company passes the must-haves, the haggle begins, and it must take time. There is always a compromise between quality and price, even if you sometimes can get both. If you can, you really should own a lot. I am price sensitive and try to get as many “good to haves” as possible without going up in price.

Opinions?

What do you think of the checklist and filter? What would you change? I know that ‘everything has a price’ and constraints could be a bad thing. However, I find it difficult to buy something that ‘fails’ on my must-haves, and I usually capture many of the good-to-haves. I think the checklist is quite right for me, but it could be improved! I’ve certainly missed some things.

The point is this: If a company passes the checklist and is very cheap, it could be cheap for the right reasons: undiscovered and underfollowed. That’s what it’s all about. My goal is to find stable investments with limited negative surprises and low risks. Whether something is cheap enough or not is a subject for a future post, since high valuation is the most obvious risk of all risks.

I know this is really picky stockpicking. But I must narrow down my investment universe. And I want comfortable investments. It’s a bit like buying five to ten pairs of shoes from a shop with 45,000 pairs in stock (no shafing is important). Any help and comments is appreciated! And do you use any investment checklists?

Best regards

Gustav

eWeLL is a Japanese SaaS name, a small, unknown market leader, growing quite strongly and trading at around P/E 27 for 2026e. Despite it’s price, it’s on my watchlist. The purpose of this post is to see if it will stay there, be scrapped, or eventually take place in the portfolio! I’m a bit stuck and hope for input and good discussions!

Disclaimer: I don’t own, and probably never will. The valuation is a main hurdle. SaaS is a hurdle, as well as knowledge and conviction. Yet there is just something I like here. I want more eyes on it and I hope that deep value investors wont “tear their eyes out” - a subtle reference to Sufjan Stevens The Only Thing, which I will return to later!

Short info about the company

eWeLL Co., Ltd. (TSE: 5038) provides SaaS solutions for home-visit nursing stations in Japan. Its core product, “iBow”, is an electronic medical record system tailored specifically for this niche. They help nursing stations with documentation, billing, scheduling, workflow optimization etc. Over the past few years, they’ve broadened the offering, becoming more of a one-stop shop. In one sentence it’s all about digitalization of a growing healthcare/homecare niche in Japan.

For more info, see their homepage, financial highlights, and their investor presentation in English and a recent research report (use translate). The market cap is 220 million USD and it’s trading around 2400 Yen.

Valuation (prognosis)

This is a bit of guessing - my interpretation of the company’s guidance plus some back-of-the-envelope calculations. Treat this as an illustrative example only.

And remember, this is a net-cash company with a growing cash pile, so cash-adjusted P/Es are lower.

Not my typical company - but a good example?

As a deep value investor, why (insert random curse) am I looking at a Japanese SaaS name that isn’t really cheap, even a few years out? Trying to trigger or confuse the hard-earned discussion partners (followers) I have? Not really! I am mostly a deep value investor, not 100%. Investment life is a struggle between different philosophies and roads that ultimately lead to the same goal. The Japanese SaaS road maybe isn’t the easiest one, but let’s take a few cautious steps anyway.

To be clear, if added to the portfolio, it would be in the GAvRP (Growth at a Very Reasonable Price) corner together with Karooooo. And eWell as an example raises interesting questions:

• When is it okay to “pay up” for consistent, non-cyclical growth?

• Should you aim for tiny, fully unknown, niche market leaders?

• How do you handle liking a company while still having real hurdles?

• When entering a new country, is deep value or GAvRP the smarter approach?

• In practice: is eWeLL a worse, similar or better case than Karooooo?

What I like

I have been following this for some years now and there are certainly things to like. I think there is some real uniqueness here:

• They solve a problem and do good. At least, that’s the impression I get!

• They have consistent, high growth in a non-cyclical sector.

• Small company, long history, no debt. That’s a good combination!

• First mover and a market leader in a niche, low churn.

• The founder has an unusual background and seems energetic and could think like an outsider (a former world leader in jet skiing).

• Grandeur Peak and Wasatch Advisors, my “childhood heroes” in global investing, both own it.

In short: There is some uniquness in this company, and something that I, and good funds really like.

What I don’t like, or don’t understand

My buying hurdles are:

• I don’t like paying a P/E ratio of more than 25-30 (TTM). This increases the risk significantly.

• The company is founded in 2012, in that way a bit unproven.

• Deacceleration? The history is great. The outlook is good. When a company’s growth goes from great to good, something bad could happen to the multiple.

• The context/competition: I tried to read and understand. Google Translate and AI tools are my friends, but they can’t be trusted. I’m worried that I’m missing future changes. Could larger players enter the field? Could they bundle their offerings and add solutions more or less for free? If you don’t know the context, it’s dangerous to pay up. Competitors are i e SMS (2175), M3 (2413), Medical Data Vision (3902), Kanamic Network (3939) and EM Systems (4820) but eWell is the market leader with around 18% market share (if I got that right).

• Grandeur Peak owns, but isn’t that loyal. They have rotated their holdings a bit and recently decreased their holding in their global reach fund. More selling could be on the way.

• This could be a textbook example of something that fits very well in a “too hard pile”. Japan, SaaS, medical systems, regulation, etc. It’s perhaps an overambitious target, as a tourist investor, and it’s better to go for easier ones? Even if the history screams predictability, the combined complexity could still be high.

• Naturally, they are only in Japan. That’s a good thing, but it still carries a risk from a diversification perspective (compared to Karooooo).

On the contrary, I don’t have these issues with Karooooo. I have other issues, but much smaller. eWell is clearly better in just three aspects: Grandeur Peak/Wasatch owning, a smaller market cap, and even less well-known.

Everything returns to valuation?

I’m trying to decide where eWell should fit in: The portfolio, watchlist, or scrapped as an idea? And I can’t get further on my own, but have valuation as a main hurdle. That brings me back to the Sufjan Stevens reference from the beginning. Here’s an extract from The Only Thing:

Should I tear my еyes out now?
Everything I see returns to you, somehow
Should I tear my heart out now?
Everything I feel returns to you, somehow
I want to save you from your sorrow

It’s obviously not about investing, but for me it, somehow, captures how I feel about valuation! Everything I see (the numbers) and everything I feel (I still want to own eWeLL) keeps coming back to “you” (= valuation). And buying low-valuation stocks is one of the best ways to save yourself from a lot of investing sorrow!

Some would even say that valuation literally is The Only Thing that matters. I wouldn’t go that far, but if anything, valuation is the most important thing. And my watchlist is a collection of ideas I like, where the valuation probably is the only thing that stop’s me from buying! And yes I know, quoting songs might seem strange, but you can find inspiration everywhere. In my defense, one part of the text says “returns to you”, and well, that’s 100% what investing is all about!

Opinions?

Under what circumstances would you buy something like this? For me, I can’t build enough conviction to pay more than 20x P/E (ideally 15x) given the risks I see. Or maybe I just lack the necessary context and should pay more.

The history is good - very good, in fact. But what about the future? The thing is, with deep value stocks, there are no expectations or demands for the future. Here, I’m simply too afraid that growth might stall and “sorrow” will follow. And do you have any “eWells” - stocks that you like but still never feel comfortable enough to buy?

When it’s too difficult to build conviction for whatever reason, the company should belong in the “too hard” pile for me, and will be scrapped. However, with more knowledge and discussions, things could change. This is a starting point. Or the end of the eWell road. Let’s see!

Best regards

Gustav

It’s time to write something about my portfolio. The names are: Argent Industrial, RFM Corp, Primeserv, Karooooo, Ultrajaya, AS Company, Arwana Citramulia, Ekadharma International and Champion Pacific. That list probably requires an explanation!

Common denominators

A few things tie these companies together:

They are all small, have no debt, high insider ownership, and are cheap - or very cheap. Most have non-cyclical elements, some growth, and decent ROEs. All are based in democracies: South Africa, Indonesia, Singapore, the Philippines and Greece. Most are family-led or founder-led market leaders. As a rule of thumb: they could double and still be cheap. There are exceptions, but my hope is that all of them are exceptionally good stocks. Who knows if that’s true, but they fit my strategy!

I try to invest a bit like Benjamin Graham/early Buffett/Peter Lynch, but in microcaps from all over the world. The key theme is low-risk, borderline boring, undiscovered market leaders with large cash piles. Stocks that are cheap for the right reasons (overlooked and underfollowed). On a broad level, it’s almost two portfolios in one: eight deep value names and one growth at a very reasonable price (Karooooo). If there’s interest, I’ll write about my checklist/process, my geographic focus, and do write-ups on every stock.

A short why

A reminder and clarification: my purpose for being here is to learn, evolve, connect, and have fun. I want to become a better investor. For that to work, I need to write things down (a good process), get input (an even better process), and discuss/improve (the end goal). Transparency is key, therefore I post my portfolio. I’m a nerd (no doubt) trying to broaden my view with help from others (nerds or not) - and hopefully help others improve too (if I can).

The numbers - full portfolio

The portfolio as a whole is cheap, but maybe not that cheap (did I hear something about “double and still be cheap”?). Note that the P/E 12 is backwards looking, and should be lower if you account for growth in 2026 (which I do). P/E adjusted for cash is obviously lower as well. So a rough “forward P/E” for 2026 should be just above 10, and cash-adjusted P/E about 9 for the portfolio. I like the combination of high FCF yield, low debt, good profitability, and some growth.

To make a bad sports analogy: having only growth is like being a footballer who can only run fast but can’t tackle, pass or shoot. Financial strength (stamina) and high minimum abilities matter too. The stocks in my portfolio are small, young and relatively unknown ‘players’ – perhaps not the fastest – but hopefully without major flaws, with good overall abilities despite their young age (small market cap).

The numbers - without Karooooo

Perhaps this is too creative. I can hear silent whispers of “financial engineering”…but if you only look at the eight deep value names (excluding Karooooo), the portfolio is a bit different. Growth is weaker, but P/B falls to ~1.2 and FCF yield almost reaches double digits. Median market cap drops to ca $200m. This is the “core” of the portfolio and the style can be described as Benjamin Graham-inspired exotic microcaps.

Karooooo isn’t that expensive in my view, and it fits my GAvRP bucket: growth at a very reasonable price. But it’s still more of a growth stock than a classic deep value stock (even if that’s another discussion).

Short comments on the first four

Argent Industrial ($JSE:ART) - 27%

Marketcap: 113m USD. P/E 6.9, EV/EBITDA 3.4, P/B 1. Owned since 2022.

A global, diversified serial acquirer within the manufacturing sector, owning 24 companies. Consistent growth - typically 5–15% revenue and 10–30% EPS. Almost 35% of market cap in cash and ~14% FCF yield. This is deep value + growth. Roughly 70% of income comes from outside South Africa. A hidden gem with a simple story: since 2017 there is a shift toward foreign income and higher-margin businesses. I am hoping for more acquisitions and buybacks. I think Argent is absurdly cheap for no good reason and the picture says two things: growth and stability.

Risks: currency movements, management could own more, acquisitions can go wrong even if bought cheap and without debt, some cyclicality, dependency on a few key people (Treve Hendry, Rhys Summerton).

Further reading: Jibby Cap, Prayavalue, Nesja on Twitter. I shared an analysis on Twitter a few months ago and may publish an updated version here on Substack.

Primeserv ($JSE:PMV) - 16%

Marketcap: 14m USD. P/E 7.2, EV/EBITDA 3.6, P/B 1. Owned since 2024.

Business support services, including staffing, recruitment and HR. A hidden gem. Stable growth - often around +10% in revenue and EPS. 8%+ FCF yield, about 32% of market cap in cash, and a generous dividend payer. They make acquisitions from time to time. Like Argent, the picture shows good growth and stability. Actually the two companies are a bit similar, even if Primeserv is more local and even smaller.

Risks: illiquidity makes buying or selling difficult, currency risk (only ZAR income), closely linked to the South African economy - though growth since 2017 has been remarkable despite (and partly due to) challenging conditions.

RFM Corp ($RFM:PSE) - 15%

Marketcap: 323m USD. P/E 12, EV/EBITDA 5.6, P/B 1.2. Owned since 2021.

Ice cream and consumer staples. Very cheap on a sum-of-the-parts basis: if the ice cream part is worth ~$170m, and you subtract $60m in cash, then the “other parts” are implied to be worth only ~$90m. That looks extremely cheap to me. You effectively get five strong businesses for that sum: two leading pasta brands, one flour business, one milk business, and one juice business—operating in a large democratic country with good demographics. The picture shows the different brands.

NOTE! See my recent write-up for a more detailed view, including risks. A good overview of country risks can also be found in Grandeur Peaks recent travel report.

Karooooo ($KARO) - 13%

Marketcap: 1.4 billion USD. P/E 25, EV/EBITDA 17, P/B 8. Owned since 2021.

Strong, consistent growth at a reasonable price. How many world-leading SaaS companies pay dividends, trade at “only” P/E 25, have a strong history, no debt, and no stock based compensation? Market leader in South Africa, now trying to replicate that success in ASEAN. I think it’s underfollowed and underdiscussed relative to its size, history, and future prospects. Samsara and Powerfleet get much more attention. I like their vertical integration and focus on markets that other large player neglect. The picture gives a good view of how unique they are (they are in good company).

Extra discussion point: What about “SaaSpocalypse”? Is AI a threat? Firstly, this is mission-critical. It’s about acquiring, interpreting and displaying data in real time. Barriers to entry may fall, and competition rise, but consider South Africa, where there are a few dominant players and Karooooo is the largest. To me, the market structure looks more oligopolistic than fragmented, and I suspect that will stay the same and that markets in Asia will end up the same way.

Risks: competition, still South Africa-heavy, very high insider ownership (future selling risk), tech/SaaS brings obsolescence risk, weak Glassdoor reviews (corporate culture could be a risk).

The other five?

This post is already getting long. The first four holdings account for 70%+ of my portfolio, so you get a clear picture of what I like. The other five are:

• Ultrajaya (8%)

• AS Company (6%)

• Arwana Citramulia (6 %)

• Ekadharma International (4%)

• Champion Pacific (4%)

The Indonesian group of four is briefly described in my earlier post about Indonesia. AS Company is a small, fairly cheap, family-operated Greek toy company with a long history. Those interested can read my Twitter thread from January for those. I’ll likely cover all stocks in future deep dives - and I am happy to answer questions about all companies.

Questions & opinions?

What do you think of this portfolio and these stocks? I’m struggling with dividing the portfolio into different parts - having two portfolios is one option, but it complicates things. Each investment should always be measured against the others, they just have different strengths.

I don’t know how unique this portfolio is. But buying the most obscure never-heard-of stocks in never-heard-of markets isn’t the point (even if it may seem so:-). I’m simply buying the cheapest and best value stocks I can find - and I like looking where fewer global investors look (and think that is a point to do). And we are talking about stocks with large cash piles and long history, despite their small size.

Any tips on what to improve? And yes, the elephants in the room… I know that 27% in one stock is quite much, and there’s a clear tilt toward South Africa (but Argent have mostly foreign income). Concentration, or not, and my geographical focus will be described in future posts - and it all comes down to how you view risk. But for now: what’s your view on the portfolio and the companies? Any comments appreciated!

Best regards

Gustav (@aktieblogg)

Whenever you hear the word “uninvestable,” it can be worth asking a simple question: can the sentiment get much worse than that? And while it’s a simple tool, Global P/E ratios suggest that Indonesia, the Philippines, and Thailand are among the places where it’s currently easiest to find value. Here, I’ll focus on Indonesia.

Background

Why is Indonesia so cheap? Probably for several reasons - and I’m not claiming to have the full answer. I’m a global small-cap deep value investor, not a country or macro specialist. Still, this is how I understand the situation:

• Low foreign participation: Indonesia has never been a “default” destination for global capital, and foreign inflows have been limited.

• Falling domestic ownership: Domestic shareholding has reportedly declined (Pangolin has highlighted this).

• Rising political risk: Political uncertainty have increased - and the market’s perception of that risk even more. Talks about expropriation (even if it is related to illegal palm oil plantations) doesn’t help.

• Middle-class under pressure: The rising middle class has not risen.

• Currency weakness: The rupiah is under pressure.

• MSCI concerns: There has been talk of a potential MSCI downgrade (from Emerging to Frontier).

Maybe the answer is in this cocktail of reasons. Or maybe I’m missing something important. I don’t really know. But I do know this:

• Indonesia is the world’s fourth most populous country, with a relatively young population.

• It’s the third largest democracy according to democracy index.

• Geographically, it’s bigger than most people intuitively think Visual capitalist and True size of are good for getting the right perspective. A few global investors get the globe wrong, I will write a separate post about that.

• Most importantly: there are many family-owned, non-cyclical companies with low debt and cheap valuations, especially among smaller names. If you do a global value screen, many candidates will be in Indonesia.

• Also, several good funds that I respect are invested there despite the challenges. In other words: you’re not alone (as Michael Jackson might have put it).

Risks

This is a country disclaimer: Indonesia isn’t for everyone, even when it’s this cheap. If you invest in consumer-related stocks - or cheap stocks in general- Indonesia can be a fertile ground. But you must consider the risks:

Currency risks are real, especially if you own local companies without export revenue. Business quality could be lacking. Competition is intense and even market leaders struggle. You can find very shareholder-friendly families - and the opposite. You have to do the work. So yes: be careful. Be brave. But it isn’t crazy. Indonesia feels overlooked, misunderstood - and recently close to rejected.

Stocks I own

I currently own four Indonesian stocks, or perhaps five*:

• Ultrajaya – A clear market leader in milk and tea and the most “Buffett-like” of the group. Conservative management, vertical integration underway, and milk consumption is low but rising. I’ve be tried their products and liked them! P/E 13, EV/EBITDA 8, P/B 2. 16% of market cap in cash.

• Arwana Citramulia – High-margin tile producer with a high free-cash-flow yield. It’s a meaningful global player (top 10 worldwide) and among the most efficient operators. P/E 9, EV/EBITDA 5, P/B 2. Cheap but a bit cyclical and dependent on external factors (import duties and gas subventions).

• Ekadharma International – Adhesive tape business that quietly is transforming to an investment company: 87% of market cap in financial assets, and around 70% in land/buildings (as I understand it). P/E 20, EV/EBITDA 2,8, P/B 0,6. Cheap on assets, not on a P/E-basis.

• Champion Pacific – Pharmaceutical packaging. Dirt cheap. Related to Kalbe, which I see as a positive. P/E 9, EV/EBITDA 2,7, P/B 0.8. Around 40% of market cap in cash.

The obvious weakness: these are local businesses and I don’t have a currency hedge. Still, the first two are the highest-quality companies I’ve found - local champions, or “hidden champions.” The latter two are classic deep value plays (almost Japanese). I may do writeups on these stocks.

*A long-term wildcard is Karooooo. I own them, and they are growing strongly in Indonesia (and ASEAN). If growth continues, they could have a meaningful Indonesian exposure over time. Otherwise, “Western” stocks with large Indonesian exposure are surprisingly rare. Not deep value, more of a growth stock.

Stocks on my watchlist

A few examples of what I’m looking at:

• Bayu Buana – Ultra-cheap travel agency, but I have some questions about ownership/governance.

• Cisarua Mountain Dairy – Worth tracking if you own Ultrajaya; it’s a key peer/competitor. Not deep value, but strong growth.

• Mastersystem Infotama – Grandeur Peak has bought; I’m waiting (recent IPO).

• Metrodata – Looks cheap and good, but Fourton selling could be a warning sign.

• Nusantara Sejahtera Raya – Largest cinema operator, but still a small company. Research ongoing; promising so far, but I could still be missing something.

Funds to follow

I closely follow these:

• Swedbank Robur Small Cap EM – Excellent fund. Owns Arwana, plus names like Kalbe Farma and Mayora Indah.

• Fourton – Finnish Indonesia specialists. Own Ultrajaya and Arwana. If they sell, I need to think long and hard why. They’ve been surprisingly good at avoiding value-traps.

• Pangolin Asia – Monthly letters of very high quality. Great for understanding Indonesia in a broader Asia context. If you read only a few, don’t miss the ones from July 2025 and September 2025, which discuss the Indonesian opportunity.

• Fidelity Asian Values PLC – Simple, disciplined approach. Covers Asia broadly but has made useful comparisons between India and Indonesia. Their interviews/videos are worth watching.

• Grandeur Peak – Salt Lake City-based global investors that invest all over the globe, having a small-cap focus. Not deep value, more value and growth.

Brokers?

I use Avanza, a Swedish broker, that offers access to Indonesia by old-school phone orders. I’m not sure which other European brokers that work. I’ve heard Comdirect (Germany) might. Fidelity may work from the U.S. (at least for the Philippines), but I’m not 100% sure. Asian Century Stocks has an old but useful overview of local brokers. Any input on brokers would be helpful as I’m collecting information for future posts!

Opinions?

Do you look at Indonesia? Have you access, and what broker do you use? Do you think it might be time to buy Indonesian stocks? If so, which stocks, or type of stocks, might be interesting?

My firm belief is this: Investing in deep value stocks in the world’s third-largest democracy isn’t crazy. Prove me wrong. Then again, Indonesia might prove me wrong - let’s see! Let’s discuss Indonesian stocks and risks!

Sometimes investing is easy. Not in most investments, but in some. The thesis in RFM Corp, a Philippine ice-cream, pasta, and flour company, is as simple as a high-school algebra problem: If 60 + X + Y = 290, what are X and Y?

Hard to tell, right? Well - not if you can nail down the value of X. To do that you need to dig a bit. Which I’ve done. I suspected RFM was very cheap, but since December 2025 it has become possible to quantify part of this very easily using external sources.

Some basic facts

• Name: RFM Corp (RFM:PSE)

• Stock exchange: Philippine Stock Exchange

• Where to buy (for Europeans): Avanza (via old-school telephone orders). Also available via several Asian brokers (e.g., BOOM/Monex, KGI Securities, Philip Securities, UOB, OCBC, Lim & Tan, Maybank, DBS Vickers). No IBKR yet, unfortunately.

• Price: ~5.28 PHP

• Market cap: ~295m USD

• Listing year: 1966 (!)

Disclaimer: I own this stock! I may be biased and may get things wrong. This is no recommendation. The only thing I can recommend is their products - even if I haven’t tested them yet, they look quite tasty.

The simple take

RFM’s market cap is about 295m USD. Net cash is ~60m, so EV is roughly 235m USD. If the ice-cream part is worth ~170m USD, then “the other parts” are implied to be worth only ~65m USD. That looks extremely cheap to me for what you get. For 65 million dollars, you effectively get five businesses: two leading pasta brands, one flour business, one milk business, and one juice business - operating in a large, democratic country with good demographics. My simple point: you get some, or most, of the other parts for free.

Back to the equation above: 170 (ice cream) + 60 (cash) + 65 (other parts) = 295 (market cap). Cash is what it is. The ice-cream valuation is recent and, in my view, reasonably grounded. What the whole case centers around is the value of the other parts. I think those parts should be valued much higher given the brands, non-cyclical nature, and market positions in a growing consumer market. When I ran this calculation in December, the “other parts” were implied to be worth only ~30m USD (!). Even after the move, I think the thesis still holds.

The numbers

Looking at the numbers (thanks Fiscal AI), this is a stable, consumer-staples business with a long history. Value, perhaps deep value, with some growth. Dividends are high (often ~10%), with several special dividends in recent years. ROE isn’t spectacular, but when ~20% of the market cap sits in cash, it looks more than fine for me.

There’s also a long backstory: the company was in serious trouble during the Asian Financial Crisis. My takeaway is that management (now) doesn’t take large risks - and that likely explains the large net cash position. It’s also worth mentioning that the company has received awards (where corporate governance is a criteria). Combined with large family ownership and some reputable funds, this feels like a “sleep-well” kind of stock.

I see a path to 15%+ CAGR returns: 5-7% growth, 7-12% dividend, possible revaluation on top of that, and corporate action as a additional bonus (selling some division or making good acquisitions). My strategy, rule of thumb, is to own stocks that are cheap even if they double. If this does, it will have almost 5% dividend, a EV/EBITDA of 10, a P/E ex-cash below 20. That’s not really cheap, but the extreme cheapness I like is evident when you consider their assets and brands.

The value of the ice-cream part

This part is simple. If you open The Magnum Ice Cream Company prospectus dated 3 December and search for “Philippines” (or “RFM”), you’ll find a valuation for the Philippine ice-cream JV of €145m, or roughly ~170m USD. This is new information since Magnum Ice Cream Company is a spin-off from Unilever.

You can argue the Philippine ice-cream business should increase in value over time. Consumption is still low, demographics are strong, and the middle class should grow. Selling ice cream in a warm country also helps (year-round demand). The Philippines is highlighted as a successful market in Magnum’s materials, and they are the clear market leader.

Similar information exists in RFM’s own annual reports, but this time we have an external source—which I prefer.

The value of the rest - the big question!

Consider these brands:

• Fiesta: cake mixes, flour-based products, sauce mixes. Top-4 market share.

• Royal: premium pasta brand (spaghetti, macaroni, bundles) with 100+ years of heritage. #1 market share.

• Fiesta pasta: value-oriented pasta brand (spaghetti, macaroni, sauces) for everyday meals. #1 market share.

• Sunkist: ready-to-drink and powdered juice beverages, under license from Sunkist Growers (USA). Top-3–5 market share.

• Selecta Milk: fortified filled milk (RTD in Tetra Pak) and related dairy beverages. Top-3 market share. (Despite the Selecta name, this is not part of the ice-cream JV.)

That’s five strong brands with leading positions in a young, growing country of ~117 million people. What should these be worth separately? I don’t think it’s crazy to argue for 250–300m USD if you viewed these five as a standalone listed entity and compared to peers (yes, that is almost RFM’s current market cap.). Not a sure thing - just speculation, estimates and peer comparisons (with the help of AI). I don’t claim precision; I just think ~65m is very low.

The true value is what a buyer would pay in a market transaction. For the ice-cream part, we effectively have a potential buyer and a price (that’s rare). For the other parts, we have to estimate. My simple guess is that a local player like Century Pacific, or a multinational, could plausibly pay ~50m USD for just one of these brands. Note: pure guessing - I may be 100% wrong and I’m very open to input.

Risks

A few examples:

• Joint venture risk: co-dependency, and Unilever/Magnum is obviously the stronger partner. The clause provide some downside protection if cooperation fails, even if it has worked well for a long time.

• Currency risks and raw materials: This is a local Philippine company that imports raw materials. There are real currency risks and they are not vertically integrated.

• Geopolitical risks: if China/Taiwan escalates (blockade/invasion), the Philippines will be severely affected - along with global trade. Ice cream, and your investments, is a small issue in that scenario, but supply chains always matter.

• Low-margin parts: flour may drag returns; ice cream may be the “crown jewel” on margins. ROE is ~10%, not high - but higher if you adjust for cash.

• Health concerns: Not all products in their portfolio can be claimed to be healthy, or even made to be healthy. Sugar tax poses a risk. There is also always a risk of product recalls.

• Competition: increased competition, especially in ice cream. Aice is a competitor to watch (deserves more discussion).

More about ice-cream competition

Over recent years I’ve followed the ice cream markets in Greece, the Nordics, Indonesia, and the Philippines. Typically, a few large players dominate, with Unilever often at the top. Magnum’s materials give a good overview of the market structure. Some argue (i e in this video) that ice cream isn’t a great business. My counterargument is that in the Philippines it likely is- otherwise you’d expect more fragmentation and lower concentration.

Aice has succeeded in Indonesia by building local production capacity. I think they could hurt growth and possibly margins over time for RFM. The key is that they’re winning in a somewhat comparable neighboring market, they’re China-backed, and they behave aggressively. That said, they compete more on low cost/cheap products. Unilever/RFM could respond by leaning more to premium (higher margins).

Relevant peers: Kri-Kri (Greece), Campina (Indonesia), B-R 31 (Japan) and perhaps Ultrajaya (Indonesia). Not perfectly comparable, but relative to those - and relative to Magnum Ice Cream Company and other consumer staples - RFM looks quite (or very) cheap.

Opinions?

What do you think? Do you find RFM interesting? And what could the other parts be worth? Do you agree with the market - or with me? (haha). Is having 14,5% of my portfolio in RFM stupid, bad, okay, good - or excellent?

And is ice-cream a good business model? I think market concentration suggests it can be. Some people might see consumer staples overall as too boring and low growth. Do you agree? I have about 22% of my portfolio in food and drink, is that too high or low? Do you own any stocks similar to RFM?

Lastly, I know that the Philippines isn’t as accessible as other markets. Coming write-ups will include more “normal” markets as well. But I’m not normal (at least in my investing style). I hope you still enjoy the post. And thinking about ice cream is at least very normal, even in the winter.

Any comments are highly appreciated!

Best regards

Gustav (@aktieblogg)

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1. The best stocks you never heard of

Global investing is what drives and inspires me. A dirt-cheap South African stock? An ignored name in Greece? Small caps in Indonesia or the Philippines? I’m happy to look all over the world - as long as it’s a democracy and my brokers provide access.

I also like very small companies. That’s where inefficiencies tend to hide, especially now that information travels fast and “obvious” bargains get crowded quickly. If you’re willing to dig a little deeper, you can still find opportunities that even Graham might have liked.

I’m a deep value investor, focusing on stocks that can double and still being cheap. What may make this Substack different is the focus on markets and companies that feel a bit “exotic.” Good businesses exist everywhere - and it’s often easier to find mispriced stocks where fewer investors are looking. But it has to be cheap for the right reasons: overlooked and underfollowed.

2. A forum for global, exotic, small-cap value investing

I want this to be a place for discussion - sharing ideas, testing assumptions, and learning together about parts of the global market that many investors ignore.

I fully understand that these areas can be ignored for good reasons, and that hidden risks are real. But it isn’t always that simple. My portfolio currently includes companies from South Africa, Singapore, Greece, the Philippines, and Indonesia - so expect a lot from those markets. I’ll also write about other countries (Japan, for example), even if I don’t own anything there. Yet.

Some of you may recognize me from X/Twitter (@aktieblogg). Substack feels like a great complement: more structure, more detail, and a better place to build an archive. Think of this as my library.

3. Starting modestly

I don’t know how popular this will be - after all, we’re talking about unpopular, underfollowed stocks. And my main skill (hopefully) is investing, not communication. Still, I’m going to give it a real try, and I’m very open to suggestions on what you’d like me to cover.

I hope you’ll join me on this journey. Financial freedom may be one goal, but it’s also about curiosity and the urge to learn. And honestly: writing things down, getting feedback, and having real discussions makes it much harder to fool yourself or take a wrong turn. My English isn’t perfect, but I hope the ideas come through anyway. I want to improve, have fun, and connect with others who enjoy the same kind of investing.

Let’s do this together!

Best regards

Gustav (@aktieblogg)