The Story

Epic began life in 1979 as Human Services Computing, started by Judy Faulkner in a basement at 2020 University Avenue in Madison, Wisconsin, with $70K scraped together from friends and family. She’d taken a course on computing in medicine during her master’s degree under a Dr. Warner Slack, been set the task of building a system to keep track of patient information, and rather than treat it as coursework, simply kept building once she’d graduated. She wrote the original code on a Data General Eclipse, a 16-bit minicomputer, and has described programming itself in a way I rather like: “clay of the mind,” as she put it, the mental equivalent of the sculpting she enjoyed as a child. There’s no VC pitch deck in this story, no garage-to-IPO montage with a couple of dropouts that we love to see being eclipsed by a hollywood movie some decades later; there’s a woman who liked solving an unglamorous problem, and simply never really stopped.

Forty-six years later, that basement operation employs roughly 14,000 people and sits on a genuinely surreal 1,670-acre campus in Verona, just outside Madison, which the company itself calls its Intergalactic Headquarters. You get the vibe in the picture above, it is absolutely surreal. It’s split into themed sub-campuses: Wizards Academy, built around Harry Potter; Storybook, drawing on the Wizard of Oz and Charlie and the Chocolate Factory; and Prairie, the original campus, which employees openly call the most boring one despite it having an entrance shaped like a chocolate factory and a hanging bridge to an actual treehouse. Faulkner, according to the architect who’s worked with her for thirty years, personally signed off on the light fixtures, tile and wallpaper for all 85 bathrooms in that first building. Painted across the bathroom and breakroom walls campus-wide are Epic’s “Ten Commandments,” the first three of which tell you almost everything you need to know about how this company thinks: “Do not go public. Do not acquire or be acquired. Software must work.” Once a month, most of the 14,000 strong workforce packs into an underground auditorium called Deep Space for a mandatory all-hands meeting employees jokingly call “work church,” which apparently includes a recurring grammar segment on whether it’s acceptable to end a sentence with a preposition. Faulkner is now 82, owns roughly 43% of the company, has signed the Giving Pledge to donate 99% of her wealth to philanthropy, and reportedly sells around $100 million of her own Epic shares back to the company annually specifically to fund that giving. In four and a half decades, Epic has never taken a cent of venture capital or private equity money, never listed on a public market, and never once acquired a competitor.

The Moat

According to KLAS Research's 2026 market share report, Epic now controls 43.7% of the US acute care hospital EHR market and 56.9% of all hospital beds, and that share has grown for five consecutive years running. In 2025 alone it added 77 hospitals and nearly 19,000 beds; since 2021, it's added a net 568 hospitals while its nearest rival has lost 173. That rival is Oracle Health, the business built on Oracle's 2022 acquisition of Cerner, and by every available measure the integration has gone badly: three consecutive years of net customer losses, roughly 30% of surveyed customers saying Oracle Health isn't part of their long-term plans, and a further 35% describing themselves as at risk of leaving, meaning something close to two-thirds of its remaining customer base is either heading for the exit or eyeing it. When large health systems, those running more than ten hospitals, made enterprise-wide EHR decisions in 2025, only two made a decision at all, and both chose Epic. No other vendor was selected by any health system running more than three hospitals that year. Away form the charming offices, Epic are a genuinely formidable company in terms of performance; they are the clear market leaders in their industry and are becoming the only contender for work. I do believe the mechanics of how Epic operate with their client is why they are so successful however.

Once a hospital system commits to Epic, ripping it back out isn't a software migration but rather it is a major surgery spread across a decade: clinical workflows are built around it, physicians develop years of muscle memory inside it, billing and every adjacent system in the building are wired into it, and the transition risk isn't financial, it's patient safety. No hospital CFO or Chief Medical Officer wants to be the name attached to a botched EHR migration. I would describe this as if you are trying to exit a Planet Fitness membership, but the membership has lives counting on it. For a real world illustration of exactly how badly this can go, look at the Department of Veterans Affairs, which picked Oracle Cerner for the largest IT modernisation project in the history of the US federal government; the contract has since ballooned past $16 billion, with lifecycle cost estimates from lawmakers running as high as $37 billion, and the rollout was paused for close to three years after patient safety concerns and technical failures. As of this year, just 10 of the VA's 170 medical centres are actually live on it. Every hospital administrator watching that saga unfold has essentially been handed the most expensive cautionary tale imaginable for staying exactly where they already are. This will only fuel consumer sentiment toward contract renewals with Epic.

The Fact

On the product side, Epic isn’t simply coasting on switching costs; it used its 2026 Users’ Group Meeting to detail a wave of new AI capabilities being layered across its core EHR platform, with Ochsner Health becoming the first health system live on Ergo Visit, an AI-supported tool for outpatient visits. That matters more than it might sound because the biggest competitive threat to any entrenched incumbent is usually a genuinely new interface paradigm rather than a cheaper version of the old one, and Epic is clearly trying to make sure that if AI reshapes how clinicians actually work day to day, it’s the one building that layer rather than watching a startup build it on top of them.

Financials will always be harder to come by for private companies like Epic, especially when there has literally never been any external involvement, but Forbes has it generating a reported $5.7 billion in revenue in 2024, ranking it 141st on their list of America’s largest private companies, up from a reported $4.6 billion just two years earlier. More than 325 million patients now have an electronic record living somewhere inside Epic’s systems, and depending on which figure you trust, somewhere between 280 million and the vast majority of the entire US population has at least one health record touched by this one company. Ambulatory market share sits at 37-44% depending on the source, and Epic reportedly won around 70% of all new hospital EHR contracts in 2024, a genuinely startling figure for a market that’s supposed to have multiple credible vendors competing in it.

Scrutiny is now coming Epic’s way however, with the FTC opening an antitrust investigation into Epic within the past few weeks, examining whether its dominant position is being used to block rivals in adjacent markets like payer data platforms.

Texas Attorney General Ken Paxton filed a lawsuit in December 2025 alleging deceptive and anticompetitive conduct, including restricting parental access to children's medical records, a case that has already survived Epic's initial motion to dismiss and is heading toward a hearing on market definition. Separately, a company called Particle Health has an active federal antitrust suit alleging Epic makes it "commercially impossible" for competitors to access the patient records it holds; a judge has already ordered Epic to expand its document production back to 2021, which tends to signal a court that thinks there's something worth finding. Epic's own defence, consistently, is that its hospital customers control data-access decisions, not Epic itself, and that it facilitates more than 725 million medical record exchanges every month, more than half of them with non-Epic systems, alongside being the first EHR vendor connected to the federal government's TEFCA interoperability framework.

I would say the main problem is that they may struggle with having this defence hold up against an attorney general, a federal regulator and a private competitor all circling at once. It’s the first real test Epic has faced in a business life that’s otherwise been one long, quiet accumulation of market share nobody could quite stop.

Best,

M

McKesson is a firm that most won’t have heard of (myself included, I won’t pretend!), despite it being 8th in the Fortune 500. On 25th August it was announced it was buying Precision Medicine, a Maryland based group helping pharma companies push cancer drugs through clinical trials and onto market. In this case the acquirer has experience in moving the needle with pills from A to B, albeit they have spent the past couple of years repositioning to a data based service provider within the oncology supply chain. Precision brings biomarker intelligence, lab services and a global clinical research organisation, none of which McKesson wanted to build from scratch when it could simply write a $2.25 billion cheque instead. Analysts at Leerink and JP Morgan called it a sensible strategic fit and, tellingly, a fairly small bet relative to McKesson's market cap; this is a company adding a capability, not making a bet-the-company move.

If you want the one sentence that explains half of this year's deal flow, it's this: everyone is buying the electrical infrastructure that data centres need to actually run. nVent, a London-headquartered electrical components manufacturer that's gone from under $2 billion in annual revenue in 2020 to a projected $5.4 billion this year, announced on 24 August that it's paying $1.75 billion for Maverick Power, a 900-person Texas outfit that makes the switchgear and power distribution kit data centres depend on. There's a further $550 million on the table if Maverick hits performance targets in 2027 and 2028, which is standard practice for buying a business whose best years are presumably still ahead of it. The multiple is around the 11.5x mark which isn’t cheap but completely in the realms of the AI infrastructure industry currently; the whole sector has quietly become the most reliable place to deploy capital in the entire economy.

Not every deal this week was a straight acquisition, and I'll admit this one sent me down a bit of a rabbit hole on Indian REITs, a corner of the market I clearly need to read up on. Blackstone is offloading up to a 25% stake in Knowledge Realty Trust, the REIT it runs jointly with Indian developer Sattva Group, through an offer for sale opening 31st August for institutional investors and 1st September for retail. The trust owns 29 business parks across six Indian cities and only listed just over a year ago, in August 2025, so this isn't Blackstone bailing on a dud, clearly not considering the REIT is up roughly 10% since debut. I’d say it is more so Blackstone taking money off the table at scale, its largest such sale this year, worth up to $1.26 billion, with the floor price set at a modest discount to both Friday's close and net asset value to actually get the thing done. Once it clears, Blackstone's stake falls from 46.51% to as low as 21.5%, handing Sattva Group the largest ownership position in the trust at 32%. Not a headline-grabbing acquisition by any means, but recycling capital out of a winning position at this scale says just as much about where Blackstone thinks the next decade of returns sits as any of its buying does.

Onwards to Next Week,

M

An era that brought Figo, Beckham, Zidane, Carlos and R9 to Spain’s capital saw football changed forever by Florentino Perez. Box office talent provided by a reincarnated Roman empire, no one was to stop them and who would have even been expected to? Of course, those that know this tale understand that the truth is very different, with patchy success being twinned with a crumbling dynasty in the end. We are going to look at the 5 key moments in the era of the new crusaders, the Galacticos.

Figo’s Arrival

It is hard to imagine a time where one of the greatest players in the world was Portuguese and wasn’t who you’re thinking of. Luis Figo was on top of the world at Barcelona, starring alongside Rivaldo & Ronaldo and winning successive Pimera División titles after sealing a move to the Nou Camp for £2.25m based on his time at Sporting Lisbon where he was part of Portugal’s ‘Golden Generation consisting of Rui Costa and João Pinto. The Portuguese winger had the world at his feet with all seeming well in Catalonia in the summer of 2000. In early July, news broke that Florentino Perez had agreed a deal in principle to trigger Figo’s buyout clause of $75m if Perez was elected as president of Real. Figo came out and outright denied this rumour, as it seemed ludicrous that a move to Barcelona’s bitter rivals would ever occur. A fortnight later a serious faced Figo was presented at the Bernabeu, with Perez beaming with pride as he considered this mission accomplished. The hate was instantaneous from Barca fans, with a pigs head even being launched at Real’s newest star in an El Clasico. Although at first he seemed unhappy, a few months later Figo won the Balon d’Or and his old club languished in fourth place. This was the beginning of it all for the Galactico’s the capturing of an international superstar was a huge statement for both Real and Perez, a sign of what he could bring to the table, as well as a massive kick in the teeth to their most bitter rivals; it was almost a sign of invincibility and a flex of what this club is truly capable of.

The Hampden Final

The Galactico project had immense expectations to live up to in Europe, following their triumphant Champions League victories against Juventus in 1998 and Valencia in 2000. And in 2002, they delivered another unforgettable triumph that left fans in awe. The road to glory was not without its highlights, especially in the semifinals when Real Madrid faced their eternal rivals, Barcelona. It was a momentous occasion, as the two giants clashed in European competition for the first time since 1960. And it was Madrid who emerged victorious, with a resounding 2-0 win at Camp Nou, etching their name in the annals of history. Their victory over Leverkusen at Hampden, thanks to one of the greatest strikes in footballing history by Zizou himself, was a testament to the Galacticos' talent, their ability to rise above the challenges and deliver moments of brilliance when it mattered the most. It added yet another glorious chapter to Real Madrid's storied European history and solidified their status as football royalty. This was the Galacticos truly showing the world what they were capable of, it left an indelible mark on the footballing world, forever reminding us of their ability to transcend expectations and produce moments of sheer magic on the grandest stage. It was a victory that exemplified the spirit and grandeur of the Galactico era, where greatness was forged and legends were born.

Legends Depart

If you were asked to rhyme off 8 Galactico’s I would be extremely surprised if you named Fernando or Claude as one of the 8, however both of these players were two of the most influential parts of the Galactico’s. While not as flashy, bold or commercialised as their counterparts, they were the glue that held this great Real madrid era together.

Fernando Hierro, a true club legend and a commanding figure in defence, bid farewell to Real Madrid in 2003 after over 400 appearances for the club, leaving behind a legacy of leadership and experience. His departure was met with a mixture of sadness and admiration as fans recognized the immense contributions he had made throughout his career. Hierro’s absence left a void not only on the pitch but also in the hearts of fans who cherished his unwavering commitment to the club.

Similarly, the departure of Claude Makelele, a midfield maestro known for his defensive prowess and ability to break up opposition play, left a significant void in the team’s structure. Makelele’s tireless work ethic and tactical intelligence were instrumental in providing stability and balance to the Galacticos lineup. His departure raised concerns about the impact on the team’s defensive capabilities and the lack of a suitable replacement. This man was so good they named an entire position after him, how could you ever let a player like that go?

Furthermore, the exit of Vicente del Bosque, the astute and successful manager who guided Real Madrid to Champions League glory, was met with surprise and disappointment. Del Bosque’s departure left many questioning the club’s decision-making processes and their understanding of the importance of continuity and stability in achieving sustained success. These departures highlighted the complexities of managing a team built on star power and the challenges that arise when individual egos clash or when players are undervalued for their less glamorous roles.

These departures forced Real Madrid to reassess their approach and recognize the importance of nurturing a strong core of players who understand the club’s values and provide the necessary foundation for success. Whilst a temporary void was left upon the departure of these figures, the opportunity of a regroup for the club and the ability to go forth and forge a new identity became available Each departure was a turning point, prompting the club to reflect on their strategies and approach to player management, ultimately leading to future successes and the evolution of the team.

A Barren Three Years

A shadow of disappointment was cast around Los Blancos for back to back seasons where the resilience of the team and their loyal supporters were tested left fans longing for the glory days that seemed to have slipped away. The barren three years during the Galacticos era cast a shadow of disappointment over Real Madrid and their loyal supporters. It was a period that tested the resilience of the team and left fans longing for the glory days that seemed to have momentarily slipped away. This spell was characterised being a lack of major silverware

It was a time when the Galacticos, despite their star-studded lineup, struggled to translate their individual brilliance into collective triumphs. The absence of notable success during those three years left many questioning the team’s ability to fulfil the lofty expectations that came with assembling a squad of such immense talent. It was a period of frustration, as fans grappled with the realisation that greatness on paper does not always guarantee dominance on the pitch.

Various factors contributed to this barren period. Internal conflicts and clashes of egos within the team disrupted harmony and hampered the fluidity of play. Additionally, injuries to key players and a lack of consistent form further compounded the challenges faced by the Galacticos during this time.

Despite the struggles during this time, it served a valuable learning experience for Madrid as it forced the institution to re-evaluate its approach and make necessary adjustments, whilst reminding its stars that success cannot solely rely on individual brilliance but must be built upon a foundation of team cohesion, hard work, and a shared sense of purpose. In retrospect, the barren years served as a humbling period, a reminder that even the most formidable teams face setbacks and challenges. It fueled the determination of Real Madrid to reclaim their dominance and reignite.

The Resignation of Perez

However, the resignation of Perez marked a turning point, leaving many wondering about the underlying reasons and the potential implications for the club’s future. Speculation swirled, ranging from internal conflicts to differing visions for the club’s direction. Regardless of the precise details, Perez’s departure symbolized a shift in power and leadership at Real Madrid. The impact of Perez’s resignation extended beyond the corporate side of the club. It had the potential to disrupt the carefully constructed balance between star power and team cohesion that had defined the Galacticos era. His departure introduced an element of uncertainty, as fans and players alike questioned what lay ahead for Real Madrid. Yet, as with any major transition, Perez’s resignation also presented an opportunity for the club to redefine itself. It allowed for fresh perspectives and new ideas to emerge, as Real Madrid sought to navigate the challenges and maintain their position as a footballing powerhouse.

In the aftermath of Perez’s resignation, Real Madrid embarked on a period of introspection and revaluation. The club had to find a way to sustain success and navigate the ever-changing landscape of football, while also preserving the values and traditions that had made Real Madrid a symbol of greatness. It served as a reminder that even the most influential figures in football are not immune to change and the need for adaptation. It underscored the importance of leadership, stability, and a clear vision for long-term success. It was a moment that challenged the club to rise above the uncertainty and continue to strive for greatness on and off the pitch, solidifying their legacy as one of football’s true giants.

All in all, the return of Perez at the top of the corporate side of Madrid brought new found riches. This was possibly where the real Galacticos were introduced, with possibly the most famous footballer of all time (I don’t even have to say his name) arriving with a certain Karim Benzema in the same summer. The real Madrid were finally allowed to prove why they are a global superpower by winning three Champions Leagues in a row. That was a statement that shocked the world, and although Madrid haven’t been quite as dominant in recent years, only winning one champions league since 2018, their five major honours since then is only one short of the amount won by the original Galacticos. Which makes you wonder; what was it really all about?

To sum things up, on paper the Galacticos looked unstoppable, however in-house problems & clashing personalities along with other situations definitely altered the course of their dynasty. There is no point in wondering about the what if’s, for the Galactico’s changed football forever in terms of commercialism and role models within football. Plus there was that Jonathan Woodgate cameo…

The Galactico project had immense expectations to live up to in Europe, following their triumphant Champions League victories against Juventus in 1998 and Valencia in 2000. And in 2002, they delivered another unforgettable triumph that left fans in awe. The road to glory was not without its highlights, especially in the semi-finals when Real Madrid faced their eternal rivals, Barcelona. It was a momentous occasion, as the two giants clashed in European competition for the first time since 1960. And it was Madrid who emerged victorious, with a resounding 2-0 win at Camp Nou, etching their name in the annals of history. Their victory over Leverkusen at Hampden, thanks to one of the greatest strikes in footballing history by Zizou himself, was a testament to the Galacticos’ talent, their ability to rise above the challenges and deliver moments of brilliance when it mattered the most. It added yet another glorious chapter to Real Madrid’s storied European history and solidified their status as football royalty. This was the Galacticos truly showing the world what they were capable of, it left an indelible mark on the footballing world, forever reminding us of their ability to transcend expectations and produce moments of sheer magic on the grandest stage. It was a victory that exemplified the spirit and grandeur of the Galactico era, where greatness was forged and legends were born.

Best,

M

Here's the bit almost nobody wants to hear: wealth isn't complicated but rather it is uncomfortable, and those are two entirely different problems with two entirely different solutions. Complicated problems get solved with more information, more research, more clever thinking. Uncomfortable problems get solved by doing the thing you don't want to do, repeatedly, in public, badly, until you're not bad at it anymore. People want wealth wrapped in comfort; they want the polished version, the confident version, the version where the first pitch is already good and the first product already works and nobody ever has to watch them fail. Take my own Substack as a live example of exactly this discomfort, since I'm hardly writing this from some position of having already solved the puzzle myself. I am sat at just over 100 subscribers, generating precisely zero income from any of this at the moment, publishing episodes into what often feels like a fairly quiet room. But every empire starts ugly, and the seeds being planted now, however unglamorous and financially uneventful they look today, are the same seeds that either grow into a community of tens of thousands of people or don't; the only way to find out is to keep publishing through the uncomfortable, unprofitable middle rather than waiting until it looks impressive enough to be worth starting. The first dollar is awkward, the first sale is clumsy, and the first version of anything is weak, which is precisely why most genuinely intelligent people never make it to version two; the humiliation of version one is more than their self-image can absorb. What they're actually asking for, whether they'd phrase it this way or not, is reward without risk, and reality has never once been in the business of handing that out.

A Genius Has Written The Manual, The Fool Lives It

Machiavelli spent his career studying power from the outside; writing, observing, theorising about how it actually worked once you stripped away the flattery. Cesare Borgia, the man Machiavelli studied most closely, simply used it. One read the game whilst the other played it with his hands dirty, and in the real world, movement beats intelligence that never risks itself. This is the uncomfortable seed of the whole paradox: the person capable of writing the most brilliant analysis of how to win is very rarely the person who ends up winning.

Take two people starting at the same point, aged 25. The Thinker reads everything, studies the market obsessively, understands the strategy in granular detail, and waits for the perfect moment to act. The Mover understands considerably less, but acts faster; he sells, he asks, he tests, he fails, and then he simply tries again. By 30, the Thinker has a beautifully refined theory of how business works. The Mover has scars, a functioning business, and considerably more money in the bank. Intelligence, in this context, becomes a hiding place. Smart people call their inaction “research” or “preparation” or “strategy,” when underneath it is simply fear; fear of looking stupid, fear of losing money, fear of starting small and having people watch you do it badly. Reality does not respond to dreams but rather reality responds to principles, and the first principle of getting rich is that you have to actually be in the game long enough to let reality respond to you at all.

"Work Hard And Success Will Come Your Way"

This is, respectfully, one of the most quietly damaging sentences in the English language. The concept of simply ‘work hard and success will come your way’ is not reality. People work 12 hour shifts 6 days a week for minimal pay, and by any honest measure of effort, they are working harder than almost anyone getting rich off a mediocre business model in a boring industry. Effort was never the variable being rewarded. Position was. Ownership was. The willingness to take on risk that someone else was too frightened, too proud, or too intelligent to take on was. A person grinding twelve hour shifts inside someone else’s system is optimising a variable, hours worked, that was never actually connected to the payout function in the first place. It is not a lack of hard work keeping most people from wealth. It is the fact that hard work, aimed at the wrong target, simply compounds someone else’s outcome rather than your own.

Judged By Outcomes, Not Intentions

Machiavelli’s coldest, most useful insight for anyone chasing money rather than power is this: you are judged by outcomes, not intentions, and the market has absolutely no mechanism for rewarding how hard you tried or how clever your reasoning was along the way. A founder who stumbled into a good business through five ugly, imperfect attempts gets paid exactly the same as a founder who arrived at the same business through years of careful, intelligent planning; arguably the stumbler gets paid faster, since he wasn’t spending three of those years perfecting a pitch deck nobody asked to see. This is why the average person, armed with nothing but a willingness to ask simple, unglamorous questions, so often ends up overtaking the objectively more intelligent one. Can I sell this? Can I raise the price? Can I survive the next mistake? You do not need the whole philosophy. You need the next move, executed, so that reality has something to actually respond to.

Smart people, on the whole, worship complexity, because complexity is where their advantage lives; it’s the terrain where being clever actually pays off. Rich people, on the whole, respect simplicity, because simplicity is what survives contact with an uncomfortable, uncooperative reality for long enough to compound. Sell something. Keep the margin. Repeat the delivery. Do this for longer than your intelligence wants to tolerate the boredom of it, and people will eventually call you lucky. It was never luck. It was just someone willing to be uncomfortable for longer than everyone smarter than them was willing to be embarrassed.

Best,

M

A 6 month battle in 1942 against a country whom were not even Britain’s real big issue at the time would have been the last thing Churchill needed, however there is a lot more to it from a geopolitical perspective than first meets the eye. By the February of the year, the might of Japan was in full strength. They’d endured a successful 20th century to that point, boldly bashing off Russian intentions of taking East Asia at the turn of the 1900s. The Nihon were now sweeping as far as Burma, and its submarines, some with a range exceeding 10,000 miles, were suddenly free to roam the entire northern and eastern reaches of the Indian Ocean unchallenged. The following month made the danger concrete: Japanese carriers raided Colombo and Trincomalee on Ceylon, an attack severe enough to force the entire British Eastern Fleet to abandon its base and retreat to Mombasa, half a continent away. Britain now had a badly weakened fleet, an ocean full of merchant shipping feeding the Eighth Army in Egypt and the entire Indian theatre, and a large, strategically located island sitting under the control of Vichy France, a government that had already shown, in Indochina, exactly how this story could end; Vichy hadn't needed to be invaded there, it had simply let the Japanese in, and that single act of accommodation had directly doomed Malaya and Singapore. Diego-Suarez, the vast natural harbour at Madagascar's northern tip, was being called "the Scapa Flow of the Indian Ocean" by British planners, and nobody in London wanted to find out what happened if Vichy extended Japan the same courtesy twice.

The Free French Problem

The French, naturally, are always a bit of an awkward bunch. Charles de Gaulle had been begging Churchill since December 1941 to let the Free French take Madagascar themselves, on the reasonable logic that French forces retaking French territory was a considerably cleaner proposition than British forces doing it. Churchill said no, and he had a very specific reason: eighteen months earlier, a joint Anglo-Free French assault on the Vichy port of Dakar had ended in public humiliation, and Churchill was not prepared to risk a repeat. So Britain planned and executed the entire Madagascar operation with the Free French deliberately excluded from it, invaded a French colony, fought French colonial troops, and only handed the island over to Free French administration once the fighting was already finished. It is a small episode in the grand sweep of the war, but it's a genuinely useful window into just how little Britain trusted de Gaulle's forces at this stage, whatever the wartime alliance posters suggested.

Force 121, the invasion fleet, assembled in Durban in April 1942 and sailed north with the battleship Ramillies, the carriers Illustrious and Indomitable, eleven destroyers and roughly 10,000 men, to face an expected pushover: 8,000 defenders, most of them conscripted Malagasy troops with light naval and air support. The landing on 5 May, at Courrier Bay and Ambararata west of the target, went precisely to plan; British troops got ashore without a shot fired, air strikes sank an armed merchant cruiser and a submarine, and the mood, briefly, was one of quiet confidence. Then they reached the actual town of Antsiranana, fortified with trenches, redoubts and pillboxes flanked by impassable swamp, and the confidence evaporated fast. A frontal assault on the morning of 6 May was thrown back with heavy losses, and by the end of the day the British had lost ten of the twelve tanks they'd brought with them, a genuinely alarming casualty rate for what was supposed to be a formality. It took a properly audacious move to break the deadlock, as on May 7th, HMS Anthony simply ran straight past the harbour's defences at speed and dropped fifty Royal Marines directly into the Vichy rear, who then caused, in the memorable phrase of the after-action reports, "a disturbance in the town out of all proportion to their numbers." Between the marines' chaos behind the lines and infantry finally breaking through at the front, Antsiranana surrendered that evening.

The Only Time It Happened

Three weeks after the town fell, the exact threat Britain had gone to Madagascar to prevent arrived anyway, just in miniature. Japanese submarines reached the island on 29 May and launched two midget submarines into the harbour; one put a torpedo into the battleship Ramillies, seriously damaging her, and sank an oil tanker for good measure. It is, according to the Commonwealth War Graves Commission, the only occasion in the entire Second World War where Japanese forces operated in direct combat alongside another Axis power in the same engagement, a genuinely obscure but rather remarkable historical footnote for what is otherwise a footnote of a campaign. Fighting on the rest of the island dragged on at low intensity for another five months, under the codename Stream Line Jane, as British and Commonwealth forces worked their way down the coasts and into the interior, before Governor Annet finally signed an armistice on 6 November.

The campaign's real legacy has very little to do with Madagascar itself and everything to do with what Britain learned from it. Operation Ironclad predates the infamous Dieppe raid by three months, and unlike Dieppe, it worked; it was the first Allied operation of the war to combine naval, air and land forces in a genuinely coordinated amphibious assault, the first to use tanks and carrier-based aircraft in support of a landing, and the first to trial a purpose-built Tank Landing Ship, however improvised, that would evolve into a war-winning piece of equipment two years later. The lessons on command structure, beach logistics and the sheer value of surprise fed directly into the Mediterranean landings and ultimately into the planning for Normandy in 1944.

Whether the operation was actually as strategically vital as it's sometimes made out to be is a genuinely open question; one historian has argued Britain's capture of Madagascar was significant enough to have contributed meaningfully to Japan's eventual defeat, while another, more measured assessment concludes the real risk of Germany or Italy seizing the island was always fairly low, and Britain was arguably reacting to a threat that never had much chance of materialising. Both things can be true at once: the immediate justification may have been somewhat overstated, and the operation may still have quietly taught the Allies exactly how to win a war two years later. That's usually how it goes with the campaigns nobody remembers; they rarely decide the war on their own, they just teach the people fighting it how to.

Best,

M

This episode has been sparked by seeing a performance comparison between Nvidia and the gas station in Iowa over the past twenty years. Nvidia returned 53,600%, which nobody serious will argue with given it's been the single biggest story in markets over that stretch. The S&P returned 752%, a perfectly respectable outcome for doing absolutely nothing. And Casey's, a company that primarily sells fuel, pizza and lottery tickets out of small-town convenience stores, returned 19,704%, comfortably beating the index by 3.4 times. You did not need to survive an 85% drawdown in 2008 or correctly identify the entire AI capital expenditure cycle to get there. You just needed to own a gas station that sells really good pizza. Today’s episode is all about why.

How A Coal Miner's Son Ended Up Selling Fuel And Pepperoni

The story starts in 1968 in Boone, Iowa when Donald Lamberti, the son of an Italian immigrant coal miner, bought out a small oil company that owned four rundown service stations for $40,000 down. His business partner on the deal, a gasoline salesman named Kurvin C. Fish, gets the naming rights in the most understated way possible: they wanted something generic that nobody would take issue with, so they simply used his initials rather than call it "Lamberti's General Stores," reportedly out of concern that an Italian surname might put off some of their more parochial rural Iowa customers. The first store, a converted three-bay petrol station, was profitable from day one, and by the mid-1970s Lamberti had stumbled onto the decision that actually built the company: putting a pizza oven in the back. It sounds almost absurdly simple written down, and that's rather the point of this whole piece.

The genuinely clever part isn’t the pizza itself, it’s the plumbing behind it. Casey’s owns its own distribution centres and runs its own delivery fleet rather than relying on third-party wholesalers, which means every store within roughly 500 miles of a depot gets restocked on the company’s own schedule, at the company’s own negotiated prices, with the broker’s margin cut out entirely. That single decision compounds into two separate advantages: it lets Casey’s buy directly from manufacturers at better terms than a smaller independent operator ever could, and it lets the company push private-label products, now numbering in the hundreds of SKUs, that carry noticeably fatter margins than the national brands sitting next to them on the shelf.

Then there’s the geography, which is arguably the whole ballgame. Around half of Casey’s stores sit in towns of 5,000 people or fewer, the kind of places no national fast-food chain or big-box retailer considers worth the real estate. That’s the entire moat: in a town of 1,200 people, Casey’s isn’t competing against five other convenience options, it’s often the only option, which buys the company pricing power that would be unthinkable on a Chicago street corner with three petrol stations facing off against each other. Layer prepared food on top of that captive audience and the margin math becomes genuinely striking; the prepared food and dispensed beverage category alone carries margins that reportedly clear 60%, a level that would be extraordinary for any retailer, let alone one whose other headline product is a commodity everyone assumes is a low-margin race to the bottom. Fuel gets you in the door and pays the rent; pizza is where the actual profit lives.

None of this stayed a secret from the market for very long, though it took the better part of two decades for the scale of it to become obvious. Casey's has been trading near all-time highs around $836 a share, and the twenty-year return chart makes the case better than any narrative can: an investor who put money into Casey's in the mid-2000s and simply held has outperformed the S&P 500 by more than three times over, without ever touching a chip fab, a data centre, or a single line of code. It's a useful reminder that "boring" and "underperforming" are not synonyms, and that a rural convenience store chain compounding steadily for two decades can quietly out-earn most of the exciting things people spend their time reading about instead.

FY26: The Numbers Behind The Highs

The most recent full-year results give the whole thesis a fairly emphatic exclamation mark. Casey’s closed fiscal 2026 with EPS of $19.16, up 31% year on year, and EBITDA of just under $1.5 billion, up 24%. Fourth-quarter net income came in at $162.7 million against $98.3 million a year prior, essentially a 65% jump in a single quarter for a company that most people still mentally file under “petrol station.” Inside same-store sales grew 5.5%, fuel gross profit rose 29.1% to $397.4 million, and management used the results to raise the quarterly dividend by 14% to $0.65 a share, extending an unbroken streak of annual dividend increases to 27 consecutive years, alongside expanding the buyback authorisation to $1 billion. Store count has grown from roughly 2,150 in 2019 to just under 2,940 today, a steady, unglamorous march rather than a sudden land grab, which is rather the whole point of this company. Guidance for FY27 points to another 8-10% EBITDA growth and at least 120 new store openings, which suggests the model isn’t running out of road, it’s simply continuing to do the same unspectacular thing it’s been doing since 1968, one more town at a time.

The lesson, if this piece needs one, is almost embarrassingly obvious once you say it out loud: you did not need to correctly call the AI trade, survive a near-90% drawdown, or read a single research note to beat the market over the last twenty years. You needed to find a company selling a product people actually want, in a place with no competition, run by people disciplined enough to keep doing exactly that for decades without getting bored and buying a football club instead. Investing doesn’t have to be complicated. Sometimes it’s just a really, really good slice of gas station pizza.

Best,

M

The map I posted about a few days ago as a Note is one I pinched from X, and perfectly exemplifies the imbalance in industry between North & South Italy. Look at it for more than a few seconds and you stop seeing a map of Italy and start seeing a map of the north of Italy, with a handful of stragglers scattered below Rome and a whole peninsula south of Naples that's essentially blank. It's not a subtle effect; it looks less like a country and more like someone spilled a very expensive bottle of ink over the top third of the boot and simply never bothered to clean up the rest.

A Country Split Down The Middle

The numbers behind this are just as stark as the map itself. In 2023, the combined GDP of Italy's northern regions came to roughly €709 billion, against €322 billion for the entire south; add in the centre and you're looking at a gap of well over a trillion euros sitting on either side of an invisible line somewhere around Rome. Per capita, the divide is even more uncomfortable: Lombardy sits at around €41,500 a head, Calabria at around €18,000, which puts the wealthiest Italian region at more than double the poorest despite both operating under the same government, the same currency, and the same passport. Unemployment tells the same story from a different angle; the south was running at 17.5% in 2023 against 5.8% in the north, roughly triple, a gap that has barely moved in decades. If you were dropped into Cosenza or Catanzaro in the 80’s, not much would be different to how these cities look today. Perhaps the most damning statistic of all is also the quietest one: back in 2000, southern GDP per capita sat at 56% of the north's. By 2022, it was 54%; Endless government initiatives over the past 2 decades have only resulted in the country going backwards.

Why Has The Money Stayed Up North

The first reason is simply a head start that was never really caught up on. When Italy unified in 1861, it didn’t merge two similar economies; it merged an already-industrialising north, built on the back of Piedmont’s textile and manufacturing base, with a south that was still running on a largely feudal, agrarian economy under the old Bourbon kingdom. Unification policy, deliberately or not, tended to favour the industrial base that already existed rather than build one from scratch where there wasn’t one, and a century and a half is a very long time for a head start to compound. To put it plainly, the south were on the back foot from the start to be honest, albeit you cannot say that is the sole reason as there has been over 150 years in between said time.

Organised crime has been a significant factor, and this is the one that tends to get danced around in polite economic commentary but shouldn’t be. The Camorra in Campania, Cosa Nostra in Sicily, the Sacra Corona Unita in Puglia and the ‘Ndrangheta in Calabria aren’t just a law-and-order footnote; they function as an informal tax on doing business, extracting a cut through extortion and corruption across huge swathes of the southern economy. No serious international investor is choosing between a factory in Bergamo and a factory in Reggio Calabria on production costs alone once organised crime is a genuine line item in the risk assessment.

The third is decades of well-intentioned state money achieving remarkably little. The Cassa per il Mezzogiorno, the state fund set up in 1950 specifically to industrialise the south, poured in the equivalent of tens of billions of euros over four decades. On paper it should have worked but in practice, much of it was absorbed by clientelism and political patronage rather than productive investment, and the south ended up with public investment per capita that is often higher than the north’s, alongside infrastructure and institutional quality that remains noticeably worse. It turns out that simply spending more money in a region isn’t the same as building an economy in it, particularly when the mechanism for allocating that money is itself part of the problem.

“Clientelism” - a political system where leaders and politicians trade public resources, jobs, or special favors in exchange for votes and political support. This exchange creates a unequal relationship between the powerful patron and the dependent client

The most visible effect this combination has had on the south has been on the millions whom have left. The people leaving are those that the region can least afford to lose; the dependents, the ones with aspirations and skills that could have been put to use to regenerate the area, but instead decades have been spent exporting its own workforce either north or abroad, a modern echo of the mass migration that followed the Second World War, except this time it's disproportionately the young and the educated who go, leaving behind an ageing population and a shrinking tax base to support it. The knock-on effect is a southern economy that leans heavily on public sector employment, since the private sector job creation that exists further north simply hasn't shown up in equivalent scale, which in turn feeds a sizeable informal and undeclared economy; Italy's overall tax gap has been estimated at around €107.5 billion in a single year, and the south accounts for a disproportionate share of it. None of this is a moral failing on the part of southern Italians, whatever a certain strand of mid-century academic literature liked to imply about the region's culture; it is a fairly predictable outcome of an economy where the formal, taxed, productive sector never fully took root.

What The Italian Government Is Actually Doing About It

The current flagship policy is the Single Special Economic Zone, or ZES Unica, which came into force in January 2024 and now covers the entire south including Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sicily and Sardinia, with Marche and Umbria added in late 2025. The mechanism is a straightforward tax credit for businesses investing in the zone, worth €3.4 billion in 2024 and running at over €2 billion a year through to 2028, layered on top of Development Contracts that channelled roughly €5 billion of a €7.6 billion pot directly to southern companies between 2022 and 2025. Alongside the tax credits sit direct labour subsidies, with the government raising employer contributions for hiring women and under-35s specifically within the ZES area, an explicit attempt to make the maths of hiring in Calabria or Puglia stack up against hiring in Milan.

Running in parallel is a wave of infrastructure spending funded through the EU’s post-pandemic recovery plan, the PNRR, with around €34.7 billion earmarked specifically for southern transport, including the Salerno-Reggio Calabria high-speed line and the long-awaited Naples-Bari connection. The logic is sound enough on paper: you cannot build a manufacturing base in a region that can’t reliably move goods or people through it. Whether any of this actually closes a gap that has survived unification, two world wars, and half a century of prior state intervention is the honest open question. The south’s GDP has ticked up modestly on the back of PNRR spending and the early ZES numbers, which is a genuinely positive sign after two decades of stagnation; whether that translates into a self-sustaining private economy once the EU money and the tax credits eventually run out is, as ever with Italy’s oldest economic problem, a story still being written.

I hope you’ve enjoyed! Best,

M

This is a relatively new framework, developed by Henry Fudge, for understanding one of Britain’s most persistent economic puzzles. Its central claim is simple to state and difficult to unwind: when capital flows toward residential land and property instead of more productive means of investment, it does not come back. The absorption of domestic savings by residential family homes has become so common across Britons that pattern now looks less like a series of individual choices and more like a structural feature of the economy itself.

Several forces feed this pattern; rising competitiveness among the middle class flexing financial muscle against their peers being one of them. But the theory’s real contribution is in identifying the mechanism by which this capital, once absorbed, is effectively lost to productive use.

The theory rests on a single distinction: capital can flow toward two fundamentally different kinds of asset, and the difference between them determines whether that capital builds something or simply sits there.

Productive Assets

A productive asset creates new value. A factory makes goods; a patent generates licensing rights. When returns on productive assets rise, more capital flows in, more capacity gets built, and the return is competed back down. This is the mechanism that makes markets self-correcting, success invites competition, and competition erodes the very return that attracted capital in the first place.

Rentier Assets

A rentier asset doesn’t create anything. It simply controls access to something scarce. Land is the purest example: there is only so much central London, and no amount of capital will ever make more of it. Supply cannot expand to meet demand, which breaks the self-correcting mechanism that governs productive markets.

This distinction explains why housing only ever seems to increase. When supply cannot expand, price simply keeps climbing. It is the attractiveness of that rising price, not any underlying productivity, that captivates and lures in successive waves of investors.

Crucially, the return on a rentier asset isn’t payment for anything new being built. It is simply the price of capital that was already allocated, resurfacing as a signal to allocate still more. The system feeds itself, and the effect is only worsened by leverage, since land is so easy to borrow against.

The theory identifies three reinforcing catalysts that push investors toward rentier assets in particular. Once a rentier asset is large enough, it stops being one option among many. It becomes the benchmark everything else gets measured against -which is where pension funds come into play.

The first is a facade of returns: the rising price of a fixed-supply asset looks, to any investor watching from the outside, indistinguishable from genuine yield, which is precisely what makes it so captivating and so easy to keep pouring capital into. The second is the sheer ease of leverage; land is uniquely simple to borrow against, which means every pound of capital that flows toward it gets amplified rather than merely added. The third is tax treatment, where capital gains are treated far more gently than gains from actual production, tilting the incentive still further toward sitting on an appreciating asset rather than building something that generates one.

The Fiduciary Trap

UK pension funds carry a duty to chase the best risk-adjusted return available. If the rentier asset structurally offers the better return, that duty pulls capital toward it whether trustees want that outcome or not. On current allocation, UK pension funds direct roughly 4% of assets to British productive enterprise. The rest goes elsewhere, including straight back into property.

Past a certain price-to-income ratio, homes stop functioning as shelter for a family and start functioning as a financial instrument. This transition does not happen uniformly, it occurs across specific locations within the UK, with London serving as patient zero.

The Invisible Cost

This is, the theory stresses, only a concept; its costs are by nature invisible and opportunistic. The factories that never got built. The businesses that never got financed. You cannot miss what you never saw exist. Instead, the true effect surfaces within housing prices, disguised as a celebration of wealth rather than registered as a cost.

Britain’s productivity puzzle might not be a puzzle at all. It might just be capital, trapped where it can never produce anything again.

Rentier Black Hole Theory offers a single, coherent explanation across several of Britain’s most discussed economic symptoms; persistently high house prices, a stubborn productivity gap, and an apparent mismatch between expensive capital and underfunded industry. Whether the framework holds up to closer empirical scrutiny is a separate question from whether it is a useful lens through which to view the allocation problem in the first place.

Best,

Max

The mechanic, once you strip away the ticker symbols, is almost embarrassingly simple. A holding company buys a small, durable, unglamorous business; it leaves the people who built it exactly where they are; and it takes the cash that business throws off and uses it to buy the next one. There’s no grand strategy or headline-grabbing mega-merger; just the same unspectacular move repeated hundreds of times over decades. What makes it powerful isn't the individual deal, it's the compounding: profit generated in one corner of the group gets redeployed sideways into the next acquisition, which improves purchasing power, supply chain reach, and the ability to spread fixed costs across a wider base, before its own profit gets redeployed again. It is economies of scale achieved not through organic growth, but through accumulation.

Buffett is never far away from conversations such as these, and he is essentially the template of this; Berkshire Hathaway spent 60 years growing a compounding masterclass, purely because the model is built to outlast himself. The capital reinvestment is the catalyst of the entire operation.

Sweden in particular, took that same idea and quietly built an entire ecosystem around it. Lifco, Addtech, Indutrade and Lagercrantz are the names that come up first, each having spent the last two decades buying small industrial and technology businesses across Europe, and each sharing a common lineage; several trace their roots back to Bergman & Beving, the Swedish distribution group that effectively wrote the regional playbook. Momentum Group does the same in industrial components, and newer entrants like Röko, founded by former Lifco dealmaker Fredrik Karlsson, are attempting to replicate the model with a smaller base and a longer runway of targets still available to buy. What ties them together, beyond geography, is a genuine allergy to empire building: decisions are made close to the business being acquired, targets are sourced through relationships rather than competitive auctions run by brokers, and the group headquarters is deliberately kept small. There's a nice detail that captures this well: at Lifco, the CEO reportedly pours his own coffee when investors visit, because the important people, in his telling, don't work at head office, they work in the subsidiaries.

The nurturing of what I’d refer to as ‘branches’ by maintaining the exact management group within each and retaining the culture that was always there, is so pivotal to the success. Private equity can more often than not drag the soul out of a company, thus reverse engineering the hard work that has been put in to build up such morale.

It is worth asking, before getting carried away with the romance of it, whether any of this actually creates value or whether it’s simply financial engineering with better PR. A recent Lund University study looking at 3,882 acquisitions by 191 listed Nordic serial acquirers between 1997 and 2024 gives a fairly clear answer: yes, modestly, and consistently. Share prices rise by a small but statistically significant amount around acquisition announcements, and crucially, that effect does not fade as companies make their tenth, fiftieth or two-hundredth deal, which runs directly against the textbook theory that repeated dealmakers should suffer from either managerial hubris or simple diminishing returns. The more plausible explanation, and the one the study lands on, is learning: the more deals a management team does, the better they get at spotting which ones are worth doing.

So what, in practical terms, are they actually looking for? The financial hurdles tend to be remarkably consistent across the whole peer group. Acquirers in this space typically target businesses with EBITA margins somewhere in the 15-25% range, reflecting a strong preference for niche, asset-light operations where a small, specialised product or service commands genuine pricing power rather than competing on volume. FCF conversion matters more than reported profit; Redeye’s own screening criteria for the sector looks for EBITA relative to working capital north of 45%, essentially a proxy for how quickly a business turns its earnings into distributable cash rather than tying it up in inventory or receivables. On price, the discipline is just as tight, with Lifco’s own management describing paying around 8x EBITA as the house standard, stretching to 9x or 10x only for the very best businesses, on the logic that a single price increase or efficiency improvement can usually claw the multiple back down to size within a year. Layered on top of all this is a minimum hurdle rate, typically an IRR in the mid-teens, and a target of growing group wide EPS by around 15% annually; miss that consistently and the model, quite simply, stops working, and investors will also then begin to question things.

The businesses themselves tend to look almost deliberately unremarkable. Dental equipment distributors, demolition robot manufacturers, industrial component suppliers, niche vertical-market software: the common thread is that each one is a genuine leader in a market too small to interest a private equity mega-fund or a large strategic buyer, which is precisely why the price stays reasonable. A tiny company drawing interest from only two or three potential acquirers gets bought far more cheaply than a larger one drawing interest from twenty, and the serial acquirers know this better than anyone; it’s the entire reason they hunt in the small end of the market rather than competing for the trophy assets everyone else wants. It is not, in other words, a strategy of buying growth. It is a strategy of buying discipline, buying cash flow, and buying it quietly enough that nobody else notices until the tenth or the hundredth deal has already been done.

Best,

Max

Simply put, you can derive an understanding of private credit simply from its title. Lending from a company that is not a bank is probably what Claude would say if you asked it to explain “as if I was five years old” (I promise you this was not something I did). It is a phrase that feels as though it has been newly coined, albeit the concept of private credit is centuries old. Before modern banks dominated lending, wealthy families and merchant houses financed businesses directly (the Rothschilds epitomising this). Modern private credit as we know it however, this was born in the shadows of Wall Street’s leveraged buyout boom, where traditional banks were often too conservative to fund increasingly ambitious deals. An excellent read regarding this is one of non fictional finance’s best selling books “Barbarians At The Gate” that epitomises the culture at the time and the environment for which firms such as KKR were born in.

The wheels hadn’t really turned properly until 2009, post global financial crisis. As banks became much more constrained by regulators, mid market entities began to struggle to obtain financing; this created a vacuum for which in stepped firms such as Blackstone & Apollo. Any niche of a market where an edge can be capitalised upon will be found by firms such as Apollo, hence the growth of private credit’s AUM to over $2 trillion globally today.

So what actually is it, beyond my incredibly vague "not a bank" description? Private credit, stripped of its jargon, is a lender (usually a fund, not a bank) making a loan directly to a company, and then holding that loan rather than selling it on. No trading floor, no syndication, no chopping it into tranches and flogging it to whoever will buy. Direct lending is really what this is; one lender, one borrower and a contract privately negotiated between both parties; this is private credit in a nutshell. The rest is just flavours of the same thing: direct lending to mid sized businesses, mezzanine debt that sits somewhere between equity and senior debt, distressed debt bought at a discount from companies in trouble, and asset backed lending secured against anything from aircraft to royalties. It is unglamorous by design; the entire pitch to investors is "we are boring and reliable, unlike a bank that might pull your facility the moment regulators get twitchy."

As I highlighted earlier, there are huge players in the market these days. Private credit has transitioned and is no longer a cottage industry run by a handful of buyout shops moonlighting as lenders. The aforementioned Apollo and KKR, as well as Ares and Blackstone, were the main shops building the American wing into a shadow banking system. The UK and Europe have not been bystanders however, despite Wall Street’s alleged dominance. Intermediate Capital Group, built out of London, is one of the oldest and largest private credit houses in the world and rarely gets mentioned in the same breath as its American rivals, which says more about who writes the headlines than who's writing the loans. Permira Credit, Alcentra, Pemberton and M&G's private credit arm have quietly built enormous books lending to European mid market companies that would otherwise be stuck begging regional banks for scraps.

Geographically, the honest answer is: still mostly America, but the gap is closing fast. The US remains the deepest and most mature market, partly because American banks retreated from leveraged lending earlier and further than their European counterparts, and partly because the pension and insurance money that fuels this industry is simply bigger there. But Europe, and London specifically, has become the second home of private credit, driven by the same forces in miniature: mid market businesses that banks find too risky or too small to bother with, and an enormous pool of insurance capital hunting for yield now that government bonds pay next to nothing in real terms. Asia is the frontier everyone talks about and almost nobody has cracked, though that hasn’t stopped every major fund opening a Singapore office and calling it a strategy.

What ties all of this together, wherever the deal is happening, is the same underlying trade. Insurers and pension funds have liabilities that stretch decades into the future and need assets that pay a steady, predictable return to match them. Private credit offers exactly that: higher yields than public bonds, in exchange for locking your money up for years and trusting that the fund manager has actually done their homework on the borrower. It is, in essence, banking without the bank; and increasingly, without much of the regulation either.

None of this matters much, though, until you put numbers to it, because the returns are where private credit really earns its reputation as the industry everyone suddenly wants a piece of. Straight direct lending, the vanilla senior secured loan to a mid market company, has been generating annualised returns around 9%; step down the risk ladder into leveraged loans or high yield bonds and you're looking at roughly 5-5.5%, with investment grade corporate debt trailing at a fairly pedestrian 2.4%. Take on more risk, unsurprisingly, and the number climbs: mezzanine debt, the stuff that sits between senior loans and equity and gets wiped out first if things go wrong, has been paying out north of 11%. Distressed debt, bought at a discount from companies already in trouble, sits somewhere in between at around 7%. None of these figures are static; they move with the base rate, and after a couple of years of the Fed cutting, yields across the board have been drifting down from their post-2022 highs, even as the spread private lenders charge over that base rate has stayed remarkably sticky.

Which brings us to how the pricing actually works, because “9% return” tells you nothing about the mechanics unless you unpack it. A typical PC loan isn’t priced as a flat rate but rather priced as a spread over a benchmark, usually SOFR, which itself sits at around 3.65% today. On top of that, lenders charge a margin, and for most senior secured direct lending deals that margin has been landing somewhere between 4.5% and 5.5%, though it can run as high as 8% for smaller or riskier borrowers, or for deals where a private equity sponsor needs more leverage than a bank would ever sanction. Add the two together and you get an all-in cost of borrowing that, for a fairly ordinary mid market company, sits comfortably in high single digits; a good deal more expensive than what a large listed corporate would pay for a bond, but a good deal more available than what a bank would offer a business that size in the first place. That premium, essentially, is the price of speed, flexibility, and a lender who won’t panic and pull the facility the moment a covenant gets breached.

As for who’s actually borrowing all this money: it is overwhelmingly the unglamorous middle of the economy. Software and the wider technology and business services world make up the single largest chunk of private credit exposure, reflecting just how many of these companies are asset-light, cash generative, and structurally unappealing to a bank that wants something physical to repossess if it all goes wrong. Beyond tech, the recurring names in every lender’s book are industrials, consumer goods, financial services, and healthcare; the sort of businesses that are profitable, unglamorous, and either too small or too levered for the syndicated loan market to bother with. It is worth noting, because it complicates the neat narrative, that this concentration in tech has become a genuine point of anxiety in the market: with AI now threatening to disrupt software business models that private lenders spent the last decade underwriting as boringly stable, some of the sector’s biggest cheerleaders are quietly wondering whether “boring and basic” was ever quite as boring as advertised.

Best,

M

Gross negligence is too easy a blanket term to throw over this scenario. The central question “why can a country so rich in resources remain relatively poor in outcomes?” deserves a much more analysis based and in depth answer, and so I have decided to assess this today in my third ever article.

A Curse of Resource

This is not an isolated case, with Sierra Leone becoming a martyr of such countries rich in resources that fall into conflict and societal struggle. This is the core thesis to what I am writing about; Peru has significant deposits of Copper, Gold & Zinc to name a few of their commodity hoards. Despite such abundance, extracting such resource has often fell into the wrong hands, and hasn’t resulted in broad based prosperity.

Mining accounted for two thirds of Peru’s total exports in 2025, and this apportion has became even more inflated within the first half of 2026; accounting for 76% of total exports from January-April of this year. This dependence results in an economy that is concentrated on one core industry; when copper prices are booming, everyone eats, but when copper prices fall or gold fluctuates in value as it has done since its H2 2025 run, the economy feels it. It would thus be easy for the Peruvian government to concentrate capital to the mining industry whilst underfunding other sectors such as technology, a situation exactly like in Venezuela which has led to an eventual oil collapse. Yet Peru is different. Despite presidential impeachments and geographical challenges which are only fuelled by said mining dependence, Peru has kept itself afloat. The reason? Exactly this;

Peru Has Done The Boring Things Well

Peru’s central bank (BCRP) has built a reputation for credibility and inflation targeting. The world has faced significant inflationary shocks in recent years, accelerated in Latin America with the return of Donald, however inflation has consistently returned towards BCRP’s target range timely, providing cause for strong investor sentiment in the currency and economic management of the country.

Such stability has allowed for a market orientated economy to be bred; albeit this is not new. In the late 80s, Peru underwent major free market reform during the Fujimori era, resulting in mass privatisation of banking (Continetal being acquired by BBVA) and both of the two major telecommunications players (CPT & Entel Peru) being sold to Latin conglomerate Telefonica.

Fujimori’s reforms paved the way for a tame inflation and stabilised economy, as well as opening the door to foreign capital being deployed in Peru for the first time ever. No country walked through said door more enthusiastically than China, whom has capitalised on the aforementioned mineral rich Andes mountain range which eat into both Peru & Ecuador. The investment framework Peru spend decades building allowed The Red Dragon to simply arrive with a blank cheque book.

China's Bet on Peru

Capital is a cowardly thing, and it tends to avoid places where the rules change every election cycle. Peru offered something different. Governments came and went, presidents were impeached, scandals emerged, yet the economic framework largely endured. Whilst much of the Western world was still discussing Peru as a peripheral emerging market, Beijing was already viewing it through a different lens, the lens being that Peru was not simply another Latin American economy. It was copper, mountains of it to be precise. Enough copper to help power electric vehicles, renewable energy infrastructure and the industrial ambitions of the world’s second-largest economy. This struck an almost inevitable relationship which has resulted in Chinese firms spending the previous 2 decades acquiring stakes in mines and expanding their presence in the region.

The irony here is that Peru has spent a long time building a market orientated economy, only for one of the largest beneficiaries to be a country whose economic model looks very different from its own. Yet economics tends to reward pragmatism over ideology. Peru needed investment. China needed copper, and the result has been one of the most important resource relationships of the 21st century thus far.

Whilst aforementioned investors have remained fixated on Brazil and distracted by Argentina, the quiet compounder that is Peru has sat quietly on one of the largest structural trends on Earth; datacentres, transmission lines, solar farms electric vehicles. Every one of these hotly debated investment topics requires copper. Peru is positioned perfectly for said industries to accelerate growth in the next decade.

I hope you’ve enjoyed. I believe over the coming months I will increase the length of these episodes, looking at topics from an investor perspective also

Best,

M

This stretch of road, between Turin and Venice, is the country’s factory belt. hundreds, thousands even, of family owned businesses operate here with little debt and often, a succession problem. The children don’t want to simply take over the family business anymore. Globalisation has opened the world up to immense opportunity, and these kids are enjoying euro summer enough that their dad’s ceramics company just does not excite them anymore. This is where private equity come in.

HALO investments are seen as a safe harbour amongst a technological landscape that offers no sympathy to investors. The picks and shovels of the modern day gold rush if you will. ‘The cockroaches of capitalism’ an MIT student with a thirst for YC funding would say. Heavy-Asset Low-Obsolescence for clarity. These companies operate in industries with a durable competitive advantage over disruptor markets, and so offer a safe haven for investor funds whom have wavering sentiment over their returns since seeing AI overhaul many mainstream industries. Factories along Italy’s A4 motorway are laden with these HALO factories, and the offering of an exit opportunity is very much appealing to this dense cluster of family-owned manufacturers.

Evercore, Ares and KKR are the first big players to set up shop in the area in the past 18 months and there are plenty more to come. There is enough for everyone at the table to eat, the real question is how long will this go on for, and will the outcome actually be a positive one?

This is far from an isolated phenomenon, with this trend having played out far beyond Northern Italy. Private equity has increasingly targeted the Mittelstand, Germany’s network of often family owned, highly specialised manufacturers, and the ‘Silver Tsunami’ is still very much in full swing within Middle America. What makes this region of Italy so enticing currently however is the freshness of the opportunity and the roll up potential which these firms oh so crave. Value creation works in its best form under scale; a firm like Evercore have the opportunity over the next 3-5 years to easily acquire a factory in Bergamo, Brescia and Turin and integrate to then exit for exceedingly more than the sum of its parts if they were sold individually. That is the beauty of private equity. A tale as old as time, and it is now being written into the next chapter of Northern Italy’s industrial history; the family dynasties may be changing, but the transfer of power is as old as Rome itself.

I hope you’ve enjoyed.

Best,

M