Title: Portfolio Update: April 2026 (Part II) — The stocks we own Show: Compounding Quality (Substack, paid post — compoundingquality.net) Guest: Pieter Slegers / Team Compounding Quality (author; byline "Compounding Quality") Date: 2026-04-19 URL: https://www.compoundingquality.net/p/portfolio-update-april-2026-part Length: written post — no timestamps Note: Paid-subscriber post captured via Stephen's logged-in session. Body text verbatim; UI chrome removed. Fiscal.ai chart panels noted inline as [Image — ...]. The conviction-level slide and the portfolio-fundamentals table are published as images and are transcribed below as [Table image — ...] blocks; figures are read directly from those images. This is Part II of a 100-page update: Part I (16 April) covered the Very Strong and Strong+ tiers; this part covers the Strong and Medium tiers. Hi Partner Did you see Part I of Our Portfolio update last Thursday? You can find it here. This extensive Portfolio Update consists of 100 (!) pages. That's why it's split in multiple parts. Here's what the schedule looks like: Last Thursday: Portfolio Update April 2026 (Part I) Today: Portfolio Update April 2026 (Part II) Tuesday 21 April: Companies we might add (Part I) Thursday 23 April: Companies we might add (Part II) Sunday 26 April: How the Portfolio will evolve from here Are you ready? Let's get a little bit wiser today! By the way, for those who missed it: you can find the recording of our webinar of 100 (minutes) where we go over every position in the Portfolio in Our Community. Portfolio Update April 2026 (Part II) For full transparency, as a Partner of Compounding Quality you have full transparency to the Portfolio here. Our Portfolio We are invested in wonderful companies that continue to generate more shareholder value year after year. Our companies are also fundamentally healthier than the market: [Table image — Portfolio vs S&P 500 fundamentals. Balance Sheet: Interest Coverage 39.5x vs 6.8x; Net Debt/EBITDA 1.0x vs 1.3x. Capital Intensity: CAPEX/Revenue 4.4% vs 19.2%; CAPEX/OCF 14.9% vs 34.5%. Capital Allocation: ROE 30.2% vs 16.4%; ROIC 19.9% vs 10.2%. Profitability: Gross Margin 56.5% vs 34.4%; Profit Margin 18.8% vs 12.1%; FCF/Net Income 265.2% vs 60-90%. Historical Growth: Revenue (5-year CAGR) 19.2% vs 6.3%; EPS (5-year CAGR) 16.4% vs 10.5%. Outlook: Revenue (2-year CAGR) 6.4% vs 5.0%; EPS LT Growth Est. 7.9% vs 7.0%. Valuation: Forward P/E Ratio 19.5x vs 21.9x; PEG Ratio 1.0x vs 2.2x. Value Creation: CAGR 3-years 5.6% vs 22.3%; CAGR 5-years 8.4% vs 13.0%; CAGR since IPO 21.0% vs 8-9%] More and more Free Cash Flow is generated over time: [Image — "FCF the Portfolio makes for us", 2015-2025 bar chart rising from roughly $13,000 to roughly $87,000. CAGR FCF Generation (10 Years): 18.1%. Source: Fiscal.ai] There are four conviction levels in Our Portfolio: Very Strong (Our favorite companies right now) Strong+ (Strong convictions we have no single doubt about) Strong (Proud owners but there are some risks involved) Medium (Should we consider selling these stocks?) We currently own 18 companies. On Thursday, we covered all the 'Very Strong' and 'Strong+' convictions. Today, we'll go over the 'Strong' and 'Medium' convictions. Should we make portfolio changes? Let's find out together. Here's an overview of every company in Our Portfolio: [Table image — "Conviction level" slide. Very Strong: 1. Medpace Holdings 2. Games Workshop 3. Kinsale Capital 4. Ameriprise Financial 5. Topicus 6. Constellation Software 7. Brookfield Corporation. Strong+: 1. Kelly Partners Group 2. Brown & Brown 3. HG Capital Trust 4. Zoetis. Strong: 1. LVMH 2. Dino Polska 3. Interparfums. Medium: 1. Evolution AB 2. Judges Scientific 3. Novo Nordisk. (17 names are shown although the text says 18 companies are owned; Visa does not appear on the slide.)] 1.3. Strong Convictions Now let's dive into the Strong Convictions: LVMH ($MC) How does the company make money? LVMH is a dominant force in the luxury industry with a diverse portfolio of brands covering a wide range of consumer products and experiences. You can read the Investment Case here. Why is the conviction 'Strong'? LVMH is one of the largest companies in Europe. The company is led by Bernard Arnault. His family owns roughly 50% of the company. And guess what? Bernard Arnault just keeps buying more and more of his own stock. The company published its results recently: Missed estimates but held organic growth: Revenue came in at EUR 19.12B, below the EUR 19.49B consensus Middle East conflict was the main drag: The Iran conflict hit in March, shaving ~1% off organic growth by dampening Gulf demand and reducing Middle Eastern tourist spending in Europe. Watches & Jewelry was the standout segment: Led by Tiffany and Bvlgari, it posted 7% organic growth, the strongest of all divisions. Recovery is slow: Management describes demand as "tepid". This means mixed economic signals and softening US demand are weighing on growth Long-term case remains intact: An organic growth of 5-7% per year going forward seems realistic LVMH is another company that is trading near its cheapest valuation level of the past decade: [Image — LVMH forward PE, 10-year range. Source: Fiscal.ai] If we update our Earnings Growth Model we get the following: Expected yearly return = EPS Growth + Dividend Yield +/- Multiple Expansion Expected yearly return = 10.5% + 2.8% + 1.8% = 15.1% If this would be correct, it would mean you double your money every 5 years. Dino Polska ($DNP) How does the company make money? Dino Polska, founded in 1999, is a Polish grocery company consisting of medium-sized grocery supermarkets close to clients' places of residence in rural areas. You can read the Deep Dive here. Why is the conviction 'Strong'? Dino Polska recently announced it will start the construction of a new distribution center: New distribution center: Dino Polska is building a large logistics hub in Zawiercie, expected to be completed in Q1 2027 Scale: ~45,000 m2 of warehouse space, including freezer, cold store, temperature-controlled and dry warehouses, plus offices and staff facilities Cost: ~PLN 150 million (net), funded entirely from the company's own cash Purpose: Support delivery to a growing number of Dino stores and enable further geographic expansion It shows that Dino Polska keeps growing. You don't invest in a distribution center like this if you're not planning on continuing to grow the number of stores you have. Just like many other examples in Our Portfolio, Dino Polska trades near its cheapest valuation ever: [Image — Dino Polska valuation history. Source: Fiscal.ai] Why Dino Polska is a 'Strong conviction' and not 'Very Strong'? There are some doubts of the future growth capabilities of Dino Polska. Can they keep growing at very attractive rates going forward? There are some issues with unions: The OPZZ (a Polish union) accuses Dino Polska of illegally using CCTV to monitor employee performance The latest results were less good than expected: Dino Polska suffered from margin compression because of cost inflation. LFL growth (4.4%) is now running below food inflation (4.7%), meaning Dino is effectively losing real volume in existing stores. Here's a great update from Alexander in the Community: Interparfums ($IPAR) How does the company make money? Interparfums is a leading fragrance business. The company manufactures, markets, and distributes a wide range of fragrances under licensing agreements. You can read a Deep Dive about the company here. Why is the conviction 'Strong'? Despite strong long-term fundamentals, Interparfums is in a perfect storm right now. Think about soft consumer spending, geopolitical uncertainty, stiffer competition, and a painful tariff squeeze on both EU exports and Chinese inputs. The good news? The company continues to grow, adding new brands to its portfolio. Off-White (first sales expected in 2027) Annick Goutal (sales to start in 2026, with 2027 the first full year of sales) Longchamp, which is projected to become a $100 million business in three to five years, with a major launch expected in late 2026 or early 2027. You can buy IPAR at it's cheapest valuation level ever. You start to notice the trend already: A lot of our companies trade at their cheapest valuation level ever As a result, the expected return is one of the highest ever [Image — Interparfums valuation history. Source: Fiscal.ai] 2. Lower convictions in the Portfolio Now let's dive into the lower convictions in the Portfolio. We currently have three: Evolution AB ($EVO) How does the company make money? Evolution AB is a market leader in developing fully integrated B2B Online Casino solutions like Roulette, Blackjack, and Baccarat (Baccarat is typically played in Asia). You can read the Deep Dive here. Why is the conviction 'Medium'? Evolution AB grew explosively from 2006 until 2023, but this growth has stalled right now. There are 3 main challenges: Most potential online casino players have already been onboarded Remaining untapped markets are largely inaccessible due to regulatory pressure Newer gambling alternatives (prediction markets, crypto schemes) are eating into Evolution AB's market share But the main thing I don't like at this point in time? The way management communications with investors. Or better said: the way management doesn't communicate with investors like us. I truly ask myself whether they are miscommunicating on purpose or whether it's a case of incapability. Very recently, Evolution AB stopped paying a dividend. The company said next steps would follow shortly. Here are the four main possibilities if you ask me: Tax preference: Major shareholder Kenneth Dart prefers buybacks over dividends to avoid withholding tax Takeover target: Evolution may be in the process of being acquired, which would explain the lack of insider buying Acquisition plans: Evolution itself could be eyeing acquisitions and needs liquid funds ready (like the company HackSaw AB) Regulatory/legal trouble: The company may need cash reserves to cover potential damages from a legal setback Here's an interesting tweet from Magnus Andersson: "I think it's been obvious for about a year now that Dart's goal is to take over $EVO. You don't exactly buy up 29% at a rapid pace, suspend the dividend, and then just sit back and do nothing. He pays low taxes in the Cayman Islands, so that's obviously not the reason. The question is probably partly whether he can live with having the founding duo on board (hardly), and partly whether he'll halt the deal or sell if they continue to refuse to sell. I think the suspension of dividends is meant to put pressure on them. Now they're sitting on non-dividend-paying shares that they have to pledge as collateral to derive any benefit from, and the fact that they've just done that doesn't feel like a coincidence. Why then would they want to own all of EVO? As an unlisted company, they can increase unregulated revenue, which would significantly boost profits and value. However, there's no clear buying opportunity right now, since a bid today would need to be at least 825, but by summer the price will drop by ~25% if the stock doesn't rebound..." The stock is dirt cheap right now, trading at just 10.9x times earnings and a Free Cash Flow yield of 10.0%. In an ideal world, the company would start to heavily buy back shares but a delisting/acquisition bid could also be realistic at today's valuation levels. I'm only afraid that the takeover premium wouldn't be very high if Kenneth Dart would make a takeover bid. Judges Scientific ($JDG) How does the company make money? Judges Scientific acquires and operates niche scientific instrument makers, making money by selling highly specialized lab equipment. You can read the Deep Dive here. Why is the conviction 'Medium'? Judges Scientific is a tough one. A very tough one. The entire life sciences industry has been struggling recently. This hasn't been different for Judges Scientific. Why? US research funding slowdown: Federal budget cuts are reducing research spending Increasing Chinese competition: Competitive pricing and better offerings could pressure Judges' market share Customer concentration risk: Heavy dependence on universities and publicly funded labs. Just look at how JDG's revenue evolved recently, and is expected to evolve over the next 2 years: [Image — Judges Scientific revenue history and 2-year estimates. Source: Fiscal.ai] The big question is whether these problems are temporary or structural. For the investment case of Judges Scientific, it will be very important that the company finds its growth trajectory again. The current valuation level looks as follows: [Image — Judges Scientific valuation history. Source: Fiscal.ai] Investing is a game of opportunity costs. We are currently re-investigating Judges Scientific. If we believe there are better opportunities elsewhere, we are open to selling our position in JDG for another, better opportunity. Novo Nordisk ($NOVO-B) How does the company make money? Novo Nordisk is a pharmaceutical company, focusing on drugs for diabetes and obesity. They're part of a duopoly with Eli Lilly in GLP-1 drugs. You can read the Deep Dive here. Why is the conviction 'Medium'? Never a dull day on the stock market for Novo Nordisk. Every single day, there seems to be news about the company. In his annual shareholder meeting, Terry Smith mentioned the following about Novo Nordisk: "Novo Nordisk, which has moved from a triumph to a tragedy, I think, in terms of the company. We bought it in 2016. We thought it was different to other drug companies in terms of the drug discovery process. We proved to be right - they came out with the first weight loss drug, actually released initially as a diabetic drug, a drug that's got any number of other indications, some of them now labelled for conditions which it helps. And they managed to snatch defeat from the jaws of victory in the core US market by playing it very badly against their competition, Eli Lilly, and their other competition in terms of people who compound the drugs, often illegally." The market for diabetes and obesity products are getting more competitive. Recently, Novo Nordisk announced a renewed partnership with Hims & Hers, agreeing to sell Novo's FDA-approved diabetes and obesity treatments on its platform. As part of the deal, Hims will stop advertising compounded GLP-1 medications and shift to branded products like Ozempic and Wegovy. The business strategy of Novo Nordisk can be summarized as follows: Diabetes and obesity are becoming global epidemics, creating a massive and growing market for insulin and next-generation treatments. GLP-1 drugs like Ozempic and Wegovy alone expected to hit ~$200B by 2034. Novo Nordisk's GLP-1 lineup is expanding fast. Oral Wegovy launched in 2026, Cagrisema coming ~2027, and several drugs are in late-stage trials. Beyond weight and blood sugar, GLP-1s are showing promise for heart failure, liver disease, and sleep apnea, opening new markets. Novo Nordisk is positioned to capture ~$40B of a ~$175B addressable market by 2031. If we look at the current valuation level of Novo Nordisk, we see the following: [Image — Novo Nordisk valuation history. Source: Fiscal.ai] If we use the following rule of thumb from Terry Smith to calculate the expected return: Expected return = Earnings Yield + EPS Growth Expected return = 8.0% + 6% = 14% It's fair to say Novo Nordisk looks cheap. Arne Ulland even argued on Twitter that, given today's valuation levels, you are now getting the obesity segment of Novo Nordisk 'for free': [Table image — Arne Ulland (@ArneUlland) tweet: "Is $NVO obesity segment a free option at these prices? Could be...Naturally depend a lot on the EBIT margins going forward, but diabetes is a growing problem worldwide, growing around 5-7%. Find it unlikely that NVO won't hold a large share of the market over the next decade." Attached working: Diabetes segment revenue (2025 estimate) ~DKK 200 billion; Diabetes EBIT margin ~42%; Implied diabetes EBIT ~DKK 90 billion; EV/EBIT multiple range applied 8-12x; Implied diabetes value per share DKK 150-230; Share price at time of writing ~DKK 235. "The current share price is about DKK 235. Which means, roughly speaking, you're paying fair value for the diabetes business and getting the entire GLP-1 obesity franchise for free. The market has valued it at essentially zero."] However, it's fair to say that there is a lot of uncertainty around Novo Nordisk today. The market is evolving very rapidly and becoming more and more competitive. The big question to ask yourself: Is Novo Nordisk a company I want to own for the next 10 years? If the answer is no, we might need to look for other, better opportunities. That's exactly why next week, you'll receive these three articles next week: Tuesday 21 April: Companies we might add (Part I) Thursday 23 April: Companies we might add (Part II) Sunday 26 April: How the Portfolio will evolve from here To be continued! As a reminder, here is the conviction level per position: [Table image — the same "Conviction level" slide repeated: Very Strong (Medpace Holdings, Games Workshop, Kinsale Capital, Ameriprise Financial, Topicus, Constellation Software, Brookfield Corporation); Strong+ (Kelly Partners Group, Brown & Brown, HG Capital Trust, Zoetis); Strong (LVMH, Dino Polska, Interparfums); Medium (Evolution AB, Judges Scientific, Novo Nordisk)] In case you didn't yet, I would highly encourage you to join the Community as we discuss all our stocks daily there. Talk to you on Sunday! Everything in life compounds Team Compounding Quality Book Order your copy of The Art of Quality Investing here Used sources Interactive Brokers: Portfolio data and executing all transactions Fiscal.ai: Financial data Disclaimer As a reader of Compounding Quality, you agree with our disclaimer.