Title: Our Shopping List: Part 3 Show: Compounding Quality (Substack, paid post — compoundingquality.net) Guest: Pieter Slegers / Team Compounding Quality (author; byline "Compounding Quality") Date: 2026-04-26 URL: https://www.compoundingquality.net/p/our-shopping-list-part-3 Length: written post — no timestamps Note: Paid-subscriber post captured via Stephen's logged-in session. Body text verbatim; UI chrome removed. Fiscal.ai and investor-relations chart panels noted inline as [Image — ...]. Every candidate ends with an "At which price are we interested?" block; those figures are transcribed verbatim.
Hi Partner
Over the past few weeks, we've been giving you an extensive Portfolio Update.
In case you missed it:
Portfolio Update April 2026 (Part I)
Portfolio Update April 2026 (Part II)
Our Shopping List (Part I)
Our Shopping List (Part II)
Let's dive in the final part of Our Shopping List today!
Investor AB ($INVE-B)
How does the company make money?
Investor AB is the Wallenberg family's listed holding company.
That means it combines two interesting things:
A holding company, a type of asset that often trades at a discount to the assets it owns
A family owned business, meaning there's a lot of skin in the game
Investor AB owns significant stakes in Sweden's industrial champions like Atlas Copco, ABB, and AstraZeneca.
They focus on long-term ownership, active board engagement, and capital allocation across listed and unlisted assets, funded by dividends and occasional asset sales.
[Image — Investor AB portfolio overview. Source: Investor AB Investor Relations]
Why is it an interesting company?
The best of Europe in a single share: Buying Investor AB gives you exposure to a pre-built collection of world-class companies like AstraZeneca (medicine), Atlas Copco (industrial tools), and ABB (robotics). It is effectively a curated fund run by one of the most proven families in European business.
Wonderful companies at a fair price: The stock trades near its intrinsic value
An amazing track record: Over the past decade, earnings have grown by nearly 25% per year. The stock has nearly doubled over the past five years. Plus, they pay a growing dividend that has never been cut.
Solid balance sheet: The company has very little debt. That means they aren't just safe during a market crash, they actually have the cash to go shopping for more companies when prices are low.
The main risk is market exposure: Roughly 70% of the portfolio consists of publicly traded securities. When global markets sell off, Investor AB's net asset value will decline with them. It's a great long-term bet, but you should expect some volatility along the way.
At which price are we interested?
Like most holding companies, Investor AB frequently trades at a discount to the underlying value of its assets.
I think it starts to get interesting at a P/B ratio of 0.9x.
That implies a stock price of around 281 SEK (current stock price: 372 SEK).
[Image — Investor AB price-to-book history. Source: Fiscal.ai]
KKR ($KKR)
How does the company make money?
KKR is an American private equity company.
They use money from big clients (like pension funds) to buy and grow other companies, invest in infrastructure and private credit.
They earn recurring fees on the assets they have under management, as well as performance fees (typically around 20%) when they sell an investment for a profit.
[Image — KKR business overview. Source: KKR Investor Relations]
Why is it an interesting company?
Strong track record: KKR manages $744 billion across private equity, real estate, infrastructure, and credit. They've been doing this since 1976 and are one of the best in the world at it.
Permanent capital: KKR bought Global Atlantic, a life insurer, giving them $321 billion in permanent capital, money that never leaves. They use it to fund their own deals, meaning they can invest without outside money and keep all the profit.
Locked in profits: Most KKR funds have lockup periods of 7-12 years. That means 92% of their AUM is basically locked in. This gives them stable fees and they don't have to worry about investors panicking and pulling their money out during a market crash.
Massive growth: In 2025, they raised $129 billion in new investment capital. They expect to continue raising over $115 billion every single year, proving that big investors still trust them with their cash.
The stock is on sale: The stock is down nearly 21% this year due to fears around private credit. But KKR's actual direct lending exposure is just 21% of assets. This looks like an overreaction and a potential opportunity.
At which price are we interested?
KKR is currently trading near its average Forward P/E over the past decade.
I would say KKR is at or very near an interesting price to buy.
[Image — KKR forward PE vs 10-year average. Source: Fiscal.ai]
Insiders seem to agree as they have been buying as of late.
[Image — KKR insider transactions. Source: Fiscal.ai]
Lifco ($LIFCO-B)
How does the company make money?
Lifco is a Swedish serial acquirer focused on small, niche businesses in dental supplies, demolition tools, and systems solutions.
It buys the #1 or #2 company in these small markets, holds them for the long term, and makes them more valuable by improving their operations and buying complimentary companies.
It's a page right out of Constellation Software's playbook.
[Image — Lifco business areas. Source: Lifco Investor Relations]
Why is it an interesting company?
It's the Swedish Constellation Software: Lifco acquires small, profitable niche businesses and lets them run independently. The decentralized model works. Revenue has grown at more than 13% every year for a decades, and EPS has grown even faster at more than 16% every single year.
It's got a strong moat: Lifco targets tiny market leaders in specialized niches. Think dental implant systems where switching costs are high, or demolition robots where they set the standard. These companies are too small for larger players to even look at.
The price is getting interesting: Lifco is back to prices we haven't seen since 2024. It's not an obvious bargain, but companies of this quality rarely are.
The balance sheet is solid: Interest coverage sits at 10.0x and debt-to-equity at 0.3x. That means they have a solid foundation to keep buying companies.
Serious skin in the game: Carl Bennet owns 50% of the company. The chairman has over half his wealth tied to Lifco's success. That means the people leading the company are incentivized to make sure you succeed along with them.
At which price are we interested?
Lifco is never a cheap company.
Since 2020, the cheapest it's gotten was a Forward P/E of 20x.
We'd love to have another opportunity to buy it at that valuation.
That implies a stock price of 191 SEK (current stock price: 304 SEK).
[Image — Lifco forward PE history. Source: Fiscal.ai]
Now let's dive into the final companies.
MercadoLibre ($MELI)
How does the company make money?
MercadoLibre runs the largest e-commerce marketplace in Latin America, earning commissions and shipping fees on everything sold on its platform.
Its fintech arm, Mercado Pago, processes payments, offers credit, and provides digital wallets.
These two things work together to create an ecosystem across a fast-growing, underbanked region.
Why is it an interesting company?
It's the Amazon of Latin America: MercadoLibre has 150 million active buyers in 18 countries. But in Latin America, 85% of shopping still happens in physical stores. It's got a massive runway for growth.
Growing fintech: MercadoLibre's payments platform (Mercado Pago), offers loans, credit cards, and digital wallets. Monthly active users are growing 30% per year.
Network effects: More buyers attract more sellers. More sellers attract more buyers. A moat built on network effects like this is nearly impossible to stop, and the bigger it gets, the more powerful it is.
Logistics network: MercadoLibre has built Mercado Envios - a full logistics network in a region where shipping is notoriously difficult.
Growth: Revenue grows 30% to 40% every year. The loan book nearly doubled in 2025. And there's plenty of runaway left in markets where most people still don't have a bank account.
At which price are we interested?
MercadoLibre currently trades near the lowest Forward P/E we've ever seen.
But a Forward P/E of nearly 37x is still expensive.
Buying MercadoLibre under 30x forward earnings would be interesting.
That's a share price of $1,560 (current stock price: $1,835).
[Image — MercadoLibre forward PE history. Source: Fiscal.ai]
MSCI ($MSCI)
How does the company make money?
MSCI licenses its equity indices to asset managers who use them as benchmarks for funds and ETFs.
Every dollar tracking an MSCI index generates recurring income.
It also sells portfolio analytics and ESG data tools, with the vast majority of revenue being subscription-based and highly sticky.
[Image — MSCI revenue mix. Source: MSCI Investor Relations]
Why is it an interesting company?
It's a toll booth on Wall Street: Every time a fund tracks an MSCI index, MSCI collects a fee. Over $18 trillion in assets are benchmarks against their indexes.
Passive tailwinds: More people than ever are moving their money away from active funds and into index funds and ETFs. MSCI gets a bigger paycheck every time a regular investor buys an ETF.
Switching costs: Once a fund manager benchmarks against an MSCI index, they almost never leave. Clients and analysts expect it. Switching would cause outflows. It's an incredibly sticky business.
High cash flow: MSCI generates nearly 50 cents in cash from every dollar in revenue. Very few companies generate cash like that.
Recurring revenue: Roughly 97% of MSCI's revenue comes from subscriptions, or fees based on index-linked assets. Fund managers need MSCI's data and indexes to run their daily operations.
At which price are we interested?
MSCI got quite expensive starting in 2019.
As a result, the stock has been moving sideways for the past 5 years.
The price is up 20% during that time, even though revenue has almost doubled.
[Image — MSCI price vs revenue, 5 years. Source: Fiscal.ai]
MSCI's valuation has gradually been coming down and it's getting more interesting.
I would love to own MSCI at a Forward P/E of 25x.
That's a stock price of $486 (current stock price: $592).
[Image — MSCI forward PE history. Source: Fiscal.ai]
Stryker ($SYK)
How does the company make money?
Stryker sells medical devices across three segments: orthopaedic implants, neurotechnology equipment, and medical and surgical equipment (beds, stretchers, surgical tools).
It runs on a razor-and-blade model.
Once its equipment is in hospitals, it earns ongoing revenue from disposables, implants, and service.
That creates durable and recurring cash flows.
[Image — Stryker segments. Source: Stryker Investor Relations]
Why is it an interesting company?
High switching costs: Surgeons learn on Stryker tools during their training and stick with them for their careers. Switching brands means retraining, lower efficiency, and higher risk for patients.
Head start in robotics: Stryker got a 3-year head start placing its Mako surgical robot in hospitals for knee and hip replacements. Competitors are still playing catch-up, and Q3 2025 was Stryker's best quarter for new Mako installations ever.
Growth: Stryker has grown faster than their market for 10 years in a row. Revenue keeps growing around 10% per year.
Declining price: Stryker was a very expensive stock at more than 50x earnings. The valuation has come down recently, but it's still over 30x trailing earnings. Expensive, but starting to get more reasonable for a steady business.
5,800 patents: Stryker aggressively defends its intellectual property. Their huge number of patents makes it nearly impossible for upstarts to challenge them.
At which price are we interested?
Stryker is a stable business, with the tailwind of the aging population behind it.
As a result, it's usually trading at a fair to expensive price.
I would love to own it at a Forward P/E of 20x.
That implies a stock price of around $283 (stock price: $327).
[Image — Stryker forward PE history. Source: Fiscal.ai]
Transdigm Group ($TDG)
How does the company make money?
TransDigm acquires companies that make essential airplane parts.
90% of the companies they buy are the only ones legally allowed to sell these specific parts, giving TransDigm a virtual monopoly.
Since planes stay in service for decades and parts constantly wear out, airlines and the military have no choice but to buy replacements from them at almost any price.
This is why TransDigm can raise prices every year and turn massive profits.
[Image — TransDigm business model. Source: Transdigm Investor Relations]
Why is it an interesting company?
A collection of mini-monopolies: TransDigm owns 100+ niche aviation businesses. 90% of their revenue comes from products where they are the only supplier.
Pricing power: Because their parts cost a tiny fraction of what a plane costs, airlines barely notice the bill. So TransDigm raises prices 5-6% every single year.
Strong track record: Since going public in 2006, TransDigm compounded at 27.4% per year. $10,000 invested at IPO is now worth $1.3 million.
Growing end market: Boeing and Airbus can't build planes fast enough, so older planes fly longer. Those need more replacement parts, which will have to be bought from TransDigm.
A Private Equity model in a public stock: TransDigm uses debt to buy more niche businesses, then use the massive cash flow from those companies to pay it off and go shopping again. Just like PE firms do.
At which price are we interested?
TransDigm is a very strong business.
Because of that, it usually trades at expensive multiples.
I think it would start to get interesting at a Forward P/E of 25x.
That's a stock price around $1,000 per share (current stock price: $1,148).
[Image — TransDigm forward PE history. Source: Fiscal.ai]
Conclusion
Here are the companies we discussed today:
[Image — summary card of the seven candidates: Investor AB, KKR, Lifco, MercadoLibre, MSCI, Stryker, TransDigm]
In the next article, you'll find out how we're planning on going forward.
See you then!
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Book
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Used sources
Interactive Brokers: Portfolio data and executing all transactions
Fiscal.ai: Financial data
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