Title: How We're Going Forward Show: Compounding Quality (Substack, paid post — compoundingquality.net) Guest: Pieter Slegers / Team Compounding Quality (author; byline "Compounding Quality") Date: 2026-04-28 URL: https://www.compoundingquality.net/p/how-were-going-forward 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 — ...]. The Buffett ten-year-closure test applied to the whole portfolio is published as an image table and is transcribed below as a [Table image — ...] block. This post concludes the five-part April portfolio review (Parts I-II of the update, Parts I-III of the shopping list).
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)
Our Shopping List (Part III)
You know everything about our portfolio as well as the companies we might consider adding.
But how will the portfolio evolve from here? How will we move forward?
Let's find out.
The best of the best
Our investable universe consists of 153 stocks.
That's 0.4% of the 40,000+ publicly traded stocks worldwide.
Only the best of the best is good enough for us.
We will continue to relentlessly track the underlying performance of our portfolio.
Why?
Stock prices always follow the evolution of the intrinsic value over time.
The intrinsic value is mainly driven by the EPS and Free Cash Flow Per Share growth.
But in the short run, stock prices and fundamentals can diverge a lot.
While this can be painful at the time, it's also what creates big opportunities.
Warren Buffett says that's what made him rich.
[Image — Warren Buffett quote card: "The beauty of stocks is that they do sell at silly prices from time to time. That's how Charlie and I have gotten rich."]
Today is such a time if you ask me.
It's why we only worry about stock prices when we're looking to buy or sell.
In the meantime, we focus on the underlying fundamental performance.
Here are the most important metrics to watch.
1. The evolution of the Free Cash Flow of Our Portfolio
[Image — "FCF the Portfolio makes for us", 2015-2025 bar chart. CAGR FCF Generation (10 Years): 18.1%. Source: Fiscal.ai]
2. Our Portfolio Fundamentals
[Image — Portfolio vs S&P 500 fundamentals scorecard. Source: Fiscal.ai]
3. Growth of the Owner's Earnings
[Image — "Owner's Earnings Portfolio (rebased to 100)", 2015-2025, rising from 100 to roughly 605. CAGR Owner's Earnings: 19.7%. Source: Fiscal.ai]
One thing I noticed as I was thinking about Our Portfolio?
Every single time I bought a company not because I thought it was the highest quality, but because it was cheap, it ended up being a mistake (so far).
Think about:
Text SA
OTC Markets
Novo Nordisk
...
A game of opportunity costs
While I believe that the companies we currently own will do fine in the long run, a lot of Quality companies are on sale right now.
We need to invest in the companies with the most upside potential according to us.
If we find better companies with greater upside potential, we should consider switching.
A great test to know if we own Quality companies?
Warren Buffett's 10 year test:
We need to be willing to own every single stock within our portfolio if the market would close for 10 years.
Going Forward
Going forward, we're raising the bar.
We'll focus on buying even higher-quality businesses.
Because not all growth is created equal.
Think about it this way.
Let's imagine two companies both grow their earnings at 10% per year.
Company A: steady and reliable (year after year)
Company B: Volatile... +30% one year, -15% the next, +20% the year after
Is Company A or B the most valuable?
It's always Company A.
The linearity of growth matters a lot.
[Image — two hand-drawn growth paths: a straight line versus a scribbled, volatile line reaching the same point]
Here's what we look for:
Consistent revenue growth, not boom-and-bust cycles
Earnings that compound smoothly over time
A business model that is resilient
We want to find companies so predictable and durable that they keep compounding for decades.
The most serious candidates to be added to the portfolio fit this description.
Sell Candidates
The most serious candidates to consider selling are the ones we might not want to own if the stock market closes for 10 years tomorrow.
We did the exercise for our entire portfolio:
[Table image — "Do you want to own this company if the stock market closes for 10 years?" applied to all 18 holdings: Medpace — Yes Evolution AB — Not sure Kelly Partners Group — Yes Brown & Brown — Yes LVMH — Yes Games Workshop — Yes Dino Polska — Yes Kinsale Capital — Yes Interparfums — Yes Ameriprise Financial — Yes Visa — Yes Topicus — Yes Judges Scientific — Not sure HgCapital Trust — Yes Novo Nordisk — Not sure Constellation Software — Yes Brookfield — Yes Zoetis — Yes]
I don't think we'll sell Novo Nordisk or Evolution AB in the near future.
On the other hand, we are considering selling Judges Scientific.
Judges Scientific ($JDG)
How does the company make money?
Judges Scientific acquires and operates niche scientific instrument makers, making money by selling highly specialized lab equipment.
You can read the Deep Dive here.
Why is the conviction 'Medium'?
Judges Scientific is a tough one. A very tough one.
The entire life sciences industry has been struggling recently. This hasn't been different for Judges Scientific.
Why?
US research funding slowdown: Federal budget cuts are reducing research spending
Increasing Chinese competition: Competitive pricing and better offerings could pressure Judges' market share
Customer concentration risk: Heavy dependence on universities and publicly funded labs.
Just look at how JDG's revenue evolved recently, and is expected to evolve over the next 2 years:
[Image — Judges Scientific revenue history and 2-year estimates. Source: Fiscal.ai]
The big question is whether these problems are temporary or structural.
For the investment case of Judges Scientific, it will be very important that the company finds its growth trajectory again.
The current valuation level looks as follows:
[Image — Judges Scientific valuation history. Source: Fiscal.ai]
Investing is a game of opportunity costs.
We are currently re-investigating Judges Scientific.
If we believe there are better opportunities elsewhere, we are open to selling our position in JDG for another, better opportunity.
Buy candidates
Here are the most serious candidates for the portfolio:
KKR
3i Group
FICO
Fairfax Financial
MSCI
1. KKR ($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.
KKR is one of the best capital allocators on the planet.
Its size and reputation with institutional investors give it fee-related earnings that grow steadily regardless of market cycles.
Another interesting thing about KKR?
The fact that it owns private assets means that there's no daily price to obsess over.
KKR focuses on long-term business building.
That's exactly how we think too.
Its stable asset base and management's long-term mindset makes it an interesting company.
[Image — KKR overview. Source: KKR Investor Relations]
2. 3i Group ($III)
How does the company make money?
3i Group is a Private Equity company/holding. They make money by buying stakes in private companies, growing their value, and selling them for a profit.
3i owns Action, Europe's fastest-growing discount retailer.
Action opens hundreds of stores per year with remarkable consistency.
Just like KKR, 3i's holdings aren't publicly quoted day-to-day.
That lets them focus on what's really important:
Store openings
Margins
Long-term value creation
[Image — 3i Group / Action overview. Source: 3i Group Investor Relations]
3. FICO ($FICO)
How does the company make money?
Everyone knows the FICO credit score. It's the standard used by lenders across the US, and it charges fees each time a score is pulled.
FICO is a toll booth that nearly every credit decision in America has to go through.
They have incredible pricing power, raising prices repeatedly without losing business.
It's got recurring revenue, low capital requirements, and very linear profits.
It's a stable, durable business that's very hard to disrupt.
[Image — FICO overview. Source: FICO Investor Relations]
4. Fairfax Financial ($FFH)
How does the company make money?
Faifax Financial Holdings is a Canadian holding company.
It operates a collection of global insurance and reinsurance businesses, collecting premiums upfront and investing the float before claims are paid.
Prem Watsa has compounded its intrinsic value for decades.
Just like Warren Buffett, Watsa uses the float of its insurance activities to invest.
They focus on business results over stock prices. This is something we love.
Earnings can be lumpy quarter to quarter, but the long-term growth has been phenomenal.
[Image — Fairfax overview. Source: Fiscal.ai]
5. MSCI ($MSCI)
How does the company make money?
MSCI licenses its equity indices to asset managers who use them as benchmarks for funds and ETFs.
It also sells portfolio analytics and ESG data tools, with the vast majority of revenue being subscription-based and highly sticky.
MSCI's indexes are a global standard, making it a toll booth business with high switching costs.
Once a fund is tied to an MSCI index, it almost never leaves.
The business is capital-light and generates high recurring revenue regardless of daily market swings.
With the continued shift toward passive investing and data-driven decision-making, MSCI has a very long and predictable runway.
[Image — MSCI overview. Source: Money Control]
If we would add one or more of these companies, we might have to sell a position to make room.
When this would be the case, you'll be notified in advance.
Conclusion
That's it for today.
We don't want good companies at cheap prices. We want wonderful companies at fair prices.
The goal is to improve portfolio quality whenever Mr. Market gives us the opportunity.
The most likely sell candidate:
Judges Scientific
The most likely buy candidates:
KKR
3i Group
FICO
Fair Isaac
MSCI
To be continued!
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
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