Title: Portfolio Update: Buying more? Show: Compounding Quality (compoundingquality.net — Pieter Slegers' quality-investing newsletter) Guest: Pieter Slegers (author) Date: 2026-FEB-15 URL: https://www.compoundingquality.net/p/portfolio-update-buying-more Length: written post (paid) — no timestamps Note: Paid-subscriber post captured via Stephen's logged-in session. Body text verbatim; page chrome removed. The portfolio weight and profit/loss charts are published as images and are transcribed below as [Table image — ...] blocks; other chart panels noted as [Image — ...].
Crazy times in the market today.
While the S&P 500 is trading near it's all-time high, many companies are trading at their cheapest valuation level ever.
Mr. Market is looking for direction.
This provides incredible opportunities to rational long-term investors like ourselves.
Mr. Market is Extra Moody
Never a dull moment on the stock market.
One day Mr. Market loves AI. The next day he fears it will destroy every (software) business model on earth.
The sectors Mr. Market is moody about right now? - Software - Credit agencies - Data providers
We love these companies as they have high margins and a lot of recurring revenue.
But as the saying goes:
[Image — market saying quote card]
The SaaSpocalypse
Today, all AI stocks seem to do really well.
On the other hand, software companies are in pain.
One of the main reasons? Anthropic recently released Claude Cowork.
It seems like the market thinks everything could be automated by a Claude plugin.
[Image — SaaSpocalypse chart. Source: Charlie Hills]
Claude Cowork is a tool designed to automate tasks.
They help automate you in legal, sales, and marketing.
Those segments were once the bread and butter of SaaS (Software as a Service).
The market reaction? Panic.
Investors worry that AI agents could replace many software licenses.
Just look at what happened to these names last month: - S&P Global: -25% - FactSet: -31% - Moody's: -21% - Paycom Software: -19%
[Image — one-month declines. Source: Fiscal.ai]
The companies above are great companies.
It has been a while we've seen them fall so much so quickly.
Should you be worried?
Many investors are asking: "Should I be worried about this volatility?"
The answer is simple.
Volatility is the price you pay for outperforming the market in the long term.
Just listen to Charlie Munger:
[Image — Charlie Munger quote card]
If you don't want to take any risk, you accept the low return of your bank account.
You want a return of 10% per year via stocks? In that case you have to accept volatility.
Here's how I see the market today: - S&P 500: Very expensively valued and lower expected returns - Quality stocks: The most undervalued since 1999 (relatively seen)
This sets us up for outperformance.
Our game plan in this uncertain market?
Owning the best companies in the world.
Fundamentals
Just look at how the fundamentals of Our Portfolio compare to the S&P 500.
[Table image — Our Portfolio vs S&P 500 fundamentals comparison]
Compared to the S&P 500, Our Companies have: - Better balance sheets - Better management - Lower capital intensity - Higher margins
According to my own calculations, the expected return for Our Portfolio now equals 15.0% per year.
This would mean you double your money every 5 years.
Another thing we love to look at?
The evolution of the Owner's Earnings of Our Portfolio.
Owner's Earnings
Here's the evolution of Our Owner's Earnings in the past 10 years:
[Image — Owner's Earnings, 10-year history]
A yearly growth of almost 20% is very remarkable.
Now let's look into the expectations for 2026.
The S&P 500 is expected to grow earnings between 10% and 15%.
Our Portfolio is expected to grow Owner's Earnings by 13.6% this year.
[Image — 2026 Owner's Earnings expectations]
Another crazy thing to see?
Every company except for 1 is undervalued in Our Portfolio today:
[Image — portfolio valuation summary: all but one holding undervalued]
You know that in the long term stock prices follow the evolution of the Owner's Earnings.
As a result, I truly think we have a great setup for amazing results.
If Our Companies: - Grow their Owner's Earnings by 13.6% - Valuation goes up from 17.1x to 22.0x (P/E ratio)
… You can expect a return of 19.3% per year on avarage.
That's ridiculous.
But remember that stock prices are volatile in the short term.
If you can't stand the heat, stay out of the kitchen.
If you want great returns as an investor, you should accept volatility.
[Image — volatility chart. Source: Dividendology on X]
Our Portfolio
Today, we own 18 wonderful companies in which we truly believe.
Our Portfolio looks like this:
[Table image — "Current weight (%)" bar chart, 17 holdings shown, descending: Medpace ~8.2% | LVMH ~7.8% | Evolution AB ~7.2% | Kelly Partners Group ~7.0% | Games Workshop ~6.8% | Ameriprise Financial ~6.4% | Kinsale Capital ~6.2% | Dino Polska ~6.0% | Visa ~5.6% | Novo Nordisk ~5.15% | Brown & Brown ~4.85% | Interparfums ~4.5% | Topicus ~4.4% | HgCapital Trust ~4.2% | Brookfield ~3.9% | Judges Scientific ~3.75% | Constellation Software ~3.75% (The post states 18 holdings; Zoetis, bought on 29 January, does not appear in the chart.)]
An important thing to keep in mind?
A few companies will drive the majority of your returns.
For us, Medpace ($MEDP), Games Workshop ($GAW), and Kelly Partners Group ($KPG) are doing really well right now:
[Table image — "Profit/loss for every position", descending: Medpace ~+$46,000 | Games Workshop ~+$42,000 | Kelly Partners Group ~+$40,500 | Ameriprise Financial ~+$11,500 | Dino Polska ~+$6,000 | Visa ~+$3,500 | Brookfield ~+$1,800 | Kinsale Capital ~-$3,500 | HgCapital Trust ~-$4,500 | LVMH ~-$6,500 | Interparfums ~-$8,500 | Constellation Software ~-$16,000 | Judges Scientific ~-$17,500 | Brown & Brown ~-$17,500 | Novo Nordisk ~-$20,000 | Topicus ~-$20,000 | Evolution AB ~-$44,000]
Currently, there are 7 strong buys, and 8 buys.
An interesting company with a 'Buy rating' we haven't talked about in a while?
Interparfums ($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.
The company has faced a lot of headwinds from macro issues, consumer spending, competition, and tariffs.
These have resulted in a very low valuation.
[Image — Interparfums valuation history. Source: Fiscal.ai]
In the meantime, Interparfums continues adding new brands to their portfolio.
This will allow them to keep growing in the years ahead: - Off-White: first sales expected in 2027 - Annick Goutal: first sales to start in late 2026 - Longchamp: first sales to start in late 2026 - Expected to generate over $100 million per year in 3-5 years
Another interesting fact?
Fragrances are one of the most profitable and fastest growing segments in the beauty industry.
This gives Interparfums a lot of tailwind.
I think the company has a great setup to do very well: - The demand for fragrances keeps increasing - Its new brands will start to generate sales - Some of the temporary headwinds are solving themselves - The stock looks quite cheap
[Image — Interparfums forward PE. Source: Fiscal.ai]
Conclusion
That's it for today.
Here's what you should remember from today's article: - Mr. Market seems to be manic-depressive right now. This provides us with many opportunities - Quality companies trade at their cheapest valuations since 1999 - We own way better companies that are cheaper than the S&P 500
There are 7 Strong Buys right now: - Brown & Brown - Kelly Partners Group - Kinsale Capital - Topicus - Constellation Software - Zoetis - Novo Nordisk
Everything in life compounds Pieter (Compounding Quality)
Book Order your copy of The Art of Quality Investing here
Used sources Interactive Brokers: Portfolio data and executing all transactions Fiscal: Financial data
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