Title: Buying 3 stocks — Portfolio Update (adding to Visa, Kinsale Capital and Ameriprise Financial) Show: Compounding Quality (Substack, paid post — compoundingquality.net) Guest: Pieter Slegers / Team Compounding Quality (author) Date: 2026-06-28 URL: https://www.compoundingquality.net/p/buying-3-stocks-361 Length: written post — no timestamps Note: Paid-subscriber post captured via Stephen's logged-in session. Body text verbatim; UI chrome (like/share counts, subscribe CTAs) removed. Charts are noted inline as [Image — …] with the credit the post carried. Hi Partner 👋 It's time for another Portfolio Update today. What's going on with our companies? And which companies are the most attractive right now? Let's dive in right away. Mr. Market is in full speculative mode We're in very strange times right now. No matter how you measure it, the market is very expensive. [Image — market valuation chart. Source: Global Markets Investor on X] Momentum is incredibly strong right now. The gap between momentum stocks and low-volatility stocks has never been wider. [Image — momentum vs low-volatility spread. Source: Alpine Macro] There's also a lot of speculation in the market. Expectations are very high. Analysts expect that the earnings of S&P500 will compound 24% annually for five years. That's double the historical norm and completely unrealistic. [Image — S&P 500 forward earnings expectations. Source: Tobias Carlisle on X] At the same time, Mr. Market is completely ignoring quality stocks. Here's the spread between quality and momentum: [Image — quality vs momentum factor spread. Source: Hunter on X] There are a lot of Quality Companies trading at decade low valuation levels today. Think about companies like Mastercard, S&P Global, Novo Nordisk, … [Image — forward PE vs 10-year average for a basket of quality names. Source: Fiscal.ai] Three types of businesses This is a good moment to think about what kinds of businesses we want to own. Back in 2007, Warren Buffett described three types of businesses in his annual letter: The good The great The gruesome 1. The good Here's what good companies do: Provide a lot of value to their customers Have a competitive advantage Why they are not great businesses? They need to reinvest a lot of their earnings just to grow. Buffett uses FlightSafety (flight simulator training) as an example. The business had a clear moat, but to grow, it had to constantly spend millions on new simulators. These businesses work on a 'pay more to earn more' model. 2. The great Great companies have the following characteristics: A strong moat Excellent returns on capital The ability to grow earnings without needing a lot of capital An example? See's Candies. When Berkshire bought See's in 1972, the business needed just $8 million in capital to earn around $5 million. Decades later, it was earning $82 million while needing only $40 million to run. Because growth didn't require big spending on equipment or inventory, nearly all the cash could flow back to Berkshire to buy other great businesses. A great business is like a savings account paying an extraordinarily high interest rate. One that climbs higher every year. 3. The gruesome These businesses: Grow quickly Need a lot of capital Earn little to no money Airlines are the textbook example. They don't have moats. They require huge amounts of capital. And there's constant competition, usually on price. Only the best is good enough Here's what's happening in today's market: The market is expensive Has unsustainable earnings growth expectations Is full of good and even gruesome businesses that are priced for perfection That's a dangerous recipe if you ask me. Which is why we're going to take the opportunity to focus even more on buying the very best businesses in the world. Only the truly great businesses are good enough. And today, it's time to add to 3 companies. Let's dive into them right away. Adding to the Portfolio Visa ($V) How does the company make money? Visa makes money by processing payments and charging fees for using its card network. They dominate the entire market together with Mastercard. Why are we adding more? Visa is the definition of Buffett's "Great" business. It requires virtually zero extra capital to process an extra million transactions. It's a capital-light compounder with a very strong network effect. Merchants are forced to accept it, and consumers demand to use it. [Image — network effect diagram. Source: Harvard] As Visa doesn't require much capital, and has high margins, they generate a lot of Free Cash Flow that it uses to consistently buy back its own shares. [Image — Visa free cash flow and share count. Source: Fiscal.ai] Transaction We will add $20.000 to Visa. This means we buy 60 shares at a limit price of $337. Kinsale Capital ($KNSL) How does the company make money? Kinsale is an Excess and Surplus (E&S) insurance company. They insure the unique, hard-to-place risks that standard insurance companies run away from. Why are we adding more? Kinsale has a very strong moat. They: Focus entirely on the E&S business Have built proprietary technology from scratch This means that they have lower costs than their competition. It also means they have better data and can quote policies faster and more accurately. The proof is in their very low combined ratio. [Image — Kinsale combined ratio. Source: Fiscal.ai] It measures the percentage of premiums collected that's spent on operating costs and paying out claims. Kinsale is a very capital light insurer, just look at how their combined ratio compares to Markel's. [Image — Kinsale vs Markel combined ratio. Source: Fiscal.ai] That's how they've consistently generated high Returns on Equity and grown their Book Value. [Image — Kinsale ROE and book value per share. Source: Fiscal.ai] The insurance market is currently going through a soft market. I think today's valuation levels provide amazing opportunities. Transaction We will add $20.000 to Kinsale Capital. This means we buy 65 shares at a limit price of $330. Ameriprise Financial ($AMP) How does the company make money? Ameriprise Financial is a leading diversified financial services firm with $1.2 trillion in assets under management and administration. Why are we adding more? Wealth management is an incredibly sticky business. Once clients onboard and build a relationship with an advisor, they rarely leave, which creates high switching costs and a strong moat. Ameriprise makes most of its money through fees, which have high margins. [Image — Ameriprise revenue mix. Source: Fiscal.ai] When you combine that with a very low capital intensity: [Image — Ameriprise capital intensity. Source: Fiscal.ai] You get another capital-light business that generates tons of Free Cash Flow. [Image — Ameriprise free cash flow. Source: Fiscal.ai] Ameriprise returns a lot of cash through a combination of dividends and buybacks. It's a clear cannibal stock. Right now, the shareholder yield (dividends + buybacks) is over 8% [Image — Ameriprise shareholder yield. Source: Fiscal.ai] Transaction We will add $10.000 to Ameriprise Financial. This means we buy 22 shares at a limit price of $460. Conclusion On Monday, we are adding to three stocks: Visa (Buy for $xx) The ultimate capital-light compounder in a global duopoly Requires virtually zero extra capital to grow, fitting Buffett's definition of a "Great" business perfectly Kinsale Capital (Buy for $xx) A pure-play Excess & Surplus (E&S) insurer targeting unique, hard-to-place risks Proprietary technology drives an industry-leading combined ratio of ~77% (compared to peers like Markel at ~95%) Ameriprise Financial (Buy for $xx) A sticky, fee-based wealth management business with a strong moat built on high switching costs Extremely low capital intensity creates very high free cash flow 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. You can read the full disclaimer here.