Title: Adding to the Portfolio Show: Compounding Quality (Substack, compoundingquality.net) Guest: Pieter Slegers (author) / Team Compounding Quality Date: 2026-03-15 URL: https://www.compoundingquality.net/p/adding-to-the-portfolio Length: written post (paid) — no timestamps Note: Paid-subscriber post captured via Stephen's logged-in session. Body text verbatim; page chrome (like/share counts, Community CTAs) removed. The Free-Cash-Flow projection tables, the Rochon "rule of 3" card, the Constellation valuation chart and the Kelly Partners performance chart are published as images and are not reproduced here; the figures quoted in the body are transcribed as written. =====
Do you know what makes me happy?
When I can add to Our Stock Portfolio.
It means we can put some more money to work for us.
Today, we will add to 3 (!) positions.
An honest realization
Over the past few weeks, I've been thinking a lot about Our Portfolio.
Should we make changes? Are we doing the right thing? Are we invested in the best companies in the world?
It's tough to stay the course when your Portfolio is underperforming the market.
From 1962 until today, Warren Buffett underperformed the market in 20 out of 64 years.
That's 33% of the time.
And yet… Here's what an investment of $10.000 would have brought you:
S&P 500: $6 million
Berkshire Hathaway: $3.6 billion
Warren Buffett underperforming 33% of the time…
That's perfectly in line with the Rule of 3 of Francois Rochon.
The most important quality of a successful investor?
The ability to hold on when things get hard.
Let me confess something, Partner.
I probably never ever want to sell part of my personal investment portfolio.
I want the portfolio to outlast me. Pass it to my children and grandchildren over time.
This way, you build intergenerational wealth.
It's probably also why I'm way more immune to short-term stock price fluctuations compared to most investors.
The only thing I care about is the Free Cash Flow the Portfolio generates for us.
You should think about it exactly the same way.
Let's look at an example:
Our Portfolio currently has a value of $1.3 million.
The Free Cash Flow Yield of Our Portfolio? 5.8%.
This means we are making money while we sleep.
Here's how much we're making. [table image]
Making $222,47 per day without having to work for it is not bad.
But let's now make some magic happen…
What if we let the magic of compounding do its work?
I assume Our Companies can grow their Free Cash Flow by 9% per year.
Here's how much we would make in the future. [table image]
In 30 years, Our Portfolio could generate over $1 million in Free Cash Flow every single year.
At a 4% FCF yield, it puts the total portfolio value at $26.9 million.
Fast forward to 60 years ahead… and it grows to nothing less than $85.7 million.
But Pieter… Isn't it unrealistic to say you'll invest for the next 60 years?
On the one hand it is.
On the other hand… Warren Buffett is 95 years old. I'm 29. If I'm (very) lucky, I could compound for the next 66 years.
Please note that the above assumes we never add a single dollar to the Portfolio.
Of course we will keep adding to the Portfolio.
This makes things even better.
Let's make the following assumptions:
Our Portfolio is currently worth $1.3 million
We add $50.000 every single month
We can invest for as long as Warren Buffett
In that case, Our Portfolio would be worth a little bit over $3 billion (!).
Here's the Free Cash Flow the Portfolio would make for us. [table image]
Making $122 million per year in passive income... Sounds exciting!
It's the power of compounding.
Humans are not made to truly understand the magic of exponential growth.
It's exactly why this quote is so true. [quoted image]
While we might not have 66 years left to invest, the concept is very clear.
The smartest thing you can do?
Invest in stocks.
The second smartest thing you can do when you already invest?
Keep adding to your portfolio whenever you can.
Every single new buy brings you closer to financial independence.
That's exactly why I'm so happy to add to three stocks in Our Portfolio today.
Adding to the Portfolio
Today we are adding to three stocks in Our Portfolio:
Brookfield Corporation ($BN)
Constellation Software ($CSU)
Kelly Partners Group ($KPG)
1. Brookfield Corporation ($BN)
How does the company make money
Brookfield makes money by owning and operating long-term, cash-generating assets like real estate, infrastructure, renewable power, and private equity.
They earn steady income while the assets appreciate. It also manages investment funds for others and collects management fees and performance-based profits.
Why we're adding
Pieter… You are adding to Brookfield Corpration... Again?
Yes!
Let me tell you a little secret.
I want to make Brookfield Corporation (one of) the largest positions in Our Portfolio.
Why? Because it could be the ultimate cornerstone for every quality investor.
By investing in Brookfield Corporation, we are investing in a structural winner led by one of the best capital allocators in the world.
I think the company will continue to thrive over the next few decades.
It's very simple: winners tend to keep on winning.
Brookfield Corporation estimates its intrinsic value currently equals $68.
As the stock trades at $39 today, this means you can buy the company at a discount of 40% compared to its NAV.
This is a very large discount from a historical perspective!
Brookfield Corporation currently has $2.3 in Distributable Earnings. The company expects this number to grow to $6.95 by 2030 (a 25% CAGR).
As the current stock price equals $39, this means you can buy the company at a P/E of 16.9x (and 5.6x based on expected 2030 numbers).
That's not expensive if you ask me.
Transaction
We add $25.000 to Our Position.
This means we enter an order of Q 650 with a limit price of $38.5.
2. Constellation Software ($CSU)
How does the company make money
Constellation Software is the best serial acquirer in the world. The company acquires, builds, and manages vertical market software companies worldwide.
Constellation Software's products are critical to their customers. Clients are governments, hospitals, schools, … These clients are often very loyal.
Why we're adding
I truly think Mr. Market is in a depressive state for Constellation Software today.
This chart of its valuation already provides this. [chart image]
Source: Fiscal.ai
I don't agree with Mr. Market and the idea the company will be massively disrupted by AI.
Constellation Software is here to stay.
Would you bet against a company with this track record? I won't.
Source: Fiscal.ai
On Twitter, Andy shared some amazing research on the Cash Return On Incremental Investments (CROI) for Constellation Software.
CROI is a very important metric. It shows you how much cash you get back as an investor for every dollar you invest.
Over the past 3 years this number equaled 29.1%.
This means that for every $100 you invest, CSU makes $29.1 per year (!) for you.
Source: Andy on Twitter
In the annual shareholder letter of Francois Rochon (Giverny Capital), we could also find some good news regarding founder and former CEO Mark Leonard.
Mark Leonard recently stepped down as the CEO due to health reason. We are very happy to hear that he will stay on the board of directors.
You want to learn even more? In the Community there are almost daily updates from all Partners about Constellation Software.
Transaction
We add $15.000 to Our Position.
This means we enter an order of Q 8 with a limit price of CAD 2600.
3. Kelly Partners Group ($KPG)
How does the company make money
Kelly Partners Group is essentially a holding company for accounting firms.
They buy majority stakes (51%) in private accounting practices and let the original accountant keep running the business (keeping them motivated with their own stake).
The model works because:
Accounting clients rarely switch, so revenue is predictable year after year
Taxes always need filing (it's recession-proof)
Growth is simple: just acquire more firms and repeat
Here are some interesting resources:
Meeting the CEO of Kelly Partners Group
Full investment case
Update Kelly Partners Group (December 2025)
Why we're adding
The investment case of Kelly Partners Group in one chart? This one. [chart image]
The stock got hammered recently.
Kelly Partners Group is down 36.7% since the beginning of the year and 60% from its peak.
In the meantime, the underlying performance was (very) good.
So let's make a short valuation update for Kelly Partners Group.
Kelly Partners thinks NPATA (Net Profits After Tax with Amortization) is the best way to measure its profits.
Why?
Because amortization expenses are required by accounting rules, but they're not a real cash expense.
This is very similar to Warren Buffett's idea of 'Owner Earnings'.
KPG expects go generate $11 in NPATA in 2026.
This means they currently trade at a forward Price/NPATA of 21.8x.
That's not expensive giving the long runrate for the company.
Here's how much NPATA they want to generate in the future:
NPATA 2027: $16 million
NPATA 2028: $20 million
NPATA 2029: $25 million
If KPG would achieve its targets, here's what the valuation levels would look like:
NPATA 2027: 15.0x
NPATA 2028: 12.0x
NPATA 2029: 9.6x
Transaction
We add $10.000 to Our Position.
This means we enter an order of Q 2700 with a limit price of AUD 5.5.
Conclusion
On Monday, we are adding to the Portfolio.
Brookfield Corporation: I want to make this one of our largest positions over time
Adding $25.000: Q 650 with a limit price of $38.5.
Constellation Software: The market is very 'depressive' for CSU today
Adding $15.000: Q 8 with a limit price of CAD 2600.
Kelly Partners Group: The company is very cheap if Brett Kelly can execute its plans
Adding $10.000: Q 2700 with a limit price of AUD 5.5.
Everything in life compounds Team Compounding Quality
Used sources
Interactive Brokers: Portfolio data and executing all transactions
Fiscal.ai: Financial data