Often you pass on a company not because it's necessarily bad, but because there are already too many expectations priced in. That happened with Dunelm. Even though it had corrected, on slightly lower growth expectations and the Iran war, the predictability of its cash flows and its high dividend kept it trading at levels that offered no margin of safety..

Often you pass on a company not because it's necessarily bad, but because there are already too many expectations priced in. That happened to me with Dunelm. Even though it had corrected, on slightly lower growth expectations and the Iran war, the predictability of its cash flows and its high dividend kept it trading at levels that offered no margin of safety.

A friend and subscriber pointed me toward Vusion, a French company focused on improving retail productivity, and from the outside there were a few elements that caught my attention and justified digging in deeper.

The analysis turned up a few red flags, which I'll walk through today. Note: this isn't a bearish call, nor a critique of the business model, which I haven't dug into deeply enough to judge, though I will say it raises more questions than it answers for me. Let's get into it.

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Internet of Things

Vusion's business model is deploying electronic shelf labels (ESL) in retailers, followed by a subscription to a Cloud platform that allows retailers to reprice on the fly, hourly pricing, declining prices for perishables, or launching campaigns like Black Friday within minutes. On top of that, they've added other services, like micro-cameras that track a shelf for stockouts or consumption pattern detection.

In the early steps of the analysis, the idea looked promising: is this a SaaS company being unfairly punished by the market? If so, the idea seemed compelling: a traditional SaaS isn’t as disruptible as one whose hardware is physically installed across thousands of a client’s shelves, with a fairly low unit cost per label but a high, though finite, switching cost (label battery life runs 5-10 years depending on how often prices change).

The problem I ran into, and the reason I don’t think it’s worth extending the analysis further, gives this post its title: Walmart’s shadow is too long.

Walmart’s long shadow

Vusion's most important milestone of the past few years came in 2023 with a billion-dollar contract with Walmart, to equip its 4,600 US stores with over 500 million ESL tags, later connected to Vusion's cloud to generate recurring revenue.

The contract was of such a scale for Vusion that Walmart had to prefinance capacity expansions, and the incentive structure of the deal included warrants in Walmart's favor, triggered starting at a $700 million investment threshold and maxing out at $3,000 million, where Vusion would grant 1.76 million warrants at a strike price of €112.20 (of which 73% have already vested and 37% have been exercised).

Thanks to that warrant structure, it's been possible to estimate the revenue Walmart has generated, since the company hasn't reported it directly, and its scale can be seen in this chart:

With a revenue base of €800 million in 2023, the Walmart contract essentially doubles annual revenue over 4 years (averaging the heavier deployment years of 2025 and 2026, with the phase-in of 2024 and phase-out of 2027). But it leaves us with two uncomfortable data points:

• Ex-Walmart revenue declined more than 20% annually in 2024 and 2025.

• In 2027, Walmart's revenue will be 1/4 of what it was in 2026.

The company has been announcing new deployment agreements with strong clients, mainly in EMEA, notably Carrefour (France), with the rollout starting in France, and Morrisons in the UK. In the RoW region, Walmex (Walmart Mexico) stands out, which, as a Walmart subsidiary, is itself a good indicator of satisfaction with the US implementation.

The problem is that, between these three major clients, they can't offset even half of the revenue drop that the end of the Walmart contract represents.

Let's run the Carrefour numbers: Carrefour's hypermarkets average around 8,000 sqm, versus Walmart's 12,000-13,000 sqm (roughly 75% of Walmart's stores are hypermarkets). Carrefour's superstores average around 2,000 sqm. The group has 325 hypermarkets and 1,167 superstores in France. The order of magnitude in total retail floor space is roughly 1:10.

In favor of this contract, unlike Walmart, Carrefour will incorporate other technologies beyond tagging, such as Captana (miniature cameras that monitor shelves), so recurring revenue per store and implementation revenue could be higher. We'll factor that in.

It's also possible that this rollout could open the door to expanding across the rest of its European stores (in fact, a 3-year exclusivity has been signed), though that wouldn't materially change the conclusions, since most of the addressable market is in France.

Let's approximate some numbers, with the usual caveats given the limitations of the company's disclosures, and keeping in mind that the Carrefour contract will carry better pricing and deeper implementation than Walmart's:

This estimate carries even more weight as the high end of the range when we read Carrefour's 2025 annual report.

“The Group will invest 100 million euros a year in AI and roll out the Vusion platform across all its French hypermarkets and supermarkets to optimise shelf management and online order preparation.”
Carrefour 2025 Annual report

Assuming they invest 100% of that into Vusion, my estimates are still on the optimistic side.

Walmex and Morrisons would each account for roughly 1/3 of what the Carrefour France contract represents, so together they replace at most 25% of Walmart's revenue. Walmex's contract could be followed by one for the Bodega Aurrera stores, also owned by Walmex, which is undoubtedly a vote of confidence in Vusion, but still falls well short of a sufficient replacement.

The full numbers, both for the rest of the contracts and for how I estimated the Walmart contract, are available in an Excel file for premium subscribers.

Other unavoidable realities

VAS recurring revenue concerns

One of the company’s expectations is that its installed base of electronic labels will layer on additional recurring revenue tied to their connection to Vusion’s cloud. This is what they call VAS (value-added services) recurring revenue.

Currently, this revenue accounts for just 10% of sales, and its scalability raises some doubts for me:

• As of the end of 2025, of the 650 million tags installed by the company, around 375 million were connected to the Cloud service. Of those, roughly 276 million (74%) belong to Walmart. Many clients bought tags without connecting them to the cloud, so they don't generate recurring revenue. With recurring revenue at just 9% in Q1 2026, it's hard to call this a software company.

• As more of Walmart's connected tags have come online, recurring revenue per tag has fallen. The company's 2027 target is to double it.

Cash flow concerns

In 2023 and 2024, the Walmart contract generated incoming cash flow through advance payments on the order book and prefinancing for production lines, but in 2025 and 2026E the company now owes service delivery against those liabilities. In 2024, Walmart had advanced around $800 million in prepayments for the 2025 rollouts, plus $300 million in production-line pre-financing.

That effect reverses in 2026: based on my calculations, with roughly 50% of stores still to be equipped, Vusion will need to deliver services valued at $1,400 million against a cash inflow of around $800 million. This comes down to two effects: it draws down prepaid credit, and prepayments shrink for 2027, since the remaining rollout will be residual.

Looking at 2026 deliveries ($1,400 million) against an approximate variable cost of around €980 million, versus a cash inflow of €700 million (the $800 million mentioned above), there's a gap of €280 million, which the company's €439 million cash position can cover, but which erodes it.

All in the price, nothing outside of it.

Starting from Walmart's phase-out in 2027E, where its revenue drops from ~€1,100 million to ~€300 million, let's assume the rest of the ex-Walmart client base grows at 20% annually, which is what's implied by the company's 2026 guidance excluding Walmart, and another 20% in 2027. That leaves 2027 with a revenue decline of ~45% versus 2026.

Assuming that, thanks to software margins and additional services, they hit their 2027 EBITDA target (22%), that would roughly double net margin, which, given the sales decline, works out to around €6-7 per share, or a P/E of 20x at a €120 share price.

To me, it's clear: there are too many expectations priced in, with no margin of error left outside of it.

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Latest on the Value Pond

🔓 Bayer AG (ETR: BAYN) - Update. The June 25th Supreme Court ruling neutralises the failure-to-warn claim behind most Roundup cases, pushing the $7.25bn settlement closer to reality.

🔒 Associated British Foods (LON: ABF) — Full thesis. Primark alone may be worth the entire group’s market cap, with the announced spin-off as the catalyst. Grocery, Ingredients, Sugar and Agriculture come effectively free.

🔓 Semapa (LSI: SEM) — Net cash, listed assets, a 49% discount to NAV, and a controlling family that already tried to take it private once. The signals point to a second attempt.

🔓 The Pond Tracker | Apr ‘26 — Portfolio review across all active theses.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

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We closed a plain H1 in the portfolio, and looking back, that might actually be a win. We navigated a very volatile H1, with autoparts, which had been driving 2025's returns, heavily punished in the portfolio.

Even though the war was the trigger for the drawdown, and other sectors have been recovering since, autoparts haven't, getting dragged into a pessimistic cycle narrative alongside their OEM customers. Gold and gold miners, despite carrying less weight now, have also given back their gains.

All this in a context where double or triple digit YTD returns are proliferating in semiconductor or memory stocks. But that's not my game, I feel I have no edge there, and I'd basically be speculating. I have nothing against that, but when we're talking about six figure positions or seven figure portfolio with money that isn't yours, what lets me sleep at night is knowing exactly what game I'm playing.

That said, it’s worth putting things in context: the annualised return stands at 25%, with positive YTD after a good May and a not that bad June. Clients are satisfied, and the year starts fresh.

Let’s go through the main open theses at The Value Pond.

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Active ideas

🌱💊Bayer AG

Since the last Pond Tracker, Bayer's share price is up 40%. The June 25th Supreme Court ruling on the Durnell case was the key driver. I discussed it in this recent post.

With the litigation menu closer than ever to a final number, attention is shifting to the Pharma portfolio and to unlocking the company's value, maybe through a Consumer Health sale? An Agriculture spinoff? We'll see.

For now, we reaffirm the target price, already very close to €60, though I wouldn't rule out updating the original thesis to revalue a Pharma portfolio that's no longer limping as badly, or an Agriculture division with real potential in an agricultural cycle caught in a standoff between trade blocs.

Next results: H1 2026 on August 4th.

P.S: Word out there is that DCA-ing into a falling stock is a terrible investment method. I started with Bayer in September '23, added in April '24, and topped up again in August '25. With an average purchase price under €34, the IRR is already above 20%.

🛫Wizz Air

Back in April, facing the risks from rising fuel prices, I gave Wizz Air the update it needed. To me, the risk was contained and limited in time. It played out exactly that way.

The stock is up more than 30% since the last update, and one of the risks that moderately worried me in April, whether demand could absorb such a large increase in capacity, has been easing.

We'll see at what ticket prices, but demand is consistently absorbing capacity increases of over 20% in the most demanding year of the fleet delivery schedule through 2030.

On top of that, the FY2026 Annual (Apr'25-Mar'26) slightly narrowed expected losses, which drove a favourable reaction.

Next date: Q1 FY27 (Apr-Jun) on August 6th, where I expect to see the ticket price trend heading into the most important quarter of the year, Q2. I'll keep posting the monthly traffic chart on X (link).

💺⚙️🔦Forvia

As I've said before, the war was the trigger for the drawdown, and while other sectors have recovered, autoparts haven't kept up. The sector has bought into a pessimistic narrative alongside its OEM customers. The market is punishing Forvia due to Volkswagen's restructuring, a path that Forvia itself has already been carving out over the last two years. Volkswagen's layoff announcement reinforces that negative narrative around European vehicle demand (17% of Forvia's sales). I think the market's reaction is understandable, even if it hits indiscriminately, but weren't we already pricing in pessimism on auto production?

It's a shame, because on a fundamental level Forvia had been delivering on expectations, propelling the stock above €14 in February on the announcement of the Interiors sale.

All of this remains buried under sector pessimism, so I see no reason to change what I said in the last update, which I leave here:

I’m not adding at these prices, because I decided to cap total portfolio exposure. You shouldn’t overexpose yourself to such a cyclical sector when the bottom of the cycle isn’t clear yet.

On July 31st, they report H1 results, where we’ll see if they confirm performance slightly ahead of auto production. After the narrative driven sector wide hits, results are what separates the wheat from the chaff.

⚒️⚙️🛻Dauch

Dauch is down 13% since the outbreak of the conflict, for reasons similar to Forvia, though its lower exposure to Asia/Europe has softened the blow somewhat. One of the primary drivers of this decline has been the market's skepticism regarding expected synergies and higher than anticipated restructuring costs. There is also an investor exodus effect in the UK following the cancellation of Dowlais and the subsequent share distribution. I will analyse this more calmly and provide an update soon.

⛏️Foraco

Foraco is going through natural back and forth, typical of a stock with such thin market volume. In the last tracker it was at 3.2 CAD, and it's now trading around 2.8 CAD.

Foraco's short term moves depend mostly on gold's moves. But Foraco's business, or gold miners' business in general, isn't built on short term commodity volatility.

Whether gold is at $4,000 or $5,000 (I'd bet more on $5,000 in the medium term), the need for drilling doesn't go away. On top of that, central banks keep buying gold while continuing to print fiat.

Below the macro picture, here's what we have:

• Senior mining companies’ exploration budgets for calendar year 2026 have grown by an average of ~35% year over year. Since these clients represent 90% of Foraco’s revenue, this increase provides strong stability and visibility to its revenue base.

• Fleet absorption: The continued rise in drilling demand, from both Senior and Junior miners, is expected to keep absorbing available drilling rig capacity across the sector.

• Greater geological complexity: Newly discovered deposits are located in remote, hard to access areas. This requires significantly more complex specialized drilling solutions (deep drilling, helicopter portability, high altitude or arctic conditions), which raises barriers to entry in the sector.

This is one of the best picks I have right now. Not only for the upside, but for the catalysts. The cycle momentum, the size and the operating leverage make it one of the best-positioned names for 2026-27.

🛍️Associated British Foods

ABF is the latest addition to the blog, and to my portfolio too. It's a British conglomerate where Primark, generating roughly half of sales, could be worth the group's entire market cap on its own, leaving Grocery, Ingredients, Sugar and Agriculture effectively for free. The announced spinoff is the catalyst that will force the market to value each division separately.

Shortly after the thesis was published, the company reported Q3 FY26 without altering the thesis direction, as expected. Here's the snapshot I posted on X about the retail division.

‘Wait & see’ ideas

🛏️🛋️🍽️Dunelm

The British homeware retailer is down 21% since the outbreak of the conflict, 29% YTD. This situation is precisely what drew me to this company, which is undoubtedly high quality and has demonstrated consistency in its growth and margins through difficult periods.

That said, the slowdown in Q2 and its confirmation in Q3 did not convince the market, as Dunelm trades on demanding multiples.

As I said, the company has many positive attributes but lacks the margin of safety I look for. You can draw your own conclusions by reading the full thesis. It may offer a good opportunity in the coming months.

Thanks for reading the Value Pond🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

Bayer is probably the most paradigmatic position on the blog in that sense. I wrote a full thesis at a time (Dec 2023) when almost all of Bayer's problems were already on the table. The stock was deeply beaten down. Then it fell further.

I questioned what I had written. More than once I asked myself whether I was wrong. I went back to the thesis, recalculated, re-examined, tightened the scenarios, expanded parts of the analysis… And I kept coming back to the same conclusion: this was going to be a hard road, but there was value here, and it was worth holding.

In the end, you are left with an excellent investment log, which can be summarised in three entries: the full thesis and two major updates.

I have always argued that unlocking Bayer's value depended, and still depends, primarily on putting a number on the total RoundUp litigation bill. Capital prefers a known, pricey ticket to not knowing whether dinner will cost €50 or €500.

Once that is resolved, the conservative valuation rests on the Pharma portfolio holding up. A pharmaceutical company is nothing without patent protection, but patents expire and you need new drugs to replace the ones that run out. Bayer's pipeline was limping, and the expiry of Xarelto combined with the first failure of Asundexian threatened to turn Bayer into a pharma company with declining sales.

The third leg is resolving the discount on a conglomerate of different businesses. Since the Monsanto acquisition, Bayer has never been just a pharma company. Half of revenues come from the Agriculture division, which has significant standalone potential as a leader in a critical global food industry.

The latest developments in the courts shed more light on the first point. Let me explain.

Waiter, the bill, please.

Two events this year need to be read together.

• In February 2026, Bayer proposed a settlement of $7.25 billion to close the vast majority of live claims. The stock touched €49 that day.

• On June 25th 2026, the US Supreme Court ruled in Bayer's favour on the appeal of the Durnell case, which had resulted in a $1.25 million award in Missouri state courts.

The Durnell case, unlike others with stronger foundations, rested solely on the failure-to-warn claim. By contrast, the more serious rulings against Bayer alleged both design defect in Roundup and negligent conduct by the company.

Beyond the ruling itself, what matters is the doctrine it establishes: the primacy of federal law over state courts. Failure to warn is the foundation that appears in virtually every claim and, more importantly, the one that gave leverage to the mass of modest but numerous cases. By neutralising it, the Supreme Court does not invalidate those cases one by one, but removes their main weapon.

It is precisely this doctrine that will pressure plaintiffs to accept the settlement proposed in February. This does not mean the serious cases disappear: those based on design defect and negligence can still proceed and be litigated individually. The €7.25 billion figure won't surprise long-time readers, I tried to size this exact invoice and landed on roughly $7 billion of remaining payments.

Back to the restaurant analogy: the price of the set menu is almost locked in. We still do not know what the champagne is going to cost.

The ocean liner is turning

In the original thesis, my SOTP always assumed a Pharma division that held steady. Not growing. R&D is not a motorbike. It is an ocean liner. Getting it moving again takes time.

Bayer presents H1 2026 results on 4th August, which will allow me to extend the analysis further. For now, let me briefly cover where the Pharma division stands, that necessary pillar for unlocking the value.

In trailing terms, and applying the methodology I have used before (see Pharma portfolio - Original thesis), the portfolio remains flat. But there are reasons to believe the inflection point is approaching.

Over 2025 and into 2026, Bayer landed three new drug approvals, added two new uses for existing winners, and posted six positive late-stage trial readings. Nubeqa and Kerendia, the two young drugs I leaned on in the original thesis, are still climbing and offsetting Xarelto’s revenue loss.

New names have joined the line-up too: a menopause treatment, a heart-condition drug, and a targeted lung-cancer therapy, each opening a fresh market. None of this shows up cleanly in a trailing snapshot yet, which is exactly why the division still looks flat.

The second half of the year is expected to deliver stronger top-line growth than H1. However, margins are anticipated to face pressure in the coming quarters due to increasing growth investments behind product launches and the R&D pipeline.

The Agriculture division and the potential spin-off of businesses will be covered in a future update.

Skin in the game, at last

After three years of drought, where in 2023 most insider purchases were those contractually required from incoming CEO Bill Anderson, in 2026 so far, seven insiders have bought €3 million worth of shares in the open market.

As they say: a thousand reasons to sell, only one to buy.

Latest on the Value Pond

🔒 Associated British Foods (LON: ABF) — Full thesis. Primark alone may be worth the entire group's market cap, with the announced spin-off as the catalyst. Grocery, Ingredients, Sugar and Agriculture come effectively free.

🔓 Semapa (LSI: SEM) — Net cash, listed assets, a 49% discount to NAV, and a controlling family that already tried to take it private once. The signals point to a second attempt.

🔓 The Pond Tracker | Apr '26 — Portfolio review & Q1 snapshots across all active theses.

🔒 Dunelm (LON: DNLM) — Full thesis on the UK's homeware leader. Exceptional quality, 8-10% dividend yield, and one question that determines everything: can it replicate its superstore model in urban centres?

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Thanks for reading the Value Pond🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

The British holding company Associated British Foods conceals one of the fastest-growing fashion retailers in the world. Primark, with its fast-fashion model built on low costs and commercial licensing deals with brands such as Disney, has expanded aggressively across Europe, doubling its retail footprint over the past decade to reach 473 stores across 17 countries.

Still controlled by its founding family, the holding operates four additional divisions across the food chain:

• Grocery: a consumer staples business with strong brand recognition, operating primarily across Commonwealth markets.

• Ingredients: a specialty chemicals platform and one of the world’s largest producers of yeast and bakery ingredients.

• Sugar and Agriculture: two businesses exposed to commodity cycles, currently navigating overcapacity, margin pressure, and restructuring costs, which the market has largely written off.

Management, after years of market pressure and persistent speculation, has decided to spin off Primark from the remaining food divisions, to be referred to as FoodCo. The transaction is expected to be completed by end of 2027.

Primark, which represents 49% of group revenues, generates approximately £1.1bn in EBIT against a group market cap of £13bn. For context, H&M trades at £21bn with £1.4bn in EBIT. The arithmetic implies that the market is ascribing close to zero value to the remaining divisions, despite the group carrying virtually no debt, a defensive and well-margined Grocery business (21% of sales), and Ingredients (10% of sales), a specialty chemicals operation with meaningful barriers to entry.

The market is rarely irrational without reason:

• Primark faces a difficult consumer sentiment backdrop across its core markets and growing competition from online players such as Shein, whose pricing is structurally aggressive. The result has been two consecutive years of like-for-like sales declines, even as organic growth from new store openings has kept total revenues moving. This casts doubt over the most important growth vector for Primark: the United States, where its expansion is only just beginning.

• The FoodCo divisions face their own headwinds: Sugar is navigating a deeply negative point in the capital cycle, with capacity being actively destroyed across Europe, Groceries is improving its portfolio so as not to lose margins while rest of divisions face restructuring costs.

Then: The spin-off of Primark will expose a valuation gap that is hard to ignore. Pricing Primark at H&M multiples, a competitor that is not growing, already justifies the entirety of ABF’s current market cap. Adding Grocery and Ingredients, two solid businesses with no debt, and deducting corporate costs, the undervaluation reaches 50% upside on a post-spin basis. The upside optionality comes from two sources:

• The US market, where a conservative scenario puts Primark’s addressable opportunity at £5bn in sales, representing 56% of its current total and requiring roughly ten times its current store count.

• The re-rating of Grocery, a business comparable in margin quality and capital returns to Danone, and Ingredients, both running virtually debt-free and currently priced at zero by the market.

What is Primark worth as a standalone?
And what does that leave for everything else?

The full thesis, valuation, sensitivity analysis and a live Excel model with every assumption exposed are available for paid subscribers. The same research I produce for family offices, now available here. If this is the kind of research you were looking for, this is the moment.

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Thanks for reading the Value Pond🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

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Yesterday in Spain, even in the usually cool north, the heat felt like the worst of summer. I, bravely, decided to counter programme against the more obvious plans for a Sunday afternoon and present an investment thesis in depth: WizzAir.

The setting is excellent. At channel they give me all the time needed to go as deep as the thesis demands, and Capi knows how to steer the conversation, ask the right questions, and bring some concepts back down to earth when we get too technical.

I am leaving you the full recording from yesterday, which ran for over an hour. It is in Spanish, but the subtitle translation is quite good.

Below the WizzAir presentation you will find the rest of my appearances, also full thesis covering Grifols, Bayer, and Forvia. The three remain just as valid today as they were when I presented them.

Forvia (FRA: FRVIA) - 06/07/2025

Bayer (ETR: BAYN) - 18/08/2024

Grifols (BME: GRF) - 12/05/2024

Thanks for reading the Value Pond 🦆. If you enjoyed it, don’t forget to leave a like 👍 subscribe 🖊 and share 🔄 it.

DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

This week I was reviewing the Q1 results of the company I am writing about today, looking mainly for clues about how management plans to deploy the cash following the sale of a business that unlocked part of the value.

From here, the question is not just about the investment’s upside, but about the opportunity cost of waiting. Any signal about the destination of that capital matters, because this is my largest holding.

The result: there are no explicit signals. But today I will explain why that may be, counterintuitively, the best signal of all.

Position disclosure: Semapa represents 12% of the portfolio I manage, top position. There have been no recent purchases. We added during the tariff crisis in April 2025. The annualised return on the investment including dividends is 30%.

Reminder: the annual subscription discount ($400/year) is open until May 31st. Link here.

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Semapa is a listed Portuguese holding company, owner of 70% of Europe’s largest paper company, Navigator Paper Company (ELI: NVG), among other businesses. One of them, Secil, a cement manufacturer primarily in the Iberian Peninsula, was sold at the end of 2025 for €1.08 billion. With the sale of Secil, the holding has moved from net debt to a net cash position of €761 million, equivalent to 40% of its current market capitalisation.

What will the company do with all that cash? No one can say for certain, but here are three clues:

1. Despite the cash position, the company has maintained last year’s dividend for the third consecutive year.

2. At the AGM on May 28th, a buyback programme covering 10% of shares will be voted on and approved.

3. In 2021, the controlling family attempted to take the company private.

Currently, accounting for treasury shares (1.4 million shares), the Queiroz-Pereira family owns 83% of the company. If the buyback programme were executed in full, approximately 8 million shares, they would reach 93%, enough to launch a delisting bid. The problem is trading volume, which is below 30,000 shares per day. Buying 8 million shares in the open market is not realistic.

If the Queiroz-Pereira family wants to take the company private, we will have to witness a second round of what happened in 2021.

The failed 2021 takeover bid

In February 2021, the Queiroz-Pereira family launched, through its holding Sodim, a tender offer for Semapa’s free float. The initial price was €11.40 per share, a 20% premium over the previous day’s closing price. It was not enough. In April, Sodim raised the offer to €12.17 per share, a 6.8% increase, representing a total investment of approximately €277 million to acquire the ~28% they did not already control. It was still not enough.

The culprits, or the heroes, depending on who you ask, were four Spanish value managers: Bestinver, Cobas, Magallanes, and Horos, who refused to sell at the offered price, considering it too low.

The situation today is not the same: These funds have been waiting, just like myself, for years for the catalyst of this special situation, hoping the family would take the company private at a fairer price. The market has eventually rewarded that patience, but the remaining upside carries an opportunity cost: time.

The numbers

Taking into account the market price of Navigator shares, the net cash position of the holding, and the other businesses owned by Semapa, valued conservatively, the discount to NAV stands at 49%. A 30% discount if we value the non-listed businesses at zero.
*Navigator will be discussed below. It is a cost leader in a declining sector, and could reasonably be valued 20% above its current share price

While a holding discount would normally apply, in the context of a delisting bid we will use €34 as our reference price, anchored by cash and the market value of listed assets.

Open market purchases would take approximately 260 trading days, roughly one year, and the family would need to negotiate 3.8 million shares in block trades. The four musketeers from 2021, Cobas, Bestinver, Magallanes, and Horos, hold approximately 3.6 million shares between them.

The Queiroz family would need to deploy €130 million before securing the operation, and could fund the remaining €265 million through a special dividend.

The incentives exist: listing costs, regulatory compliance, and quarterly earnings pressure all disappear. The family has spent decades building an industrial empire, and maintaining a listed company with a 17% free float and barely 30,000 shares of daily volume provides neither fresh capital nor useful visibility. It only brings the scrutiny and deadlines of a public company without any of its advantages.

This is a real possibility, but not without risks.

Diworsification: the risk

In recent years the company has brought in investment banking professionals, and although small in scale, Semapa has acquired companies such as Triangle (bicycle frames) and Imedexa (energy services, high-voltage towers). The risk that they use this capital to buy more companies is real.

The market would not welcome such a move in the short term. Even if they eventually prove to be excellent serial acquirers, it would still be a holding company that is too diversified for a secondary European market.

Investing in declining industries

Investing in a declining industrial sector can be, counterintuitively, a very good idea. And Navigator, both via Semapa and directly, could be a great investment.

n the digital age, paper demand falls year after year. While office paper and textbooks (UWF) seem to have slowed their decline, newspaper and magazine paper consumption is now almost irrelevant (UME/CME). Who would want to invest in paper?

In a declining industry like this, you look for the last survivor. The low-cost producer. And that is Navigator. Beyond being Europe's largest producer, it benefits from having its forests vertically integrated with production.

In this sector, capital is not just scarce: capacity is actively closing. Falling demand is compounded by rising costs, including energy, and the difficulty of passing price increases through to customers.

In the last two years, 2.01 Mt of production has disappeared from the market. That is 12% of total European capacity:

• 2024 | Sappi (Belgium): -530,000 t

• 2024 | Sappi (Germany): -220,000 t

• 2024 | UPM (Germany): -610,000 t (two sites)

• 2025 | UPM (Germany): -270,000 t

• 2025 | Metsä Board (Finland): -210,000 t

• 2026 | Papresa (Spain): -375,000 t (bankruptcy)

• 2026 | Smurfit Westrock (UK): -200,000 t (proposed)

As capacity closes, Navigator’s pricing power increases. The company has already announced price increases of 4-7% for all UWF paper products sold in Europe, effective in April, with the upper end of the range applying to entry-level grades.

The sector also benefits from a natural transport moat A UWF paper reel can weigh 20-40 tonnes and, given its low unit cost, freight differentials above approximately 600 km by road begin to seriously erode margins. This provides meaningful protection in Navigator's core markets against lower-cost competitors located elsewhere in the world.

The company is shifting its investment focus away from traditional paper, growing its presence in Tissue and Packaging. It has recently announced a manufacturing agreement for Tissue products with Procter & Gamble.

Navigator is not a business anyone wants to own. That is precisely why it trades where it does. And that is precisely why, through Semapa, you can buy Europe’s lowest-cost paper producer at a 49% discount to NAV, with €761 million in net cash, a buyback programme approved this month, and a controlling family that has already tried to take the company private once.

The setup is unusual: a holding company nobody covers, in a sector nobody wants, with a catalyst nobody is pricing. That is the pond we fish in.

Thanks for reading the Value Pond 🦆. If you enjoyed it, don’t forget to leave a like 👍 subscribe 🖊 and share 🔄 it.

DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

I’m happy to celebrate one month since The Value Pond became a paid publication. For those who are new: I publish institutional-grade research on companies I believe are genuinely mispriced. 7-9 full dossiers per year, Excel models, and complete position disclosure. Quality over quantity.

Reminder: the annual subscription discount ($400/year) is open until May 31st. Link here.

Today's five-minute read covers two things: Japan, a market full of overlooked bargains where I am sharing a free screener, and Primark's parent company, Associated British Foods.

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Next in the Pond

Selecting a new company to analyse is always a complex process. I typically spend 2 to 5 hours on initial research before committing to a deeper dive. Most of the time, the decision to pass is almost immediate. This time I reached two conclusions:

First: I want to analyse a Japanese small or mid cap, so I ran a mini-screener with very strict criteria: below 9x MC/FCF, below 1x Net Debt/EBITDA, FCF margins above 8%, EBIT margins above 10%, and trading below Book Value. Does this exist? Yes, it does.

I am sharing my own screener with 13 companies and updated metrics. The first one is a standout. I have not made a decision yet, but at least one of these 13 will end up in The Value Pond.

Japan Screener

26.4KB ∙ XLSX file

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Second: While exploring the universe of announced spin-offs, I came across an old acquaintance: Associated British Foods. The British company may not ring a bell, but if I say Primark, it probably does. It is one of the giants of fashion retail.

Some of its consumer brands will also be familiar: Kingsmill, Silver Spoon, or Blue Dragon. Spanish readers will recognise Azucarera, also owned by ABF. And to all this is added an agricultural business.

In April 2026, the company announced it is planning a spin-off of the Primark brand, which represents 50% of group sales, to unlock its value and separate it from the rest of the business. The move makes sense.

If you value Primark at multiples comparable to Inditex or H&M, this segment alone supports 70% of ABF's current market capitalisation, leaving aside the other businesses that represent the remaining 50% of sales.

One of Primark's key growth vectors is the United States, where the brand has barely scratched the surface of its commercial expansion potential.

In summary, I believe Associated British Foods is a compelling sum-of-the-parts story, where it may be interesting to build a position even before the spin-off itself. But that is what the full thesis is for.

Thanks for reading the Value Pond🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

We close a disastrous April, where the portfolio's correlation to oil has been strongly negative 😂. Buying Brent puts would have been the most efficient hedge.

That said, it is worth putting things in context: the annualised return stands at 27% despite a negative YTD.

Investing is, most of the time, about facing discomfort. Right now it is tremendously uncomfortable to hold positions in European car manufacturers, airlines (just as it was during Covid), or SaaS companies, for example. But the truth is that most positions that generate good returns are, or have been, very uncomfortable to hold at some point.

And uncomfortable as it may be, this is no less the right moment to review the open theses on the blog. Let's go.

Reminder: the annual subscription discount ($400/year) is open until May 31st. Check your Mail Inbox (suscribers).

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Active ideas

🌱💊Bayer

Bayer has dropped ~6% since the outbreak of the conflict. Here, volatility has been amplified by the start of proceedings at the US Supreme Court on the RoundUp cases.

The next few months are decisive. The Supreme Court's ruling, expected by June, will determine if Bayer can finally cap its liabilities. I expect so.

Q1 2026 results are due on May 12th. We will be watching the pharma portfolio and cash generation closely. Also insider purchases, which were quite active in early March. We will talk more about Bayer then.

🛫Wizz Air

Wizz Air is down 26% since the outbreak of the conflict. Here, the discomfort maxim mentioned above will be applied rigorously: there may still be further downside.

Today, the idea of flights being cancelled due to fuel shortages no longer seems far-fetched. The peak season for European tourism is now beginning (Q2 and Q3), and this would be a significant blow to the sector. Once again, this is cyclical, not structural. I published an update to the original thesis covering the main risks of this scenario:

Recently, aviation analytics firm Cirium, in its Annual Review 2025, ranked Wizz Air #2 globally in passenger CO2/ASK efficiency for 2025 at 52.9g, despite the grounded fleet. It also operates the #2 youngest fleet globally.

The lower fuel consumption, added to the higher seat density of the A321neo makes structural unit cost advantages and margin resilience.

This is not a recommendation, but I have explained to paid subscribers why I decided to increase my position

💺⚙️🔦Forvia

Equally uncomfortable, but for different reasons, Forvia has fallen 19% since the outbreak of the conflict. Here, the risk the market sees is that already fragile vehicle demand could deteriorate further if oil prices drive inflation and, in turn, rate hikes and recession.

For its part, Forvia delivered a more than reasonable Q1 given the circumstances, alongside the definitive announcement of the sale of its Interiors division to French private equity firm Apollo for €1.8 billion. This will help reduce leverage risk and smooth volatility.

I see no reason to change what I said in the last update, which I leave here:

Worth noting: Spanish value manager Horos has opened a position in Forvia bonds through its fixed income fund. Given the reputation and respect I have for their managers, this is a positive signal.

If you enjoy reading fund manager letters, you should not miss Javier Ruiz, their CIO, in his Q1 letter.

⛏️Foraco

Despite Q1 results already showing early signs of what is beginning in the metals drilling cycle, Foraco is down 5%. In the short term, Foraco is reacting directly to gold and copper prices. Whether gold is at $4,000 or $5,000 per ounce, the need for drilling is not going to stop.

This is one of the best picks I have right now. Not only for the upside, but for the catalysts. The cycle momentum, the size and the operating leverage make it one of the best-positioned names for 2026-27.

⚒️⚙️🛻Dauch

Dauch is down 13% since the outbreak of the conflict, for reasons similar to Forvia, although its lower exposure to Europe helps. One of the primary drivers of this decline has been the market's skepticism regarding expected synergies and higher than anticipated restructuring costs. There is also an investor exodus effect in the UK following the cancellation of Dowlais and the subsequent share distribution. I will analyse this more calmly and provide an update soon.

‘Wait & see’ ideas

🛏️🛋️🍽️Dunelm

The British homeware retailer is down 25% since the outbreak of the conflict, 33% YTD. This situation is precisely what drew me to this company, which is undoubtedly high quality and has demonstrated consistency in its growth and margins through difficult periods.

That said, the slowdown in Q2 and its confirmation in Q3 did not convince the market, as Dunelm trades on demanding multiples.

As I said, the company has many positive attributes but lacks the margin of safety I look for. You can draw your own conclusions by reading the full thesis. It may offer a good opportunity in the coming months.

Thanks for reading the Value Pond🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

Since the original publication in September, and up until the outbreak of the conflict, the share price remained flat — but today it trades 20% below that level. That alone warrants an update.

The long-term thesis has not changed materially:

• Airbus and Boeing continue to face production bottlenecks.

• WizzAir’s fleet remains the lowest unit-cost in Europe and is improving in efficiency.

But short-term risks have increased: fuel price and potential shortage, solvency and liquidity concerns, and changes in the shareholder base, all elements worth examining.

In this update we review the fuel crisis, analyse manufacturer bottlenecks, and address one concern about the core thesis. Paid subscribers also get access to the full original dossier and the Excel model.

Content.

1. Fuel crisis: the Ukraine precedent and cost pass-through

2. Demand saturation? Q4 FY26 traffic data shows some warning signs

3. Sale & Leaseback: bottlenecks and debt

4. Summary

5. Disclosure and Full dossier + Excel (🔒)

1. Fuel crisis

The closest mirror for the current fuel crisis is 2022. When Russia invaded Ukraine, jet fuel prices surged dramatically, reaching $180 per barrel and sustaining an average of $140-150. In the current crisis, prices have reached and held $200 per barrel — potentially the worst energy shock ever recorded.

If there is one lesson from that chart — with the Ukraine war still ongoing — it is what I wrote recently in the Pond Journal #9:

Short term, everyone suffers. Medium term, the economy reroutes.

Despite the war continuing, embargoes, and supply difficulties, jet fuel found its way back to $80-100 per barrel before the current shock. If production capacity in the Gulf is not destroyed and the Strait reopens, the medium-term impact could be even more contained than in 2022, despite being a significant short-term disruption.

This is no longer just a price issue. According to the International Energy Agency (IEA), Europe has approximately six weeks of total reserves before airlines would need to start cancelling flights en masse due to kerosene shortages. WizzAir has already had to resort to full tank loading on some aircraft — increasing weight and therefore fuel consumption — due to supply shortages at certain Italian airports.

We are not going to dwell on the worst-case scenario. And if it materialises, it may create Covid-style opportunities in the sector.

The task of any company facing an uncontrollable external input is to pass costs through to customers. Let us briefly examine how WizzAir handled the previous crisis.

Mission: cost pass-through

After the pandemic, WizzAir eliminated its fuel hedging policy to avoid financial losses from grounded aircraft. In FY2023 that decision proved costly:

• Fuel price (average per tonne): $1,218 +54%

• EUR/USD: 1.04 -10%

Fuel costs measured as Fuel per ASK rose from 1.17 € cents to 2.00 € cents, an increase of 0.83 cents per ASK, against a Revenue per Passenger Kilometre increase of 0.68 cents per ASK. Results were partially masked by improved load factor (88% vs 78%), though the FY2022 baseline still included part of the pandemic period.

The following year, Fuel per ASK fell 24%, both from lower fuel prices and a partial Euro recovery, declining to 1.52 cents per ASK, while RPK increased 3% to 4.61 cents, recovering the lost ground.

Comparing FY2024 vs FY2022, WizzAir's cost structure did not lose margin due to the fuel increase.

For a fair comparison with FY2022, two adjustments are applied:

• FY2024 load factor is applied to FY2022 (still affected by the pandemic)

• RPK yield used is from pre-pandemic FY2020, when occupancy was 93.6%.

For context: Ryanair managed to increase its RASK yield by 1.11 cents against a fuel increase of +0.94 cents per ASK, a margin per ASK gain of 0.12 cents. It is worth noting that WizzAir has been growing its ASKs at almost twice the rate.

In WizzAir's favour: the Fuel CASK reflects the competitive advantage of operating a newer, more fuel-efficient fleet with more seats per aircraft. The latest available data (March) shows WizzAir at 50.6 grams CO2 per RPK vs 63g for Ryanair.

FY2027 context

Unlike 2022, the company had learned its lesson this time:

• For Q4 FY26 (January-March 2026), over 80% of consumption was hedged at R749/F681 (Roof/Floor).

• For FY27, approximately 55% of annual consumption is hedged at R716/F650.

Despite this, fuel CASK in Q4 may have increased to approximately 1.50 cents (from 1.40 in Q3), driven not only by higher fuel prices but also by increased EU Emissions Trading Scheme (EU-ETS) costs.

For FY2027, in a scenario with average fuel at $1,086 per tonne (~$136-137/bbl), reflecting de-escalation and subsequent normalisation, Fuel CASK would increase to approximately 1.59 cents vs 1.43 in FY2026.

WizzAir's Revenue per Passenger Kilometre will close FY2026 at approximately 4.84 cents, with an average aircraft stage length of 1,711 km. This implies an average ticket price (including ancillary) of ~€83. To pass through 100% of the additional fuel cost, that ticket would rise to €86 in FY2027, an increase of 3.6%.

Airlines are already passing costs through to fares, with some applying dynamic fuel surcharges that fluctuate up to the day of departure.

2. Demand saturation?

Monthly KPIs show that in FYQ4 2026, load factor was 88.3% vs 89.4% the prior year. With seat capacity up 9.3%, one percentage point less occupancy is reasonable in the weakest quarter of the year with that level of supply growth. So far, so normal.

The concern is the following.

At the end of FYQ3 2026 (calendar Q4 2025), the company had 220 operating aircraft and 209 equivalent operating aircraft (a metric accounting for grounded aircraft and the timing of new deliveries). Entering FYQ4 2026, the weakest demand quarter, with approximately 220+ operating aircraft, and assuming 5 net deliveries (8 in, 3 out) contributing 2.5 equivalent aircraft, we reach approximately 222.5 equivalent aircraft.

The problem: that implies 25% more capacity while seat supply only grew 9.3%. In other words, some aircraft are not flying. The Iran conflict only affects March within FYQ4.

Q4 is admittedly the weakest quarter, but estimated ASKs per equivalent aircraft look low. It is possible the company has sold some of the Airbus aircraft that were due for delivery, which connects directly to the next point and reinforces one of the core thesis arguments: manufacturer bottlenecks.

This is something to monitor in Q1 FY2027 and in the Annual Report when it becomes available.

3. Sale & Leaseback

A brief refresher on WizzAir's growth model:

WizzAir signed a contract with Airbus in 2017 (subsequently updated) committing to a delivery schedule through 2032. Agreed prices are adjusted for Airbus's cost inflation but include significant volume discounts. WizzAir makes advance payments to Airbus during manufacturing (currently approximately €1 billion in prepayments).

When aircraft are delivered, WizzAir can either retain ownership or transfer them to a lessor under an operating lease, the sale & leaseback model. The main advantage: the company recovers all prepayments made to Airbus, funding further growth. The main disadvantage: at lease expiry, the airline does not own the asset.

The company's target is to reduce sale & leaseback to 50% of the fleet, though it currently exceeds 80%. In the current environment, that makes complete sense.

n a normal market, sale prices to lessors tend to equal factory cost plus an availability premium. Aviation is not in a normal market.

Bottlenecks

AerCap's business is buying aircraft to lease, being opportunistic across the cycle. Buy cheap, sell expensive. They do it well: 14% annualised shareholder return over the last 10 years.

What does AerCap's management say about the current situation?

• Structural long-term scarcity: CEO Aengus Kelly views delivery delays and supply shortages as a structural problem that will persist at least through the end of this decade and likely well into the 2030s.

• Availability premiums: Since airlines cannot rely on manufacturers to deliver on time, immediate availability has become invaluable. Aircraft close to delivery or already available command a significant market premium.

• Record sale margins: AerCap sold aircraft from its own portfolio at a 27% gain (equivalent to double book value of equity), a clear reflection of strong demand and the prices buyers are willing to pay.

Returning to WizzAir: as shown in the original thesis, the company was receiving new A321neos at approximately €65 million and delivering them to lessors with an accounting gain of €7-8 million per aircraft. In cash flow terms, the effect is even larger: Upon delivery, the company receives both the gain and all prepayments made during the manufacturing period.

Financial debt

One driver of WizzAir's higher volatility relative to peers is its elevated leverage. On a reported basis, Net Debt / EBITDA stands at just over 4x, high by any measure.

Two clarifications are worth making:

• First, financial debt should be reduced by both short-term deposits (essentially cash) and prepayments (~€1 billion). In the sale & leaseback model, those prepayments convert to cash at the moment of aircraft delivery. Adjusting for both, the ratio falls to 2.93x.

• Second, when WizzAir receives a new aircraft, two simultaneous positive cash effects occur of very different natures.

  • The first is the sale & leaseback gain: WizzAir sells the aircraft to the lessor above catalogue price, generating an immediate premium and indirectly funding growth without tying up capital

  • The second is the capture of the structural negative working capital inherent to the airline model: passengers pay weeks or months before flying, generating a permanent cash float associated with each incremental aircraft added to the fleet. This float is not an accounting profit, it is real cash that WizzAir retains for as long as the aircraft remains operational.

In year one of each new aircraft, WizzAir recovers approximately 20% of the total financed asset value, combining the sale & leaseback gain, the structural negative working capital capture, and operating EBITDA. While bottlenecks persist, the sale & leaseback model makes compelling strategic sense.

4. Summary

Three things stand out from this update:

The fuel shock is real but manageable. WizzAir enters FY2027 with 55% of consumption hedged and a proven track record of passing costs through to fares. A 3.6% ticket price increase covers the modelled fuel increase in full. The precedent from 2022 shows the business can absorb a severe shock without structural margin damage.

The demand signal in Q4 warrants watching. The gap between equivalent aircraft and ASK growth suggests some aircraft are not flying at full utilisation. This is the weakest quarter seasonally, but it is a data point to track in FY2027 Q1 and the upcoming Annual Report.

The sale & leaseback argument has strengthened. AerCap’s commentary confirms that the structural aircraft shortage is not transitory. WizzAir’s locked-in order book at 2017 prices is a genuine competitive advantage, and the cash mechanics of each new delivery remain highly attractive.

The long-term thesis holds. The stock is +20% below September levels and the structural drivers are intact.

5. Full dossier + Excel (🔒)

The full dossier and the Excel model are available for subscribers below the disclaimer.

Full disclosure

WizzAir represents 6% of the total portfolio (Top 4). Several position increases were made during March-April (+2%).

Thanks for reading the Value Pond🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

Read more

The S&P500 closed last Friday at all-time highs. The Fear & Greed index sits at 68, firmly in Greed territory. The Eurostoxx50 is less than 1% from its own historical highs. All of this against a backdrop of a provisional ceasefire riddled with denials, reversals, and noise.

Trump has been playing a peculiar game with this war: agitating on Friday evenings post-close, then calming markets on Sunday pre-open: a juggling act designed to keep 20-year yields below 5%, oil below $100, and the impression that he is winning, winning fast, and conceding nothing. The Iranian regime is running a parallel game internally, but without internet, free press, or institutional/economical counterweights.

The closure of the Strait by the US, while dangerous, has changed the rules of the game by bringing China onto the board. China was among the countries most dependent on the Strait of Hormuz; in fact, the few ships allowed passage were bound for China, and the toll demanded by Iran was paid in Yuan or Bitcoin.

Polymarket has emerged as a 24/7 real-time thermometer, as interesting for reading global market sentiment as for watching the large players move. Right now, the most relevant variable for markets is the Strait of Hormuz, and its most perverse derivative: stagflation.

For its part, the Brent futures curve is already signaling a price only 5% higher for M+6. The market is pricing in this event as a temporary disruption that will eventually normalize. Probably there is too much euphoria for the amount of uncertainty still on the table.

Supply shocks have a cure: price incentives

When Russia invaded Ukraine, the narrative was apocalyptic. Ukraine was one of the world’s largest corn producers, a trigger for meat prices globally. Russian oil and gas supplied most of Europe. The end was near.

It wasn’t.

Supply shocks are painful in the short term. But they are also the most powerful incentive to develop resources elsewhere. Canada accelerated bitumen production. Offshore energy became economically viable again. In our Pond: Bayer was selling corn seeds & pesticides in the US & SA like never before. The same logic applies today.

Iran has shown it is willing to use the Strait as a weapon. But it may be a single-use weapon. Restoring passage through the strait and restoring confidence are two very different things. Gulf countries will seek alternatives and they will find them.

Short term, everyone suffers. Medium term, the economy reroutes.

The cost of being right about the wrong

Imagine you read the macro situation correctly one month ago. You saw the geopolitical risk, you decided to reduce exposure or exit entirely. Unless you have inside information from the Pentagon, you will likely have to stomach the initial, sharpest drop, where everything is uncertain.

Maybe this week was the perfect time to get back into the market. It seems like it’s all over. But what if it’s not? Do you exit again next week?

This is not a hypothetical. It happens to the most investors in the world. The problem with market timing is not that you cannot read the current situation, it is that you cannot read the future. No one knows where the bottom is. We only know that staying invested in good businesses at good prices has worked, consistently, across every crisis in modern history.

Buffett, Lynch, Howard Marks, none of them operated in calm waters. They operated through wars, hyperinflation, financial crises…. The lesson they all drew was the same. It is in moments like these that your conviction in what you’ve read is truly put to the test. It is one thing to read it; it is quite another to feel it.

The only question that matters is go through each position and ask one question: does this business have a future? could them survive? and embrace the volatility as an opportunity.

The risk you actually need to manage

There are two risks in investing:

• The first is drawdown, your portfolio falls in value. This is painful but circumstantial. Markets recover. Good businesses recover faster.

• The second is permanent capital loss, the business itself deteriorates. This is the one that cannot be undone. This is the risk worth obsessing over.

Trying to avoid both simultaneously is impossible. And trying to avoid the first by exiting the market usually just guarantees you miss the recovery.

We have all read the right books. Very few of us are capable of staying the course when it actually matters.

What’s new in the Pond

This past month has been the most active since The Value Pond launched. A few things worth flagging:

The blog has gone paid. Full institutional dossiers, live Excel models, and complete transparency on my own positions are now reserved for paid subscribers. The free tier keeps access to the 5-minute drill teaser for every thesis, plus articles like this one.

Three tiers are available. Paid subscriber at $500/year for the full research. Institutional subscriber at $1,500/year for everything above plus direct Q&A, priority on the research pipeline, and research on demand.

Two full theses are now live. Foraco (TSX:FAR) — a mining driller positioned for the commodity cycle and Dunelm (LON:DNLM) — the UK’s leading homewares retailer at 10-year PE lows with an 8-10% dividend yield.

Both include the full dossier and a live Excel model.

What’s next

• A WizzAir update is coming. The original thesis was published in September 2025. With the stock back near those levels and new fuel price scenarios to model, an updated dossier with Excel model is in progress.

• New full thesis expected around 20th May.

If any of this sounds like the kind of research you were looking for, the Pond is open.

Thanks for reading the Pond Journal🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

5 minute drill

Dunelm is the UK’s market leader retailer in homewares with over 200 stores. Still controlled by its founding family, the company delivered 20 years of sustained sales growth of 9% annualized (except 2020), sustaining operating margins above 12% and with a shareholder remuneration policy via dividend with payouts close to 100% and a very contained financial debt.

The company is currently trading at 10-11x earnings, averaging 15-16x, with a drop of more than 20% YTD, mainly due to two factors:

• A profit warning after a weaker-than-expected Q2 (Black Friday and Christmas), where sales grew only 1.6% vs Q2 2025, leaving FY2026 earnings in the low range of guidance, with wages incremental costs.

• Since the outbreak of the Iran conflict, the market has priced in a potential stagflation scenario in the UK economy that structurally harms discretionary consumption.

Beyond these short-term headwinds, Dunelm faces a genuine structural question in its growth model. Its superstore format in retail parks already covers 60% of the UK population within a 15-minute drive. The remaining addressable market sits in dense urban centres, where the company is experimenting with smaller urban store formats. This model carries meaningful operational risks and brings Dunelm into more direct competition with M&S Home, Next Home, and a growing Amazon.

Dunelm, due to its size and penetration, has acted as a secular consolidator in a highly atomised market such as homeware and furniture, where its ability to maintain low ranges at good prices, its own brand with good value for money, bargaining power with suppliers and low debt allows it to opportunistically face adverse scenarios and end up capturing market share from small fish in a market that is barely growing.

Over the past 10 years, the company has achieved organic growth, expanding at a rate of 5-6 openings per year (including M&A) while increasing its like-for-like sales, gaining market share year after year.

Some of the ingredients of success have been to incorporate furniture product ranges where its market share in some families has doubled, to develop an omnichannel system that already represents 40% of sales, and all this in scenarios of strong price competition, sustaining its margins.

During the inflationary crisis caused by the war in Ukraine, Dunelm was trading at around £7 at 10 times earnings. When the business model showed solvency and continued to gain market share, the stock bounced back to £12-13, offering returns (including dividends) close to 100%.

Then: Dunelm is a high-quality company, excellently managed and prepared for the challenges it must face.

If the company increases its store park in the low range of the guidance (5-10 stores), it would grow in sales at an annualized 4% until 2030. With sustained margins, the company would trade at a multiple of 8.5x versus an average of 15-16x.

Does the company currently deserve such a high output multiple?

The full thesis, valuation, sensitivity analysis and a live Excel model with every assumption exposed are available for paid subscribers. The same research I produce for family offices, now available here. If this is the kind of research you were looking for, this is the moment.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

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In a market where uncertainty will reward cashflow certainty in the short term, Dunelm is proving, at this stage of the analysis, to be a good place to look.

• 20+ years of uninterrupted sales growth (2020 exception)

• Operating margins consistently above 12%

• Almost zero debt

• Founders and insiders with serious skin in the game

• Heavy dividend policy

Dividends tend to act as a market floor for stock prices. The consistency of Dunelm's earnings and its dividend policy give the current share price of Dunelm (LON:DNLM) an attractive potential dividend yield of >8%.

Additionally, as a first approximation of the margin of safety, we will look at a reverse DCF.

I have initiated a speculative position at current prices. I explain why.

The analysis continues below for paid subscribers.

If you have read Going Paid and Going Serious, you already know what this is about: institutional-grade research, full financial models, transparency on my positions.

If you have not subscribed yet, this is a good moment to reconsider.

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Dunelm Group (XLON: DNLM) — Specialty Retail | GBR A founder-led specialty retailer with a scalable business model, strong insider ownership, and consistent capital returns. In a sector often dismissed as structurally challenged. Dunelm stands out for the right reasons. I would not normally go after a business just because it is scalable, but it appears undervalued on first pass and carries contained debt.

Professional track-record

I am aware of the leap I am asking of my readers: yet another Substack going paid. I do not expect to reach 10,000 paying subscribers. But as I explained, that is not my game.

This is going to be niche. I am trying to scale something I already do for institutional clients, and they do not just want a well-documented thesis and an Excel model. They want to know your experience and your instinct.

Until now, I had never disclosed my annual returns. I only talked about specific companies. Why? A few reasons.

• I never disclosed position sizing, entries or exits, so it felt unfair to talk about returns.

• Some of my investments were theses never formalized on the blog, though I did mention them here or on X: IAG, Semapa, Flatex Degiro, Catalana Occidente, TGS….

• Although my real track record goes further back, the demonstrable and most professional one starts on January 1st, 2023.

But now we are playing a different game, and the cards have to go on the table.

My current track record managing the family office stands at 25% annualized with 30% volatility (from 01/01/2023 to 03/27/2026). Note: I have absorbed a drawdown of more than 10% since the Iran conflict began.

What were the main drivers of this performance?

• Concentration in 10-15 picks, overweighting 3-4 high-conviction ideas.

• Margin of safety and long-term horizon.

• Keeping liquidity to be aggressive during drawdowns.

• Fishing for ideas in funds managed by people I trust.

• Continuous learning.

• Acting as a Connoisseur.

Foraco — Full Institutional Report

Beyond the upcoming Dunelm thesis, Foraco is a compelling reason to subscribe. It is one of my highest-conviction positions: the cycle is favorable, the thesis is resilient to the Iran conflict, the 2026 backlog guarantees strong visibility, and the CEO just bought shares. Full disclosure: it is my 4th largest position at 6% and I am currently adding.

I am making the full 14-page institutional report public — the one I produced for an institutional client, which complements the thesis I published here on Substack. The Excel model will be for paid subscribers only, at the bottom of this publication.

Foraco Report En January 2026

768KB ∙ PDF file

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

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The investment theses I publish are financial dossiers, not the narrative storytelling common on this platform. I have tried to adapt, but storytelling is not my craft. I never know where to stop documenting a thesis because I believe here in Substack there is a tend to oversimplify. I would never invest based on a “compelling story,” no matter how attractive it sounds. I prioritize depth over frequency; therefore, I cannot publish two theses a month, and I will never be an account with 10,000 followers.

So, what am I? I am an obsessive analyst. I am capable of locking myself away for hours to scrutinize every detail of a company’s capital cycle, unit economics, or balance sheet.

How does this work? Typically, institutional investors (primarily Family Offices) hire me to analyze a company when they lack the time, the specific team, or the expertise in a particular sector—such as complex cyclicals or special situations. I conduct the analysis, prepare a rigorous PDF report, and build a dynamic Excel model for the client.

I am turning The Value Pond into exactly that.

What to expect

Moving forward, full investment theses will be reserved for paid subscribers. There are three ways to access:

• Free Subscriber: Access to the “5-Minute Drill” (teaser) for every thesis, along with general market commentaries and articles via The Pond Journal.

• Paid Subscriber ($500/year- 50$/month):

  • 7-9 Full Institutional-Grade Theses per year: Comprehensive 15+ page financial dossiers.

  • Live Excel Models: Downloadable and editable models, updated as companies report results.

  • Continuous Coverage: Periodic updates on published theses.

  • Full Disclosure: Complete transparency regarding my own positions and movements in the stocks covered.

  • Substack chat questions

• Institutional Subscriber ($1,500/year):

  • All content included in the Paid tier.

  • Direct Q&A: Private access to discuss theses or technical model assumptions, webcall or mail.

  • Priority on pipeline: Priority voting rights on the research pipeline — your interests shape what gets analyzed next.

  • Research On-Demand: If there is a company you are interested in that I am not currently covering, I can prioritize it in my workflow with a professional discount on bespoke research.

As a token of appreciation to those of you who have followed The Value Pond from the beginning, I want to give free subscribers a voice in what comes next.

Below are three companies from my current watchlist, each with a brief rationale and key metrics. One of them will become the next full thesis — exclusive to paid subscribers.

Capital BM (XLON: CAPD) — Metals & Mining | GBR A natural extension of the drilling sector covered in my Foraco thesis. Capital Limited operates in overlapping geographies and client segments, but with a distinct business model worth analyzing on its own terms. A different angle on the same commodity cycle.

Dunelm Group (XLON: DNLM) — Specialty Retail | GBR A founder-led specialty retailer with a scalable business model, strong insider ownership, and consistent capital returns. In a sector often dismissed as structurally challenged, Dunelm stands out for the right reasons.

Publicis Groupe (XPAR: PUB) — Communication Services | FRA One of the most penalized stocks in the AI narrative — the market fears disruption, but the balance sheet is clean and the business more resilient than the sentiment suggests. A potential case of price disconnected from fundamentals.

Thanks for reading the Value Pond🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

Today, I want to look back at the first point I wrote in January’s Pond Tracker.

Conviction cannot be transmitted in a thesis, no matter how extensive or well-justified it may be. It is only achieved through two paths (or a necessary mix of both): the authority of the source and, above all, doing the hard work yourself. When I speak of conviction, I mean seeing a 20% drop and using it as an opportunity to buy.

And here we are. With the war ongoing, a large portion of the gains reported in some theses has vanished. The 14% drop in Forvia and the 18% slide in Wizz Air are particularly painful. Let's briefly review each of these investment cases.

🌱💊Bayer

Bayer has dropped 11% since the start of the conflict. Following the release of its results, the market reacted negatively to the 2026 litigation payout guidance. However, the investment case remains unchanged; I largely reiterate what I stated in the May 2025 update.

In fact, Bayer is attempting to settle the Roundup case for $7.25 billion, which falls within the range I previously estimated ($6.7–$8.4 billion). If they finally close the books on this, the market may once again value Bayer for what it truly is: a solid Pharma player and an agricultural giant.

Immediately following the results, several insiders stepped in to buy. This marks the first time since March of last year that we’ve seen insider purchases, and they are significant amounts.

• Bill Anderson, the CEO and architect of the turnaround, purchased 21k shares, bringing his total market position to approximately €8 million. This is nearly double the holding requirement mandated by the board.

• udith Hartmann, a member of the Supervisory Board since 2023 and the incoming CFO as of June, purchased 13k shares, an investment of roughly €500k.

• Other board members, such as Norbert Winkeljohann and Lori Schechter, also increased their positions by €100k and €70k, respectively.

As the saying goes: An insider has a thousand reasons to sell, but only one to buy.

🛫Wizz Air

This is where things get serious: down 18% since the start of the conflict. The impact is direct, hitting through two main channels:

• First, approximately 4–5% of sales come from Middle Eastern routes. For now, this will mean a revenue decline. While cyclical, it is certainly not negligible; restoring confidence in international flights to or through the Middle East will take time.

• The worst pressure, however, could come from oil: Jet fuel prices surged 58% in just one week, and they tend to be stickier than Brent crude. The war will eventually end. that is transitory, but what will be the lasting echo on global oil supply and, consequently, fuel costs? It’s hard to say.

Amidst this turbulence, the company has already revised its 2026 guidance downward. The 'fuel effect' hits Wizz twice: currency impact (stronger USD) and the rising price per barrel. We’ll dive into Wizz’s hedging strategy another time.

Although I expect the share price could suffer more in the short term, I believe the company has the capacity to reallocate excess capacity to other routes quickly. In the medium term: people flew again after 9/11, they flew again after COVID-19, and they will fly to the Middle East as a destination or hub again.

This is not for the faint of heart, but no one said this would be easy. Despite the clear execution risks, my long-term thesis remains unchanged.

One of the best investments I’ve made to date was IAG (Iberia, British Airways...) in May 2020. As the pandemic progressed, the thesis worsened. It seemed like the end of international tourism. IAG had to launch a rights issue in July; I subscribed 100%. It ended up doubling the investment with an IRR of >40%.

💺⚙️🔦Forvia

The conflict has wiped out 14% of its value since it began. When a confidence crisis hits the markets, everything drops, but the most leveraged companies suffer the most—and that’s exactly where Forvia stands. It is one of the hardest-hit auto parts stocks these days. I see an opportunity here, as I noted in my recent thesis revision.

The 2025 results and the deleveraging outlook appear positive to me. Furthermore, the definitive announcement of the Interiors business sale will loosen the debt noose.

⛏️Foraco

When panic hits the markets and a flight to liquidity ensues, a Canadian listed small cap is the perfect target for investors looking to slash portfolio risk. And that is exactly what we are seeing.

Our favorite mineral drilling company had the worst possible timing for its earnings release: the very Monday the conflict began. It has dropped 12% since then. Has the investment case for gold or copper changed? Has the need for exploration diminished? I don't believe so.

In The Pond Journal #8, I dedicated a section to the 2026 outlook: the order backlog has surged +83% compared to Q4 2024. This backlog provides visibility for 66% of my 2026 revenue estimates and 41% for 2027, with plenty of commercial upside still on the table.

Tim Brenner, CEO of Foraco, confirmed that in Q1 2026, they have already surpassed 50% rig utilization (compared to a 36% average in 2025) and expect to maintain a steady 67% utilization rate. In my projections, maintaining 50% utilization throughout 2026 alone would imply a revenue increase of more than 30%.

⚒️⚙️🛻Dauch

I saved the most painful case for last: It is true that Dauch hasn’t dropped more than its peers since the start of the conflict (11%), but it was already down 30% since it began trading alongside Dowlais.

One of the primary drivers of this decline has been the market’s skepticism regarding expected synergies and higher than anticipated restructuring costs. There is also an “investor exodus” effect in the UK following the cancellation of Dowlais and the subsequent share distribution. I will analyze this more calmly and provide an update soon.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

Market risk perception is curious, to say the least: Israel’s benchmark TA-125 index surged as much as 6% relative to Friday’s close, while the Eurostoxx dipped over 6%, and the S&P 500 dipped only 1%.

No one knows where these events might lead, but it’s worth remembering that this isn’t the first escalation of tension in the Middle East, and that panics often represent prime investment opportunities.

Last year, the trade war was supposedly set to reshape the world. In April, markets suffered through extreme volatility, and within that chaos, opportunities with highly asymmetric risk-reward profiles emerged.

Two examples:

• Semapa: How could tariffs possibly affect a Portuguese holding company whose core business is producing and selling paper, cardboard, and tissue in Europe? The answer is: not at all. Yet, investors fled toward liquidity. On April 7, 2025, Semapa traded 12% below its prior levels, hitting €13.6. Today, it trades at €24 (ex-dividend 2025).

• Grifols: While the cross-tariff game could have impacted the company,despite its massive plasma production in the US, their pricing power within a virtual oligopoly served as an authentic shield. It traded 20% down at €7.3; today, it stands at €10.5. Still a bargain, but this is another story.

In times like these, “Cash is King”. This is why Berkshire Hathaway, with Buffett’s successor now at the head, is sitting on a $370 billion cash, roughly 30% of total assets. Waiting for the right moment to strike, like a hunter.

So, what should you hunt? Well, if companies you already know, whose fundamentals are consistently improving, correct due to a massive sell-off, that is your moment

In my last post, I updated the Forvia thesis. The stock, which had approached €15, is now hovering around €10.50. The company’s outlook isn't deteriorating; in fact, I recently revised the price target upward, driven by better margins and higher deleveraging.

Wizz Air could also be an interesting play. Only 4.4% of its active routes are in the Middle East, representing less than 5% of its total revenue. If it was compelling, it still is.

Then there is Foraco. As fate would have it, they presented their results this Monday, a day when commodities and miners were on a true roller coaster. The stock price failed to reflect what was, frankly, excellent news.

I’ll dedicate a section of today’s article to briefly analyzing their results. It doesn't require a full update like Forvia, given that the original thesis is less than two months old.

⛏️A promising 2026

The 2025 results are “bad”, but that was already priced in. The real uncertainty was whether we would see a rebound in Q4, a particularly difficult quarter due to the winter season in Canada and the US. And we did: while the quarter in the North was indeed tough, with revenues dropping 13%, South America surged by 95%. Combined with a 15% growth in EMEA, this offset the decline in North America, leading to a total revenue growth of 4%.

The real silver lining comes from the order backlog, which has skyrocketed by 83% to $404 million. Of that total, $228 million is scheduled for execution in FY2026. While a backlog isn't 'carved in stone,' it provides visibility for 66% of our 2026 revenue and 41% of our 2027 revenue based on our thesis estimates, with plenty of commercial upside still on the table.

Tim Brenner, CEO of Foraco, confirmed that in Q1 2026, they have already surpassed 50% rig utilization (compared to a 36% average in 2025) and expect to maintain a steady 67% utilization rate. In my projections, maintaining 50% utilization throughout 2026 alone would imply a revenue increase of more than 30%.

“This year, I can tell you that 67% of the fleet is going to be used at any given time” Tim Brenner CEO. Q4 FY25 earnings call.

The company’s record utilization was 74% back in 2012, and management believes reaching those levels again is possible. But step by step, eyes on Q1 2026 now. This rig occupancy could drive a +43% revenue increase over Q1 2025 lows.

Regarding margins, they have weakened, but this is typical given the additional mobilization costs of preparing the fleet for 2026 orders. Debt has also risen slightly, as they have added five new drillers to the fleet over the last six months. The thesis is accelerating, faster than I anticipated. The question remains: will we get a chance to catch it even cheaper?

I’ll see you soon, likely with an analysis of Bayer’s results. Until then, remember that the stock market is a device for transferring wealth from the impatient to the patient.

Thanks for reading the Pond Journal🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

Forvia is boring; there’s no AI here, no glamorous product. Today, that very smell of metal and welding (asset-heavy) acts as a hedge against the AI-driven disruption currently shaking the markets. This is a pure industrial play: betting on a post-merger restructuring to boost margins and deleverage the balance sheet.

This is the kind of place where you come to roll up your sleeves and do the hard work. Even so, over 1,000 people stopped by to check it out. I’m leaving it here for you, as there are some details I won’t be revisiting today.

The 2025 results and the Capital Markets Day have brought a lot of new information to the table, enough to warrant a full review and a revision of the company’s price target. So, let’s get to it.

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♟️Interiors: The Sacrificed Pawn.

The main and most critical piece of news is the sale of the Interiors division. Having been put up for sale in December, the deal is now considered a given for 2026. The impact on a company’s valuation when facing a divestment is a two-fold dilemma:

• The earnings lost through the sale vs.

• The debt reduction it enables.

In these situations, the timing of the cycle and the urgency to sell heavily dictate the outcome. In Forvia’s case, the need for deleveraging is an undeniable fact. They are offloading a segment where they are a clear leader with a ~13% market share. Is this a negative? Let’s take a look 👁️.

In the original thesis, we saw that Interiors was the division with the lowest Return on Assets (ROA) and the thinnest margins. Furthermore, after Lighting, it was consuming the highest level of CapEx relative to asset value, at around 4%.

Moreover, despite being a market leader, it is a lower value-added segment and is more fragmented among local competitors. We already touched upon this in the original thesis.

The expected Enterprise Value for the sale is estimated at approximately €1.4 billion—so much so that they have already adjusted the impairment loss against book value in the 2025 results.1 This valuation implies an EV/EBIT multiple of around 8x. This multiple is consistent with recent M&A transactions in the sector.

✅ Overall, the decision makes sense. The priority for unlocking value lies in improving margins and reducing debt. The Interiors division was the necessary sacrifice.

💼 Portfolio Redefinition

In its 2028 plan, Forvia has redefined the value proposition of its divisions by splitting them into two groups:

• Growth Cluster: These are the divisions management considers growth drivers, where investment is truly worthwhile.

• Value Cluster: Here, the priorities are margins and cash generation. This makes perfect sense.

I won’t dwell much longer on this topic. If you’d like to learn more about the strategy or the value proposition of each segment, you can consult the Forvia CMD 2026 Presentation.

💰Resultados 2025

We knew top-line growth wouldn't set the world on fire, but we came here for an industrial restructuring play, not a compounder. Yet, they delivered exactly what was required: the guidance was met. Adjusted for currency, sales remained flat year-on-year. (If we include a “tooling” effect2 in Interiors, product sales actually grew by 1.5%).

When compared to global light vehicle production, which grew by 3.9%, Forvia lagged by 4 points. However, if we factor in Forvia’s specific geographic mix, production grew by 1.4%, representing a 1.5-point underperformance.

Chinese OEMs have entered a phase of offshoring production to Southeast Asian countries, and Forvia has been following them, to Thailand with BYD, for instance. Nonetheless, the net effect in Asia remains negative. This will need to be monitored closely.

We’ll discuss specific divisional sales later, but since the two pillars of this thesis are margin improvement and deleveraging, let’s see how they performed.

🔎Margins & Debt

The margin improvement in a flat sales environment has been very positive. Both the EU-FORWARD program and the Hella synergies have outperformed my expectations, with a +20 bps incremental beat over my own estimates.

The thesis goal was to achieve €300 million in savings (compared to the company’s target of €500 million by 2029), and these have practically been reached already in 2025.

Furthermore, if we consider the “new” Forvia (excluding Interiors), the group’s EBIT margin rises to 6%.

Turning to the debt, there is also good news. In 2025, the leverage ratio dropped to 1.71x, or 1.59x if we factor in the Interiors divestment.

Cash generation has improved despite rising restructuring costs, and the company has reduced its reliance on factoring (client advances with financing costs). This is clearly reflected in the Normalized NCF (Net Cash Flow), which excludes restructuring expenses and the contribution from factoring.

The debt maturity profile has improved, clearing the Everest that 2027 once represented. We hope that this, alongside the stronger cash flow generation and the Interiors divestment, will help improve the company's credit profile, which still sits at the lower end of non-investment grade, with no rating revisions since late 2024.

Let’s take a look at the performance of the main segments.

💺 Seating: The Restructuring Paradigm

The Seating segment, responsible for 31% of sales (nearly 40% in the new Forvia), is the textbook example of a restructuring process. The segment’s sales dropped due to the slowdown in the Chinese market—mainly BYD—and the European market, yet margins expanded. The net effect is positive, with a 7% higher EBIT contribution than in 2024.

The underperformance relative to its competitors is primarily explained by its over-representation in Europe, where most of the capacity cuts (under the EU-FORWARD3 program)

The company views the Seating segment (the origin of the former Faurecia) as part of its growth portfolio. This is where management sees the potential for expansion:

• Higher CPV (Content Per Vehicle): The shift toward increased comfort leads to a higher cost per seat: heating, advanced reclining features for autonomous vehicles, and even massage functions.

• Exposure to the Indian market and Japanese/Korean OEMs.

• Growth in the industrial segment: Trucks and machinery.

Let’s not forget that Forvia is the world’s #1 in seat frames and mechanisms, and #3 in complete seats

👌👌 Electronics: The Green Shoot

Particularly satisfying is the performance of Electronics, one of the two segments, alongside Seating, that management has classified as “Growth Clusters” in its medium-term strategy. Sales grew by 12% while margins expanded by +140 bps.

The sales growth relative to its main competitors is highly remarkable.

This segment includes radars for autonomous driving and assisted parking systems, power management controllers, and infotainment electronics, among others. It is a segment with very favorable tailwinds, where Forvia is a top 3 global player. Investing in this segment makes perfect sense.

😅 Lighting: The Laggard

The Hella legacy segment is struggling to find its footing. The expiration of several high-volume programs has coincided with a weakening European market. The sector is currently facing clear overcapacity. As a result, the company has recognized a €270 million impairment charge, writing down its goodwill.

This is precisely why Lighting falls into what they’ve labeled the “Value Cluster”: the focus is now on rationalizing investments and reducing capacity to bring the division back to profitability. I believe this strategy is the correct path forward.

🐄 The Cash Cows

The remaining divisions to discuss are Clean Mobility and Lifecycle Solutions. These segments are relatively small (representing 23% of the “new” Forvia’s sales), but their low capital intensity makes them powerful cash generators. There isn’t much to add here: they are improving margins and showing organic growth.

Clean Mobility is the one “sentenced to death”—the division whose terminal value the market essentially prices at zero. I’m not claiming that catalytic converters for internal combustion engines (ICE) are the future, but 71% of new vehicles registered in Europe in 2025 still featured them. The situation in the US is much the same.

“RBC has significantly lowered its 2030 EV adoption forecast for the U.S. from 35% to 17%”

Perhaps this “cash cow” isn't worth zero; perhaps the very weight holding it back will become the catalyst for its value.

🎯 Price Target Revision

The top-line thesis hasn’t changed much. The industry outlook remains similar: S&P Global Mobility estimates a 1% CAGR (compound annual growth rate) in light vehicle production through 2033. Notable growth is expected in Asia (excluding China) at a 2% CAGR, compared to 0.8% in China. Major Chinese OEMs are currently offshoring their production, and the emergence of India and the ASEAN4 will be key in this process.

Assuming a flat 2026, as guided by management, we are projecting a 1.5% annualized organic growth rate through 2029. This is slightly above the light vehicle production growth in their specific markets (+1.3%).

Management has set operating margin targets above 7%, driven by volume improvements and cost cuts. We won’t be quite as optimistic. Forvia’s 2025 EBIT margin, excluding Interiors, stands at 6%.

While I am confident that by 2029 margins will be closer to 7% than 6%, a margin of safety is paramount. Restructuring expenses will remain high, albeit trending lower. By factoring in these projected restructuring costs and a slightly more conservative contribution from the efficiency programs, we are modeling a 6.5% EBIT margin. Debt is projected to decrease progressively, following a conservative path.

This scenario supports a €3 per share increase in our Price Target, representing a 15% bump over our previous estimate. This revision is consistent with our positive assessment of the margin improvements, stronger cash flow generation, debt reduction, and the Interiors divestment.

Thanks for reading the Value Pond🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

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Remember Liberty Global? Is a complex telecommunications conglomerate and investment holding company geographically diversified across Europe. Known for its opportunistic capital management under John Malone, it focuses on high leverage, tax minimization, and aggressive share buybacks to unlock shareholder value.

A little over a year ago, I wrote a thesis alongside , primarily focused on taking advantage of a special situation involving the Sunrise spinoff, which was set to unlock the value of both the spin-off and Liberty itself.

The value catalyzed, though only on the Sunrise AG leg. In Liberty, there is still around ~70% upside. The funny thing is, this past Friday we saw a very strange market situation, which could be a precursor to further catalysts.

The Anomaly🤔

Liberty Global trades through three share classes: Class A (LBTYA) and Class B (LBTYB) carry voting rights, while Class C (LBTYK) has the same economic rights but no voting power.

Furthermore, there is a massive difference between Class A and B: Class A has one vote per share, whereas Class B has 10 votes per share. In short, the company is controlled through the ownership of Class B shares.

These shares have historically been held by John Malone, the “Cable Cowboy”, and Mike Fries, his right-hand man and successor. Together, they hold ~90% of the Class B shares. This makes Class B highly illiquid, with an average daily volume of just over 1,000 shares, compared to the 3 million shares traded in the other two classes.

Usually, all three classes trade at parity. Until Friday.

Class B shares skyrocketed +100% at the open, hitting $29, while the other two classes remained below $12

Some say this was a short squeeze; honestly, I don't think that theory holds water. Not only is the short interest in this stock practically non-existent (185 shares), but the volume traded during the session tells a different story.

Opening volume was very high, dismissing the idea of sharp price swings on low liquidity: 1.2 million shares were traded against an average of 1,000 shares, with another 1.3 million shares moving throughout the day. This means ~19% of all Class B shares moved. In other words, 8% of the company's control votes changed hands at a roughly 50% premium.

And that, my friends, is no small feat.

The contagion reached Class A shares (1 vote per share), which saw their average volume double to 5.5 million shares, ending the day up 4%.

The company has up to four business days to report these moves to the SEC; only then will we know more. In the meantime, we can only speculate:

• If we assume Malone/Fries haven't sold any of their Class B shares, someone has bet big on snatching up all other existing voting rights to take an active role in catalyzing the company's value.

• If it’s Malone/Fries who have tightened their grip, something big is coming: A take-private bid? A simplification of share classes? Who knows.

Q4 2025 results will be presented this coming February 16th, and we also know that Fries/Malone are very fond of dropping major headlines the week before earnings.

Unreliable sources leaked on Friday that Liberty might be looking to acquire the 50% stake in the VodafoneZiggo joint venture (Netherlands) at an implied valuation of $4.40 billion, subsequently merging it with Telenet (their Belgian subsidiary) to create a Benelux giant. All speculation, nothing official.

What we do know is that Liberty Global is a clear case of undervaluation offering, in a conservative sum of the parts, a very attractive upside. These moves could stir the hornet's nest, forcing the actions needed to finally unlock that value. And if you have an undervalued stock in your sights, along with potential signs of upcoming catalysts, there is only one thing left to do.

An interesting week lies ahead after this strange event; I will be posting updates via X and Notes.

Thanks for reading the Pond Journal🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

Today, I am doing something I haven’t done until now: publishing the performance of the investment theses I’ve shared on this blog. I’ve held back for two main reasons:

1. Conviction cannot be transmitted in a thesis, no matter how extensive or well-justified it may be. It is only achieved through two paths (or a necessary mix of both): the authority of the source and, above all, doing the hard work yourself. When I speak of conviction, I mean seeing a 20% drop and using it as an opportunity to buy. Therefore, this blog only aims to highlight interesting ideas to encourage the latter and, over time, with successful theses and a bit of luck, generate the former.

2. The performance of individual theses can differ greatly from a portfolio’s return. You might have averaged down during dips or trimmed gains, assigned different weights to each idea, or even incorporated stocks without a full thesis.

For me, both reasons remain gospel. However, with 2 years under our belt and nearly 500 subscribers, I hope I’ve earned enough authority to publish this without feeling “imposter syndrome.”

Starting now, I will use Sundays at the end of each month to publish the following dashboard with relevant updates and a brief summary of each thesis’s status.

I’ve included a poll below to see if you find this format interesting. If you have any suggestions for improvement, please leave them in the comments.

Thanks for reading the Value Pond🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

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DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com

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I will be commenting on the results for WizzAir, Forvia, TGS, Foraco, American Axle, and Bayer on X, and if anything of vital importance arises, I may cover it more extensively in a future Journal.

But before that, let’s revisit Pond Journal #1, written back in October. At that time, we discussed gold, and I stated the following:

"Gold is at an all-time high against our beloved fiat currencies, but not against real assets like housing or other commodities. There is no bubble here; only a paradigm shift."

Since then, gold has climbed an additional 20%, and research firms like Goldman Sachs are already raising their price targets to $5,500.

Geopolitical tensions, central bank demand, and a complete lack of faith in any government balancing its books without debt-based stimulus are sufficient drivers for gold demand. This remains true whether we see a 10% correction tomorrow or if the price reaches that $5,500 mark.

Miners of Gold

One of the most lucrative ways to gain exposure to gold in 2025 has been investing in miners—for instance, through the VanEck Gold Miners ETF (GDX), which represents the top forty global gold mining companies by market cap. With a 180% return in one year, it has been even more profitable than investing directly in the metal.

However, this hasn't always been the case. Following the peak of the previous cycle (2011-2012), miners went through a profound crisis that forced a sector-wide restructuring and consolidation. This process generated deep disinterest among investors, who began to view mining as a risky, volatile, and extremely cyclical investment. We discussed this in greater detail in the thesis on Foraco (TSX:FAR).

As always, the capital cycle comes into play: disinterest leads to reasonable prices for these assets, and once the price of gold rises again, highly attractive investment opportunities are created.

This opportunity materialized clearly in the Major Miners-to-Gold ratio, which expresses the price of miners relative to the metal.

While gold resumed its upward trend in 2020 due to the pandemic, monetary stimulus, and resulting inflation, miners failed to keep pace. By 2024, the ratio reached levels so low they signaled a clear arbitrage opportunity. Furthermore, the sector is now more concentrated, less leveraged, and allocates capital in a more balanced manner.

As the chart shows, the ratio is approaching resistance. After such a meteoric rise, it is only logical to ask: How much upside is left? Is it time to leave the last penny for the next guy?

These are not easy questions to answer, and one must feel comfortable with how their portfolio is constructed; therefore, I will try to offer the answers that I have applied myself.

Attempting an intrinsic valuation of an ETF with over 40 companies is a nightmare, but we can try to get close. We are going to do a napkin valuation, a method that oversimplifies things but is perfectly valid when backed by a solid macro thesis like the one we have.

The Napkin Math

According to the VanEck report from January 16, 2026, gold miners are trading at an NTM P/E of between 14x and 15x. It is important to note that this relative valuation was calculated with gold at $3,400/oz, while the price currently stands at $4,950/oz.

This implies that there will be a quarter where miners' revenue per ounce will be closer to $5,000 than to the $3,400 reflected in that 14-15x multiple (a 47% difference). To this, we must add operating leverage.

The sector's average All-In Sustaining Cost (AISC) is approximately $1,600/oz. Therefore, every dollar the gold price rises above that implied $3,400 flows almost entirely to the bottom line.

Obviously, costs could rise: gold may become harder to mine, costs could increase due to higher demand for services, or staff shortages... These costs will trend upward in the medium term. We will be conservative with this.

In the following chart, I have overlaid the price of gold onto VanEck’s NTM P/E series. The gold price doesn't have its own scale, but it serves to illustrate the key point: this is a cyclical industry, and as in many others, the highest valuations are reached at the lowest multiples. And that is exactly where we are, except for the fact that gold seems to have no ceiling.

Based on the scenario implied in the VanEck report (12/31/2025), at current gold prices and with costs held ‘ceteris paribus’, the multiple would drop from 14.50 to 9.55 NTM P/E. This implies a potential annual earnings growth of 86%, assuming every ounce is sold at current spot prices.

Adjusting this scenario with a 10% increase in AISC, holding gold at $5,000, and applying a 12x multiple, the ETF would reach a price of $127, providing a potential 21% upside from current prices on a one-year horizon.

Before wrapping up, a note of caution: everyone must find their own comfort level when managing an asset currently trading at all-time highs. It makes sense to try and capture the full potential of this trend, but nobody ever knows exactly when the music will stop. Remember to be greedy when others are fearful, and fearful when others are greedy.

Thanks for reading the Pond Journal🦆. If you enjoyed it, don’t forget to leave a like 👍subscribe🖊️ and share🔄 it.

Subscribe now

DISCLAIMER: All the information provided in this document is purely informative and does not constitute a buying recommendation (according to Spanish Law Article 63 of Law 24/1988, of July 28, on the Stock Market Regulator, and Article 5.1 of Royal Decree 217/2008, of February 15). DuckPond Value Research is not responsible for the use of this information. Before investing in a real account, it is necessary to have the appropriate training or delegate the task to a duly authorized professional.

Reach us on duckpond@duckpondvr.com