4+1

Hello,

It has been already four years since starting this blog and it has been one year of transition to paid version. It is time for some reflections. I was at high school when I started thinking about writing on a substack. I remember the moment very well. I was digging a hole with a showel at my ex-girlfriend’s father house at his new-built for $20 in total. When digging deeper and deeper (for water purposes) I was looking at my ex-girlfriend telling her I will start writing. At that time I had $5.000 net worth and barely knew anything. Today I have over 4.000 free subscribers a people who care enough about what I have to say, despite still not knowing anything. That is unreal.

Time went by… I already gave my perspective on the going paid in 2025 ending post. I still view it the same altough I am more relieved that some ideas have worked well. I needed that. You deserved that. I did some stupid things before and I still do. That is quite common in my life since my frustration of not being able to conduct racing put me in hospital years ago.

I feel I should have waited few more years before doing that, but I still not regret it because it uncovered my many flaws. And I am very thankful for that. My current situation is tough but it is going well. Fortunately I have been able to quit one of my jobs and currently have only one, while studying hard for the last exams. And guess who failed statistics? Maybe I need to focus on truly simple investments, haha. No, I am well mentally again and at the best physical shape since started lifting weights. However, most of the days I feel like Eddie (skeletal mascot of the British heavy metal band Iron Maiden) in the picture. I am basically dead man walking from the start of the day till the night.

The reason for writing this is simple. It is time for some review as H1 went by and reflections and perhaps something to learn from my mistakes. I believe lots of things changed to the better and I feel the need to update everyone via writing it down. The reason for writing H1 now is simply due to time reasons.

Path

Last year I was stupid after going paid. I am still stupid but hopefully less. What I am trying to do is very different to what I have done last year. My success with PharmX led me onto the wrong path. I was lucky to evaluate it correctly, but it made me think I understand companies that proved how hard is investing in small technology companies. It is almost impossible to compete with more capitalized companies with bigger R&D, better engineering talent and reputation. Sure, it might work for some time, but usually the party ends soon. After thinking about this thoroughly I needed to completely change my whole processes, watchlist and the way I see investments. Lucikly I was able to learn it at 22. I am still in deep restructuralization process as I build new processes, ways of thinking and watchlists that no longer focus on hypergrowth or future potential earnings positive companies. I hope I can say those days are gone. Today I am reminded of the great interview by The Lazy Beavers, which I re-read monthly. I am focused on simple product/service businesses which posses a high market share in their respective markets despite the TAM being small as I believe it is great to have less problems when investing such as competition hindering your growth-rate. I learnt that I am not smart and I can not evaluate 99.99% of companies. I can only understand simple business with great value proposition for the end-customers as well as good management team — the best way is letting others do the work for you.

Your network is more important than you think

I was saying it once and I will say it again. Pay a very close attention to who are you idolizing and what interact with. My network begun to form in 2023 when I met great people. But I believe in 2024 & 2025 I got on the wrong path following the wrong people or people that did not align with who I want to be or become. These people had terrific returns so I tried to adopt their thinking. It worked well but I did not like one thing: the performance of the share price after I sold. Naturally, this rised questions: Am I really doing valuation and assesments right? Am I just lucky with the timing? While I understand that most of the ideas will get sold quickly, I should pay more attention to durability. The VC approach is interesting but it takes lots of mindspace and I did not like the fact that I spent 10s of hours on things that might change economically wise in one day. The messsage is: You invest and think the way your heroes do. That is dangerous because in the end, you have to do the work yourself. I would also state to really follow the great investors closely but pay attention to the point where their career is and what is their real motivation. Ideally you want someone (if you are young as me) whose goal is to compound at the highest rate of return in the most responsible way. Thanks to co-operating with David, I started focus on what matters again — something I unfortunately forgot along the way.

On markets

I do not know, I do not spend time with it. My world became quiet. All I do is thinking about what I own or owned or want to own.

Thinking starts with buying

What I am happy with and do not want to change is my decision making when it comes to selling. I am constantly thinking about things that I own, which constantly play in my brain on a replay. It never stops playing. Sometimes I wrote up the company but once I had it a week in my head I realized it is a bad/not so great idea, opposite to what I initially thought. I am ending up selling fast as I hate losing money. And when I figure it out internally, I make the decision. It does not matter if I am up or down 5% and if I hold it 1 day, week or a month. When I realize that the idea is poor after constantly thinking about it, I am selling despite nothing really changed. This is crucial for me as the constant thinking about particular ideas help me prevent costly mistakes or spot blind spots early. For example I bought an Australian industrial company in April. I thought they are coming stronger from bad execution by previous management with real tailwinds and trade at 10x earnings despite growing 14% CAGR for two decades. I thought there is an easy path to 20% IRRs. But after talking to the new management it was clear to me that the repetition of previous management’s mistakes will likely emerge. I am still learning how to asses management teams, but I was uneasy with holding shares therefore I sold. And paid subscribers already know how and why I sell things. I will go back to chess, which I play daily: If you can not win, try to get out with a draw. Another thing is when you are losing, you must not trade the pieces off the board. You need to preserve them and wait for the better opportunity to strike when the odds of attack are in your favour. This is why I am getting rid of the stuff fast. I don’t want to trade my pieces off the board and lose faster. I want to recoup and wait for the right time to attack. And if not, all my attention goes to finishing in draw.

Of course it does not look great in hindsight reading my write-ups and seeing some stocks down. Most of the time I no longer hold them. But to be clear. I always consider it as a failure as I want companies to do well after I sell them. And as my employer says: “Early investors barely enjoy the profits of the particular investment despite finding them and identifying the opportunity.” Unfortunately this applies to wonderful companies more rather than what I have been focusing on until recently. I spent damn too much time with low ROIC, unprofitable companies and moonshots for a desire to find something early. While I still have that desire and go through more than 100s companies a week, I started to appreciate more the winners, because it is logically and mentally easier to focus on what are the companies already doing right, not what they might do right 5 years from now.

And my goal is to write about those companies. I realized it is not worth writing lower quality companies up. Klimator AB worked but that might be exception. I can buy them in my portfolio but I am actively undermining my blog doing that. Paid subcribers saw how many flaws and mistakes I did last year. I can now safely say my free ideas were way better than paid ones. However, the tides were turning more positive on me lately.

The most important question

“Where is your margin of safety coming from?” This question will eliminate 99% of your ideas. If you have small technology company, will you be able to spot among the first one when competitive conditions deteorirate? If you have 70% of market cap in cash, can you safely say the management won’t do anything stupid? This question helps me understand the chances of losing money.

Returns

My 6 months recap… despite not being happy of not having a higher hit-rate, I made some good decisions and I have not lost more than 10% on any investment. YTD my portfolio is up 33% as of writing this today. Again I can see that most of the previous years (+30%, +46.8%, +65%) similarly to this year the returns came from great 1 or 2 investments. And it is usually true when you have a look at my current write-ups or previous ones, when they were free. PharmX, Stif, Solitron, Entravision, ImmuCell, Kaspi…. Majority of these are responsible for the returns I had, offset by the losers I have been able to liquidate very quickly. As one of the goats from Sweden put it: “You can’t ever let your CAGR go down”. And I am actively putting this into work by shooting the ideas right into their heads.

I am not happy though about the hit rate. I wish it would be higher, but it is process I need to learn and it is the reason why I am looking up to great investors such as David. Two good investments a year is enough, but if I can find three, it will be even better. I finally know that these barely come from small technology companies and I abandoned this pond to smarter people than I am. So yeah, I am satisfied with this year so far. I think I learnt the most and finally paying attention to details. Still I am quite handicapped by the college in terms of time spent.

Note: These returns are unaudited. As you already noticed, I am not trying to sell you paid subscription. I do not share my whole portfolio, because I still worry the responsibility of people copying me at this point of my career and my mental health suffers when I lose people’s money. Yet, 70% of portfolio is regularly shared by announcing position sizing and is shown below.

Still not there

Despite going through 1000s of companies, my main struggle remains the same. I need to get better at understanding the situations and what is the sauce of attractivity for good investments, becuase if I go through thousands of them and can’t identify what good investment is comprised of, it is wasted work. So how do I think about the investments today? I changed my approach. I am looking for niches or special situations. I consider attractive a company with small addresable market with high market share (ImmuCell), or a company that has critical product/service established deep in customer’s workflows (Solitron, Servotronics). I also learned that market is getting ever short term oriented and I was like that too. I learned to slow down and really focus on what matters and that is the next 3-5 years and possibly more. And going forward the more the market will become short-term oriented the more I want to become long-term oriented. I quickly realized that I am way dumber than I thought and I should act that way. Today I spent most of the days looking at fillings and putting everything to spreadsheet to build new watchlist to follow for the long-term. I can imagine not buying anything new for months. Readers can expect reduced frequency. I do not have a good idea each month. I do not want to write about average ideas anymore (question is how to know one is average?). I would like to write now about solely companies I would be okay to own in the 3-stock portfolio.

I actually run an experiment. I have a second european broker where I own only three companies all the time — the three best ideas. I open the account only when I am sure this should be in the 3-stock portfolio. I am doing this since 2022 and since then I owned 6 stocks in total and the account is up roughly 400% in 4 years. My goal is to bring the discipline into the main account (I do not count this into the performance that I share). That obviously means I will likely only have a great idea in 6 months on average. I tried to be more frequent writer but I realized that can’t be done on the quality basis. So I apologize, but going forward the frequency will go down roughly to 1-2 articles per month. I would write-up so many different companies but my mind still operates in constant worry of profiling something that won’t perform. So I calmed and reduced the frequency of write-ups as well as checking my portfolio. I only write something now when I feel I have something to say, which is not very often. I expect many of you will unsubscribe and I am okay with it. It is the best thing for you and for me. I am not here for ARR maximization game and I do not understand me profiling some of the companies that I have. But that is just me and my journey. I knew it was not easy.

Lastly I learned that the attractive situations are around divestments in a so called multiple segment company. I always knew that but for some reasons I lost attention to these setups. In all ways, I spent too much time looking at low ROE companies in the past. I am also looking for durability. Yes, I can trade myself some stuff that I consider more risky about whether the growth is durable or not, but those are rarely good ideas to write about. The most significant trait I want to develop is that even if I do not end up buying for valuation reasons, I want the companies to do well long term.

So should you subcribe and give me your money? While I am forever grateful, your money is better parked at better investors. In either way below are my top positions from my portfolio right now (not disclosing full) for existing subscribers. I do not feel that I need to write review of individual positions given I frequently update all my thoughts in the chat and made articles about current positioning individually.

Still fighting, still going, still compounding, still being dumb. Thanks for reading.