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Hi Partner 👋
Last week, you got an extensive Portfolio Update.
In case you missed it:
For every company in the Portfolio, you found out about our conviction levels.
Investing is an intellectual game that never stops.
And it’s also a game of opportunity costs.
What do I mean by this?
If you are invested in a company where you believe the future expected return equals 8% per year…
… And you find another one with an expected return of 13% per year…
You should consider making the switch.
That’s exactly why we’ll dive in some companies we’re considering adding to the portfolio this week.
Ready. Set. Go!
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Companies we’re considering adding
Let’s now go over a list of companies we’re considering for the Portfolio.
3i Group ($LON:III)
How does the company make money?
3i Group is a Private Equity company/holding. They make money by buying stakes in private companies, growing their value, and selling them for a profit.
Their largest stake? Action.
Action is an European discount retailers that is growing at very attractive rates:
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Why is it an interesting company?
Here’s why 3i Group is interesting in 5 bullet points:
Action exposure: ~90% of 3i’s private equity returns come from Action. Action is the fastest-growing non-food discount retailer in Europe (Revenue CAGR since 2011: 26%)
Exceptional unit economics: Action earns back the ~€500k it spends to open a store in less than a year. This helps them pay for new stores on its own, opening about one new store every day.
Massive runway left: Many places in Europe don’t have many Action stores yet, and some countries (like the UK and Scandinavia) don’t have any at all.
Wide moat: Because Action is so big, it can sell things cheaper than others. People tell their friends about the low prices, so it grows without spending money on ads. This creates a simple cycle where being bigger helps it stay cheap and to keep growing.
Strong management alignment: CEO Simon Borrows owns over £585 million in 3i shares (865× his base salary), keeping incentives firmly aligned with shareholders.
At which price are we interested?
At the end of 2025, the NAV (intrinsic value) of 3i Group equaled 3,017 pence.
The current stock price equals 2,859 pence.
This means the company now trades at a small discount.
Buying 3i Group at a discount compared to its NAV is never a bad idea if you ask me.