Today, I'm publishing a summary of the first six months of 2025, covering my key portfolio movements and performance.
The performance was more than satisfactory, achieving a 16.48% return during the first half of the year.
First off, it's worth remembering that all portfolio movements are consistently published in my notes, ensuring full transparency. This project began on January 1, 2025, with an initial portfolio value of €50,000.
Let's compare my portfolio with the previous quarter to see the changes:
Portfolio as of March 31, 2025
Portfolio as of June 30, 2025
Sales:
Firstly, Datagroup. After a takeover offer from KKR Group at €54 per share, the company is currently trading above that price. All signs suggest the final offer for the tender offer will be higher. In my case, I decided to sell at the time of the announcement. I felt €54 was a fair price given the alternative investment opportunities in the market.
Secondly, I sold Aplisens and Groupe Guillin. This situation is different; there's nothing inherently wrong with these companies. The sales were for the same reason in both cases. Both companies were trading at attractive multiples despite being in a challenging year. So why did I sell? To reallocate that capital into other portfolio companies trading at very similar multiples but with higher-quality businesses and higher ROICs.
Purchases:
I've increased my positions in several companies, taking advantage of market volatility. The best example is Golar, which was my smallest position last quarter at 3.7% and is now my fifth largest at 8.7%. It's interesting that I was able to slightly lower my average purchase price despite the company's announcements of new contracts.
Other companies where I've increased my position include B&M, We. Connect, Toya, McBride, Macfarlane, and Auto Partner.
My cash percentage has increased due to recent sales. As you might have noticed from the lack of new analysis last month, I'm currently short on new ideas that would genuinely improve my portfolio.
In summary, I've further concentrated the portfolio, focusing on higher-conviction ideas and companies that, despite having better ROICs, were trading at multiples similar to those I sold.
B&M European Value Retail
In each update, I'll dedicate a few lines to one of my holdings. This time, due to recent declines, I'll discuss my largest position: B&M.
You can find more analysis here: https://10baggernewsletter.substack.com/p/b-and-m-european-value-retail-a-bargain
B&M European Value Retail S.A. is a variety discount retailer operating in the UK and France. The company offers a wide range of products, including groceries, general merchandise, and home goods, all at affordable prices.
B&M boasts a strong growth track record, having increased its revenue at a CAGR of 12.96% over the last 10 years and generating an average ROIC (ex-Goodwill) of 32% during this period. One might expect a company with such fundamentals to trade at above-average multiples, and historically, it has. Its average P/E over the last 10 years has been 16x, with an EV/EBITDA of 10.9x and a dividend yield (excluding special dividends) of 2.49% (Source: TIKR). Currently, the company is trading at roughly half its 10-year average across all three metrics. What's most surprising is the dividend yield, which, if I include the "not-so-special" special dividends (as they've paid special dividends in 7 of the last 10 years), exceeds 10%.
Why the drop in share price?
The year 2025 is proving to be challenging for UK retail, and B&M is not immune. Although it's ostensibly a defensive business, its sales are roughly split 50/50 between FMCG (Fast-Moving Consumer Goods) and General Merchandise, with the latter being less stable. This has led to B&M reporting worse-than-expected results in 2025, primarily in the UK, with two profit warnings announced for this year. Curiously, while the profit warning implied a 6.3% drop in earnings, the stock has fallen by approximately 50%. This decline, in my opinion, is only justified if the growth the company has accustomed us to has truly come to an end.
Is the poor performance exclusive to the company or is it a sector-wide issue? Is the downturn temporary or structural?
In this case, the answer is straightforward: the UK retail sector is struggling overall. Pepco's sale of Poundland to Gordon Brothers is the best example. Gordon Brothers plans to restructure the company by closing at least 68 stores and reviewing another 80. Meanwhile, despite negative like-for-like sales in the UK, B&M continues to generate profits.
How has the company's execution been?
The company's execution since Simon Arora stepped down as CEO in 2022 wasn't the best, something the company acknowledges. This is where the new CEO, Tjeerd Jegen, a retail industry veteran, comes in.
Has the company's business model changed?
The model has not changed and remains exactly the same.
The company's future: Can B&M continue to grow?
The answer appears to be yes; the company seems capable of continued growth by reinvesting capital for many years. First, in the UK, they expect to open 45 stores per year, aiming for at least 1,200 stores from the current 777.
Also in the UK, with Heron Foods, they plan to open 10 to 15 stores annually.
Finally, the company's greatest long-term potential lies with B&M France, which currently has 135 stores. With a population similar to the UK, they expect to reach a similar number of stores in the long run.
In addition to revenue growth from store openings, long-term margin improvement is also expected. Firstly, a greater number of stores implies higher product volume, leading to better purchase prices. Secondly, although France is profitable, its margins are lower than the UK's. The margins in France are improving and are expected to reach a similar level in the long term.
After considering these questions, I conclude that with competitors struggling, a continued ability to grow and reinvest at 30% ROICs for many years, and a valuation at historical lows, B&M, in my opinion, represents a significant investment opportunity with relatively low risk.