Semi-Annual Letter - June 2025
Portfolio Review & Strategic Outlook
TABLE OF CONTENTS
Portfolio Strengths and Tailwinds
🔐 For Paid Subscribers:
Risk Review & Potential Improvements
Portfolio Rebalancing Ideas
Factor Exposure, Macro Regime & Stress Testing Results
Portfolio Scorecard: A Company-by-Company View
Final Take: What we believe in, What’s our edge as individual investors
To Our Expanse Readers,
Welcome to the mid-year review for 2025.
The first half of this year has once again echoed the tone set by much of this decade—a paradoxical landscape of tremendous technological momentum (AI), intertwined with persistent threads of macroeconomic and geopolitical uncertainty. Volatility has remained the norm, not the exception.
In such an environment, my 🔗 Investing Philosophy hasn’t just endured, but it’s become more relevant than ever: to patiently craft and own a concentrated portfolio of the world’s most durable, innovative, and well-managed businesses.
My strategy as an investor is not to predict the unpredictable swings of the market, but to identify and partner with companies possessing enduring moats advantages, exceptional capital allocation skills, and exposure to long-term secular tailwinds. This letter will provide a transparent look at how this philosophy is embodied in the Expanse 🔗 Portfolio today, review its inherent strengths and risks, and discuss my thinking on its future positioning.
💍 On a Personal Note
The close of H1 2025 also marked a life-changing event: I got married and immediately embarked on a once-in-a-lifetime adventure across Namibia, South Africa, and Mauritius 🌎. It was an unforgettable trip with my life partner, filled with new perspectives.
Honestly? I’ve never felt more grounded to continue building Expanse Stocks. So, before we dive into charts and strategy, I thought I’d share a few personal snapshots of that happiness:
Thank you for reading, for your trust, and for being part of this journey.
Let’s get into it. 👇
— Nikotes
The Expanse Philosophy in Practice: Strengths & Enduring Tailwinds
Our concentrated portfolio of 16 names (+2 spin-offs) is constructed around several core themes, each representing a pillar of the modern global economy.
1. The Digital & AI Backbone (Software, Semis, Cloud, Networking): This theme, representing around 50% of our portfolio, is our highest conviction bet on the future. We own the non-negotiable infrastructure of the digital age.
Software is (Still) Eating the World: Our largest allocation is to the Constellation Software ecosystem (🔗 CSU, 🔗 Topicus, 🔗 Lumine). These companies are not chasing trends; they are buying and holding hundreds of mission-critical software businesses that run entire niche industries. Their model of disciplined acquisition and permanent ownership is, in our view, one of the most powerful wealth-creation engines in the public markets.
The Picks & Shovels of Digital Intelligence: The AI revolution cannot happen without the "picks and shovels." We own two of the most critical toolmakers: 🔗 ASML, the absolute monopoly on the EUV lithography machines required to manufacture advanced AI chips; and 🔗 Cadence, a dominant vertical player in the essential software and semiconductor IP used to design them. 🔗 Arista Networks is another name we own, providing the high-speed networking switches that form the central nervous system of the data centers powering this revolution.
The Platforms of Modern Commerce & AI: We have exposure to the dominant platforms through 🔗 Amazon, MercadoLibre, and our newest addition, Alphabet. They are not just retailers or search engines; they are full-stack ecosystems with huge network effects advantages, encompassing cloud computing (AWS, Google Cloud), logistics, digital payments, and foundational AI models that are becoming essential utilities for businesses and consumers alike.
2. The 🔗 Serial Acquirers and 🔗 Exceptional Capital Allocators: Beyond the Constellation Software universe, a significant portion of our capital is entrusted to owner-operators who are masters of acquiring and improving businesses—not just growing for growth’s sake, but compounding value over time with discipline.
Names like Heico in aerospace, Danaher in life sciences, and our European industrial champions—Addtech and 🔗 Judges Scientific —have earned their place in the portfolio. Why? Because they follow a proven playbook:
Acquire high-quality, often overlooked niche businesses
Empower them with operational improvements and autonomy
Reinforce decentralized decision-making
Reinvest cash flows with discipline, targeting high-IRR opportunities
These are compounding machines hiding in plain sight—built on capital discipline, not hype. Their track record speaks louder than any narrative.
3. Unassailable Brands & Networks: True moats are rare. We own businesses with some of the strongest. Visa operates a near-universal toll road on global digital payments. Hermès possesses a brand so powerful it transcends economic cycles. Nintendo's intellectual property is a timeless cultural asset, and Copart's salvage auction network is a classic example of a dominant, self-reinforcing competitive advantage.
🔒 The following sections are reserved for paid subscribers
Risk Review & Potential Improvements
Portfolio Rebalancing Ideas
Factor Exposure, Macro Regime & Stress Testing Results
Portfolio Scorecard: A Company-by-Company View
Final Take: What we believe in, What’s our edge as individual investors
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