Monthly Portfolio Update - Small-Cap Portfolio Achieves 48% in 16 Months

My small-cap portfolio has outperformed the S&P 500 by 26% since inception

May has been an exceptionally strong month, with portfolio performance not only solid but also comfortably ahead of the S&P 500. While this index returned 6.15% in May, my large-cap portfolio delivered 7.92%, and the small-cap portfolio surged by 9.44%.

Several individual stocks have shown outstanding performance since inception, particularly within the small-cap portfolio, where the top 3 performers gained +165%, +107%, and +78% respectively. What is even more encouraging is that many of these stocks (including the top performers) still exhibit strong upside potential, supported by solid fundamentals.

This outperformance reflects the consistency of my strategy: identifying high-quality businesses with strong metrics, competent leadership, and reasonable valuations.

In this update, we will take a closer look at how this approach translated into results over the past month.

If you are curious or missed out, you can find my method here and how to react in case anything bad happens here.

Overall performance

Large-cap portfolio

A monthly return of nearly 8% has been a welcome result. However, since I report performance in euros, the sharp appreciation of the Euro against the USD (nearly 10% in 2025 so far) has weighed on the overall numbers. Adjusted for currency effects, my YTD performance stands at 2.5%, which compares favorably to the S&P 500's 0.5% over the same period.

While modest, this positive performance is respectable given the challenging environment. Several holdings have experienced significant drawdowns this year, yet in most cases, the long-term investment theses remain intact. I continue to view these as temporary setbacks and expect a stronger rebound in the coming quarters as fundamentals reassert themselves.

Small-cap portfolio

This month’s performance extends what has already been a standout year for the small-cap portfolio, which is now 15 percentage points ahead of the S&P 500 YTD. Notably, the portfolio has outperformed the index every single month in 2025 so far.

Since inception, the small-cap portfolio has delivered a total return of 48.8%, underscoring the strength and resilience of the strategy even in a volatile market environment.

Valuation and metrics

My portfolio’s key metrics continued to evolve this month (weighted average)

• Past growth: 20.3% —> 20.2% / Estimated future growth: 13.4% —> 14.1%

• Estimated EPS growth: 16.2% —> 17.1%

• Net profit margin: 27.9% —> 28.0%

• ROE: 39.2% —> 39.2% / ROIC: 24.5% —> 24.5%

• Debt leverage: -0.63x —> -0.76x EBITDA (so increased average net cash position)

• PE: 27.1x —> 27.8x / PE Y+2: 19.5x —> 19.8x

• FCF yield: 4.49% —> 4.38% / FCF yield Y+2: 6.67% —> 6.68%

• Dividend yield: 1.36% —> 1.24%

• Dividend growth: 8.7% —> 8.3%

• Buybacks: 0.82% —> 0.77%

• Expected TSR: 14.0% —> 13.9%

Published articles in May

I have revamped the newsletter at the beginning of the year for a clearer, more structured format. You can now explore new categories right on my homepage.

Here are the different articles I have published:

• A Curated Collection of My Best Articles

• Stock market news

  • 4 Secular Trends and Stocks to Watch

  • Stocks Are Soaring, But Are We Ignoring the Risks?

• Research and analysis

  • Do Morgan Stanley’s Preferred Business Model Stocks Beat the Market?

  • A Deep Dive Into a Cybersecurity Stock You Probably Haven't Heard Of

  • Reddit: Hype Train or Long-Term Play?

• Investment knowledge

  • My Playbook for Bear Markets

  • Dividend Growth Investing Done Right

• Stock spotlight

  • Stock of the Week: Amazon - Long-Term Opportunity?

  • Stock of the Week: Transmedics - Cutting Through the Controversy

  • NVidia vs AMD: a Stock Duel

  • Stock of the Week: On Holding Is Running Strong

  • Stock of the Week: Is Apple’s Reign at the Top Under Threat?

• New stock ideas

  • These 3 Stocks Are Mastering the Art of Margin Expansion

  • Off the Radar, ep. 1: Stocks You Have Probably Never Heard Of (But Should Know)

  • These 4 Quality Stocks Are Finally Cooling Off: Here Are the Targets

• My portfolio

  • The UnitedHealth Move I Am Making + What I Am Trading This Week

---

The next sections (Portfolios, Stocks, News, and Moves) are exclusive to paid subscribers. While this newsletter provides valuable content for free subscribers, becoming a paid subscriber unlocks even greater benefits to help you gain an edge in the market.

---