Because sometimes lower expectations mean higher long-term upside

Flutter dropped guidance and the stock instantly reacted like someone kicked out the power cable of the casino. The WSJ framed it as a soft consumer story, analysts panicked a bit, and the market decided to punish the stock for daring to invest in itself. But honestly? I like it. Actually, I like it a lot. So much so that I initiated a buy today and made it a mid-size position in my portfolio.

I sold half my Evolution position today (around 5k) and rotated straight into Flutter, not because Evolution suddenly turned into a bad company, far from it actually, it’s another company that is experiencing an overreaction right now, but because the risk/reward imbalance in gaming is shifting, and Flutter is sitting right at the center of everything I find exciting about this space.

Look around for a second and you see that Polymarket is booming, Kalshi is booming, prediction markets are going mainstream at a pace nobody would’ve expected a year ago, the U.S. betting environment is normalizing, and the big players are entering with real conviction. The market is expanding, and whenever the pie grows this fast, you want to own the company holding the biggest knife. And surprise, surprise, that’s Flutter. FanDuel is still the monster in the U.S., the international footprint is huge, and the ecosystem is beginning to look like the AWS of gambling, positioned as the default option.

I appreciate that Flutter isn’t pretending this year is perfect. Free cash flow is dipping because they’re spending heavily, but spending on the right things is completely justifiable. Revenue growth is projected in the mid-teens for the next few years, FCF is expected to take off after this investment-heavy year, and even though debt sits around 3× EBITDA, it’s manageable and temporary. FCF yield is around 3% now, but closer to 7% by 2027, and the valuation sits at historical lows. That combination doesn’t come around often, especially for a company this dominant with strong growth prospects ahead.

Analysts keep trying to spin this as a “cautionary” story, but the fundamentals are screaming the opposite. To be fair, even the consensus among analysts is more than 60% upside from the current levels, so despite slightly negative comments on a few fronts, the majority remains bullish on the stock. This is exactly what long-term winners look like: They sacrifice a bit of momentum to expand the moat for the future. They take the hit now to reap the rewards for the next decade. The companies that don’t invest aggressively in a time of change, just to please some short-sighted shareholders, will be the first losers of the future.

So yes, the stock dipped. And yes, the headlines are full of negativity. But I don’t buy into noise and short-term momentum. I buy narratives with long runways, and Flutter is building something much bigger right now with a betting ecosystem that is the strongest it has ever been.

$FLTR (+0,27 %)
$EVO (+1,97 %)

When a market leader whispers about leaving the stock exchange, it rarely signals calm. Rumours suggest that Evolution AB $EVVTY (+1,75 %) , $EVO (+1,97 %) , the Swedish gaming giant once praised as the crown jewel of live casino innovation, may soon reveal plans to go private. If true, it would mark one of the most dramatic changes in its history and one that raises more questions than it resolves.

Probably even too many

This week felt like a portfolio spring cleaning (in October) with part discipline, part opportunity, and maybe a touch of restlessness. Five trades in total, all within days of each other. I usually prefer slower, more deliberate moves, but some action was necessary. Let me run you through why:

The first trade was one I discussed in a post a few days back: rotating Gambling.com into Evolution AB. The decision came down to quality over theory, and the loss came down to my ego not being able to accept that I had a flawed thesis. Gambling.com looked great on paper but was fragile in practice: no moat, heavy dependence on SEO, and questionable defensibility. Evolution, on the other hand, is a powerhouse. It owns roughly three-quarters of the live casino market, earns free cash flow margins north of 50%, and runs one of the most technically complex infrastructures in the industry. Same sector, same trend, but one is an obscure bet, while the other is a toll booth. It was time to stop gambling and start owning the house’s supplier. Though I should add that Evolution’s stock tanked just a day after I opened my position, due to less-than-pretty earnings. But I don’t see much more downside from here with the moat and valuation, plus I am in it for the long game.

Second was Novo Nordisk. The timing was perfect for a long-term investor, as the board-resigning chaos briefly rattled the market. I doubled down during the noise. When a company sits at the epicenter of one of the largest secular trends in healthcare, short-term governance issues don’t matter much. For Novo, so many negative factors boiled together over the last few months, and I am loading up as long as the weakness in the stock price persists. Obesity and diabetes treatments are reshaping medicine, and Novo is leading that charge in a duopoly with Eli Lilly (also in my portfolio). The step-down headlines were just a distraction in a story that’s still writing itself. One of my highest-conviction comeback bets.

Next, I added InPost, the Polish locker network that’s quietly conquering major parts of Europe. The setup feels rare: founder-led, capital-light, and misunderstood. At barely over a 14× forward P/E, it’s priced like a slow-growth utility, not a network-effect logistics play expanding across multiple countries. The Allegro dispute scared investors, but the math doesn’t justify the discount. This is exactly the kind of calculated risk that balances my otherwise very U.S.-heavy portfolio. It’s refreshing to find a great growth opportunity in Europe, rather than one more left-behind carmaker.

After that came a structural adjustment — selling MSCI. I still like the business, but it’s almost redundant next to S&P Global, which already makes up my largest holding. Both share similar moats, models, and margins, and owning both represents more correlation than diversification. Between the two, S&P offers greater breadth and slightly better pricing power. So I let MSCI go, not because it failed, but because I want focus.

Lastly, I trimmed Dynatrace. A small, clean sale with about a 5% return. It’s a great company, but considering the stretched valuation, I think better opportunities exist within the same sector. I’d rather recycle the capital into cheaper, equally capable players like Salesforce or Atlassian. Sometimes great companies don’t make great investments, and I fear that we could see a sideways run for the observability player.

Looking back, it was an unusually active week. But every trade had a clear logic: higher quality, less overlap, better risk/reward. If anything, it’s a reminder that good portfolio management isn’t about doing nothing — it’s about acting with purpose when the puzzle pieces start to shift. And this week, they did.

$EVO (+1,97 %)
$NOVO B (-0,13 %)
$NVO (-0,33 %)
$MSCI (+0,1 %)
$DT (+0 %)
$GAMB (+0,03 %)
$INPST (+0,63 %)
$SPGI (+0,07 %)

The House Won, at Least I Learned

I think most investors have that one stock that looked so good on paper that you convinced yourself it’s a no-brainer, and the market is wrong. Turns out sometimes the market is exactly right in assessing potential — much more than any individual investor ever could. And I just learned that the hard way with my “bet” (ironic, considering the industry) on Gambling.com Group. It checked all the boxes: extremely strong projected growth, high margins, low capital intensity, exposure to the booming U.S. betting market. A P/E falling faster than the account balance of a notorious gambler. What could go wrong, right? Well, pretty much everything that wasn’t visible at first glance.

The main problem: I didn’t research Gambling.com enough. I looked at the numbers, the valuation, and the industry tailwinds and thought, “this is perfect.” The industry sold me, not the company. The company just seemed great on numbers, though that’s never the whole story. Just look at Adobe: a phenomenal balance sheet, still, I wouldn’t touch it with a ten-foot pole. For Gambling.com, I didn’t think deeply about the moat or, rather, the lack of one. The competitive position (“The Moat”) is usually one of the key qualitative metrics I look at before anything else. Not on this one, unfortunately. In theory, the business is scalable and asset-light. In practice, it’s fragile and highly dependent on Google rankings, regulation, and betting operator relationships. Its biggest “assets” are domain names and SEO placement. That’s not a moat — that’s hope dressed up as defensibility.

So why didn’t I sell earlier? Pride. Simple as that. The position got bigger as the price went lower because I kept telling myself I was averaging down on a misunderstood gem. In reality, I was just doubling down on a mistake. It became a position that didn’t fit my portfolio anymore, and I knew it. But I refused to admit it until the loss hit 25%, and I finally pulled the plug. Maybe the stock will rebound at some point and prove me (and the market) wrong, but I want this to be a reminder not to buy into something just because the numbers add up.

The money didn’t go far — just from a weak affiliate to a near-monopoly. I rotated the position into Evolution AB, arguably the best company in the global gaming space. If Gambling.com was a good idea executed badly, Evolution is a masterclass in execution. It dominates the live casino industry with ~70–75% market share, has an FCF margin north of 50% (close to S&P Global territory), and builds infrastructure so complex that no one can realistically catch up. That’s the kind of company I want to own — the kind that fits the pattern of my usual suspects like ASML, S&P Global, or MSCI: dominant, cash-rich, defensible, and indispensable.

Honestly, I could have thought of that earlier, and it would have saved me a lot of money, but it will serve as a reminder. On the big graveyard of failed ideas, where most concepts die before I even invest, Gambling.com will get a prime spot — a massive tombstone right at the entrance, the kind that makes you stop and think what went wrong. Probably right next to Lilium, by the way. Not much money lost on that one, but still quite embarrassing in hindsight to invest in flying cars that won’t even take off and believing in German innovation.

Back to my new holding: Evolution isn’t flawless — very few companies are. Regulatory risk will always hang over it, and headlines can shake the price short term. But in terms of structural quality, this is a company that can easily compound for years. It’s still undervalued relative to its moat and earnings power, which is rare these days. With a P/E between 10–12, risk is priced in, and the competitive position seems to be disregarded. This is arguably the single best way to profit from the online gambling boom with a very safe “toll booth” pick.

This wasn’t just a portfolio move — it was a learning experience. Buying into a “hot” theme without understanding the moat is speculation, not investing. I confused growth with durability. Evolution fixes that mistake. It might not be as exciting as a small-cap moonshot, but it’s built to last.

The irony of the story is that you could equate my move to gambling — the house won. Now I’m investing in its suppliers.

$GAMB (+0,03 %)
$EVO (+1,97 %)
$EVVTY (+1,75 %)

$FLTR (+0,27 %) , $EVO (+1,97 %) .... Worth to evaluate due to the next couple of years of TAM expansions in USA and Brasil.

Plus a longer term high barrier to entry.... The options alternatives in USA will soon face problems in state regulators and new regulations, since the states are loosing tax revenues.

📆 July 2025 PatitosFortune Portfolio Recap in:

The sun’s out, dividends are dripping, and some of our high-conviction picks are flying . ☀️💸

The top 7 now make up 34% of the portfolio — a slight reduction from 37.33% in June — and the focus remains: stock-picking with Patito Score + WB Score at the core.

🐣 Top Gainers of the Month:

• $WCP (-0,34 %) (Canada): Monthly dividend darling surges to the top with +16.3%, now the biggest holding at 8.13%. 🍁💵
• $3679 (-1,36 %) (Japan): Our trusted performer stays strong with +15.7%, now at 7.16% weight.
• $EVO (+1,97 %) (Sweden): Gaming momentum continued — +13.8%. 🎮

💼 New or climbing contenders:

• $GRLA (Denmark): quietly compounding — a clean +10.0%, holding 6.36% of the nest
• $2330 (Taiwan): tech titan with +6.02%, pushing past the 6% line
• $HME (+0,85 %) (Canada): small cap, big potential — +6.15%
• $4GLD (+0,08 %) : the lone ETF survivor keeps its glimmer with +5.79%

💾 Holdover Stars from June:

✅ $3679 and $E3G1 stay strong

✅ $4GLD returns to the top 7 after a month away

✅ $WCP rockets to the top spot — a new leader with a familiar dividend drip

$BETS B (+1,07 %) fell hard from the short term rally it has been showing but this is a marathon and not a sprint. While the fundamentals remain solid we will patiently wait for recovery.

Ironically the inspirer behind the Patito Scoring system, has $BRK.B (-0,1 %) as the worst scoring of our current portfolio and one of the heaviest laggers. Holding with conviction still.

🔍 Strategy Update:

Patito’s conviction nest is now ~35% concentrated in the highest-performing 7 stocks.

These aren’t lucky ducks — they’re Elite and Excellent scorers, with high WB conviction and real returns to match.

From Canada to Japan to Denmark, the feathers are globally diversified but always fluff-optimized. 🪶🌍

See you in August (where changes to the portfolio are already taking place) — and of course don’t forget to check the dividend mailbox. 📬🤑