Cadence Design
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Trump calls on US chip designers to stop selling to China,
My investable universe
When I‘m screening markets for my investable universe I look for high-quality compounders with:
- Strong and consistent capital returns (ROCE)
- High and stable profitability (gross, operating, and FCF margins)
- Steady revenue growth over time
- Large market capitalization (mature, established companies)
In detail I’m screening for:
- Market Cap: at least $ 10B
- ROCE 3-Year Avg: ≥ 25%
- ROCE 10-Year Avg: ≥ 25%
- Gross Margin 3-Year Avg: ≥ 50%
- FCF Margin 3-Year Avg: ≥ 20%
- Operating Margin 10-Year Avg: ≥ 25%
- Revenue per share CAGR 3-Year: ≥ 5%
- Revenue per share CAGR 10-Year: ≥ 5%
- FCF per share CAGR 3-Year: ≥ 10%
- FCF per share CAGR 10-Year: ≥ 10%
- Consistency/stability of earnings (from max. 1.0): ≥ 0.8
- No more than 75% revenue exposure to one single country/market (eg. USA)
Here are my current holdings:
My Portfolio
Today I‘m sharing with you my main portfolio. This doesn’t include any ETF investments and crypto currencies / gold etc. since I want to focus my presence on getquin on stock-picking.
Read my 3-part portfolio strategy posts to get the full picture - here are just the main pillars of what I‘m doing:
- Long-term buy and hold (average holding time 5+ years at least)
- Focus on high-ROIC compounders riding secular trends (top-tier capital efficiency)
- High margins, strong FCF growth, large moats (7 powers strategy)
- Holding not more than 20 stocks at a time while mainly focusing on US and EU based companies
I like to divide my holdings into „core holdings“ (forever stocks) and „trend picks“ (2030 stocks) as follows:
Core Holdings (“Forever Stocks”):
- $MSFT (+0,62%)
$ADBE (+0,93%)
$META (+0,56%)
$MA (+2,14%)
$AMZN (-0,1%)
$OR (+2,06%)
$MC (+0,1%)
$RMS (+1,74%)
$EL (-0,32%)
$BRK.B (-0,27%)
$MSCI (-0,18%)
$SPGI (-0,04%)
Growth Picks (“2030 Stocks”):
My portfolio strategy (part 3)
I use the 7 Powers framework from the book “7 Powers: The Foundations of Business Strategy” by Hamilton Helmer. It’s a killer framework for understanding why some businesses create lasting value and compound returns over time.
Each “Power” is a sustainable strategic advantage that lets a company generate outsized returns for a long time. I ask the 7 questions for each stock I am considering to buy.
1. Counter-Positioning
- What it is: A new entrant adopts a superior business model that incumbents can’t copy without damaging their own biz.
- Example: Netflix vs. Blockbuster. Blockbuster couldn’t move to streaming without killing its DVD revenue.
- Why it matters: Creates asymmetric pressure; the old guard is paralyzed.
2. Scale Economies
- What it is: Unit costs drop as volume increases.
- Example: Amazon, Costco. Bigger = cheaper = stronger moat.
- Why it matters: Hard to compete if you can’t match their cost base.
3. Switching Costs
- What it is: Customers stick around because switching is painful.
- Example: Adobe Creative Cloud, Microsoft Office, Salesforce.
- Why it matters: High retention = stable cash flows = compounding machine.
4. Network Effects
- What it is: The product gets better as more people use it.
- Example: Meta, Visa, LinkedIn.
- Why it matters: Leads to dominance, creates a feedback loop of growth.
5. Branding
- What it is: Emotional or symbolic value, not just functional.
- Example: L’Oréal, Hermès, Apple.
- Why it matters: Lets companies charge premium prices and keeps customers loyal even if alternatives exist.
6. Cornered Resource
- What it is: Exclusive access to a critical asset — talent, IP, data, supply.
- Example: ASML (EUV tech), Novo Nordisk (Ozempic IP), Ferrari (brand + heritage + team).
- Why it matters: If no one else can get it, you win.
7. Process Power
- What it is: Unique internal processes that drive efficiency, innovation, or quality — and are hard to copy.
- Example: Toyota (lean manufacturing), Amazon (logistics, culture of innovation).
- Why it matters: Long-lasting edge baked into the org’s DNA.
If I had to chose one, Network effects would be the most important one for me.
Here are my current holdings:
My portfolio strategy (part 2)
- Concentrate on the following sectors: Tech, consumer, healthcare, financial (excluding banks), industrials
- Smallest position size 2% / largest position size 15%
- Only sell a position when it can be replaced with a position that increases the overall quality of the portfolio
- Avoid companies with little to no track record or companies going through a restructuring phase
Here are my current holdings:
Cadence unveils new Nvidia-based supercomputer and pushes into engineering and biotech software
Cadence Design Systems on Wednesday unveiled a new supercomputer based on chips from Nvidia that will accelerate its software offerings for everything from chip development to jets to new drugs.
Cadence provides software that companies like Apple use to develop chips. In recent years, however, the company has expanded its offerings to help customers like Boom, a start-up that makes supersonic jets, design their airplanes, or biotech start-up Treeline Biosciences find new drug candidates through molecular simulations.
The software was originally developed for central processing units (CPUs) at a time when PCs were still widely used. On Wednesday, Cadence announced that many of these core programs have been redesigned to run on the latest "Blackwell" graphics processing units (GPUs) from Nvidia.
Cadence's new Millennium M2000 supercomputer will contain about 32 of Nvidia's latest chips and cost about $1.5 million, depending on configuration. It follows on from a supercomputer launched last year that ran a more limited range of Cadence software.
The price is justified by improvements in speed.
Michael Jackson, corporate vice president and general manager of the System Design and Analysis Group at Cadence, said the company worked with Boeing to analyze turbulence around parts of a 777 jet. What would have taken eight days with a traditional CPU-based system could be done in less than 24 hours with the new supercomputer, allowing engineers to either do the same work in less time or use the extra time to make further design improvements.
"There is an insatiable need for faster simulations," Jackson explained in an interview with Reuters on May 6.
Jeff Grandy, vice president of Cadence Molecular Sciences, explained that molecular simulations to find promising drug candidates have been reduced from two days to about four minutes, allowing scientists to tinker with new molecule ideas in near real time.
"You used to have to wait several days for an answer to make a decision on your project," Grandy said in an interview on May 6. "Now you can really do it in a much more interactive way." (Reporting by Stephen Nellis in Santa Clara, California; Editing by Muralikumar Anantharaman).
My portfolio strategy (part 1)
My Portfolio is a selection of 15-25 companies which I am buying and planning on never selling. The overall criteria for my #investableuniverse are the following. I will go in-depth in another post:
- Little capital needed to run the business (high ROCE)
- High returns on invested capital (high ROIC)
- Profitability track-record with high gross margins / operating margins / high free cash flow margins
- High free cashflow growth / substantial revenue growth
- Global revenue diversification
- Low cyclicality
- #tollbooth Company - Large moat / brand name in the industry / no alternatives to the product
- Predictable sources of future growth / global trends
Here are my current holdings:
Time to buy: My top 30 companies that I am particularly looking at in the current crash
It is now slowly becoming clear who has what it takes to make good profits in the coming years.
Here are my top 30 companies by category, which I am particularly looking at in the current crash.
Some are still overvalued, others are already very attractive at the current price level.
Tier 1 (high corporate quality and strong growth)
Airbnb $ABNB (+0,51%)
Alphabet $GOOGL (-0,13%)
Amazon $AMZN (-0,1%)
ASML $ASML (-1,02%)
Axon $AXON (+2,93%)
Cadence $CDNS (+1,22%)
Constellation Software $CSU (+2,57%)
Crowdstrike $CRWD (+2,43%)
Fair Isaac $FICO (+2,65%)
Hermes $RMS (+1,74%)
Intuit $INTU (-0,37%)
Intuitive Surgical $ISRG (-0,67%)
Mastercard $MA (+2,14%)
Meta $META (+0,56%)
Netflix $NFLX (+2,13%)
Microsoft $MSFT (+0,62%)
Palantir $PLTR (+7,32%)
Tesla $TSLA (-2,92%)
Tier-2 (high business quality and moderate growth)
Booking $BKNG (+0,51%)
Costco $COST (+3,24%)
Ferrari $RACE (+0,11%)
Moody's $MCO (-0,32%)
MSCI $MSCI (-0,18%)
Transdigm $TDG (+0,7%)
Tier-3 (medium / solid corporate quality and strong growth)
Hims & Hers $HIMS (+8,3%)
Robinhood $HOOD (+3,45%)
Roblox $RBLX
Shopify $SHOP (-0,16%)
Spotify $SPOT (+4,37%)
The Trade Desk $TTD (+0,27%)
I bought on Friday and am buying again today - even in the course of the next few days and weeks, when we could probably see even lower prices.
Where are you buying?
The only list you need: The top 24 companies I look out for in the correction process
Airbnb $ABNB (+0,51%)
Amazon $AMZN (-0,1%)
Axon $AXON (+2,93%)
Cadence $CDNS (+1,22%)
Constellation Software $CSU (+2,57%)
Costco $COST (+3,24%)
Crowdstrike $CRWD (+2,43%)
Fair Isaac $FICO (+2,65%)
Ferrari $RACE (+0,11%)
Hermes $RMS (+1,74%)
Hims & Hers $HIMS (+8,3%)
Intuit $INTU (-0,37%)
Intuitive Surgical $ISRG (-0,67%)
Mastercard $MA (+2,14%)
Microsoft $MSFT (+0,62%)
Moody's $MCO (-0%)
MSCI $MSCI (-0,18%)
Palantir $PLTR (+7,32%)
Robinhood $HOOD (+3,45%)
Roblox $RBLX
Shopify $SHOP (-0,16%)
Tesla $TSLA (-2,92%)
The Trade Desk $TTD (+0,27%)
Transdigm $TDG (+0,7%)
Select a maximum of 8-10 positions from this list that have the best risk/reward ratio and are reasonably valued. Then there is a good chance of outperforming the S&P 500.
Your opinion?
CDNS | Q4 2024 Earnings Highlights:
🔹 Adj EPS: $1.88 (Est. $1.82) 🟢; UP +36.2% YoY
🔹 Revenue: $1.356B (Est. $1.346B) 🟢; UP +26.8% YoY
🔹 Non-GAAP Operating Margin: 46.0% (Est. 45.03% as EBIT Margin) 🟢; UP +3.1pp YoY
FY 25 Guidance:
🔹 Revenue: $5.14B-$5.22B (Est. $5.25B) 🔴
🔹 Adj EPS: $6.65-$6.75 (Est. $6.83) 🔴
🔹 Non-GAAP Operating Margin: 43.25%-44.25%
Q4'24 Segment Performance:
🔹 Core EDA Revenue (Digital, Custom/Analog, Verification): UP +15% YoY
🔹 IP Business Revenue: UP +28% YoY
🔹 Hardware Business (Palladium Z3, Protium X3): Record quarter
Q4 2024 Key Metrics:
🔹 Backlog: $6.8B
🔹 Current Remaining Performance Obligations (cRPO): $3.4B
Strategic Updates:
🔸 Cadence. ai portfolio gaining traction with AI-driven products (Cerebrus, Verisium SimAI, Allegro X AI).
🔸 System Design & Analysis revenue up over 40% in 2024, driven by multi-physics and AI optimization.
Management Commentary:
🔸 "Our momentum continues to build as we exited 2024 with record bookings and record backlog. Cadence is very well positioned to benefit from the various phases of AI," said Anirudh Devgan, President and CEO.
🔸 "I’m pleased with our record year-end backlog of $6.8 billion and cRPO of $3.4 billion, and I look forward to building on that strength in 2025," said John Wall, SVP and CFO.
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