1) Executive Summary

Embraer is not just another aircraft manufacturer – it’s a global leader in regional and business jets, with a portfolio stretching across commercial, executive, defense, and even urban air mobility. Backlogs are filled and at an all-time high of nearly $30 billion, growing quarter after quarter, providing multi-year visibility and opportunities for strategic planning. The company is increasingly seen as the “third force” in global aerospace – smaller than Airbus and Boeing, but faster-growing, more diversified, and dominant in its niches.

In commercial jets, the manufacturer benefits from an oligopolistic market where Airbus and Boeing are swamped with narrow-body demand, leaving airlines eager for Embraer’s efficient E2 family. In executive aviation, the Phenom and Praetor families continue to outpace peers, with the Phenom 300 holding its crown as the best-selling light jet. Defense is becoming a real growth engine as the C-390 gains traction among NATO members. And looking further ahead, Eve gives the Brazilian group a credible stake in urban air mobility, with an order book rivaling much larger peers.

The core strengths remain clear: diversification, execution, and a backlog that underwrites growth into the next decade.

2) Macro Environment

Embraer operates in a booming global environment on multiple layers:

• Regional aviation demand: Airlines are expanding their fleets globally, with rising passenger counts, and the company capitalizes on these trends. The manufacturer forecasts demand for ~10,500 sub-150 seat jets and turboprops over the next two decades, which, if true, would boost sales even more, as the leader in that space.

• Emerging markets penetration: Embraer led a strong push into India and other emerging economies across commercial, business and defense sectors through talks with Air India and IndiGo. Many regions, especially in Southeast Asia, are expanding their aircraft fleets massively due to the increased level of wealth within these countries and the corresponding demand for travel. The group is at the forefront of this growth. Countless regional airlines in developing regions are banking on smaller jets and efficient delivery. Both are major catalysts for Embraer.

• Global increase in defense spending: With countless conflicts around the world and growing tension between the largest political actors, many countries decided to shift their priorities toward defense. Especially in Europe, where NATO members had to realize the hard way that conflicts still exist everywhere and can occur unexpectedly. Under President Trump, the U.S. pledged not to guarantee Europe’s defense perpetually if the continent does not conform to NATO defense spending goals (>2% of GDP). Following these events, many nations increased spending or even took loans for “emergency” packages to modernize and expand defense capabilities.

Decreased geopolitical and trade risk: After “Liberation Day” and the subsequent announcements, investors have become wary of Embraer’s North American prospects. However, these concerns vanished after the administration announced that aircraft deliveries will be exempt from scrutiny. Embraer reported no material tariff impact in Q2, which will continue, given that the situation stays constant.

3) Company Overview & Segmentation

Embraer is a diversified business with several categories. There are the core lines:

• Commercial Aviation: The backbone of the company is the E-Jet program. The newer E2 family (E175-E2, E190-E2, E195-E2) builds on the success of the original E-Jets, which still form a big part of the fleet worldwide. Embraer is the undisputed leader in regional jets (<150 seats). Airlines opting for something smaller than an A320 or 737 turn to Embraer instead. Demand is rising as carriers open up point-to-point routes and expand into secondary airports, particularly in emerging markets. The company also benefits from the largest installed base of regional jets in the world, with a proven track record for reliability and a vast operator network.

• Executive Aviation: The business jet arm centers on the Phenom (100EV, 300E) and the Praetor (500, 600). The Phenom 300 has held the top spot as the best-selling light jet for over 12 years, proving itself as a reliable market leader. The Praetor series marks Embraer’s strong entry into the midsize jet category, where it competes with models like Bombardier’s Challenger and Cessna’s Citation. Light and midsize jets are favored for their cost-efficient operations and dependable performance, making them a preferred choice for both corporate and private buyers.

• Defense & Security: Embraer’s key program is the C-390 Millennium (KC-390 for air-to-air refueling and cargo). It is seen as a modern, cost-effective alternative to Lockheed’s C-130 Hercules, favored especially by smaller European countries. The backlog is filled with orders from Austria, Portugal, Czechia, Hungary, the Netherlands, South Korea and Brazil. Other countries also confirmed intent to purchase, including Sweden, Slovakia, Lithuania, India, Poland, Turkey and Finland.

• Service & Support: This is Embraer’s recurring revenue base and serves as a margin stabilizer across economic cycles. Embraer has over 2,500 aircraft in service worldwide, generating demand for support services, including maintenance, repair & overhaul, parts supply, pilot training and fleet upgrades. Services backlog is growing rapidly, increasing predictive revenues.

• Advanced Air Mobility: Eve is developing electric vertical take-off (eVTOL) and landing aircraft for urban air mobility. The order book is filled from airlines and ride-sharing platforms, however commercialization is still far away at the moment. Still, Eve is in a strategic position, backed by Embraer’s engineering and global service network – something many eVTOL startups lack.

Embraer is not a one-product company: it combines commercial and executive aviation with other ventures and this strategy bears fruit. The company is gaining traction, driven by macro tailwinds and strong execution. The business model is as diversified as possible for an aircraft manufacturer.

4) Financial & Operational Performance

• Revenue (Q2 2025): $1.82 billion (+22% YoY, record second quarter)

• Adjusted EBIT: $191.8 million (10.5% margin, best in a decade)

• Adjusted Net Result: –$4.7 million (vs. $80 million profit in Q2 2024)

• Deliveries (H1 2025): 87 aircraft (61 executive, 26 commercial; +30% YoY)

• Backlog: $29.7 billion (record high; +40% YoY)
• Commercial Aviation: $13.1 billion (+16% YoY) – demand driven by E2 jets and strong regional fleet renewal
• Executive Aviation: $7.4 billion (+62% YoY) – Phenom 300 and Praetor families leading, business jet deliveries up sharply
• Defense & Security: $4.3 billion (doubled YoY) – C-390 export contracts expanding with NATO countries
• Services & Support: $4.9 billion (+49% YoY) – recurring revenue base growing rapidly

• Free Cash Flow (Q2 2025): –$162 million, explained through working capital required for increased production

• Leverage: Net debt/EBITDA around 0.5x after sharp deleveraging in 2024

• Guidance 2025: Revenue $7.0–7.5 billion, 77–85 commercial jets, 145–155 executive jets, EBIT margin 7.5–8.3%, FCF >$200 million

• Long-term growth: Management aims to nearly double revenue to ~$10 billion by 2030, driven by steady commercial demand, executive jet leadership, expanding KC-390 defense contracts, and early-stage growth in urban air mobility (Eve eVTOL).

Embraer is aiming for another year of solid top-line growth, driven by strong execution and macro trends. Backlog strength across all four segments provides multi-year stability, with Executive and Defense posting the fastest growth, Commercial stabilizing as the core driver, and Services adding recurring resilience with impressive numbers.

5) Growth Drivers

• Backlog at record levels: Nearly $30 billion provides exceptional forward visibility and ensures production stability well into the next cycle.

• Regional jet demand: Airlines need smaller, fuel-efficient aircraft to run point-to-point routes and connect thinner markets. This is exactly the space the E2 family dominates.

• Executive jet momentum: Business aviation is holding up better than expected, with Embraer at the front of the pack. The Phenom 300 and Praetor are driving the strongest delivery volumes in years, outpacing most competitors and proving that demand for this class of jet is here to stay.

• C-390 adoption: More and more countries are lining up for the Millennium. Several NATO members already signed on, and others are in the pipeline. For mid-sized air forces that need a modern, versatile transport aircraft, it’s becoming the clear replacement for the aging C-130 built by Lockheed Martin. With production capacity expanding, Embraer can actually deliver these planes on time and work through its massive backlog – something rivals are often struggling with.

• Expansion into emerging markets: India, Southeast Asia, and Latin America are increasing fleet sizes – precisely the markets where Embraer’s regional aircraft fit best. The company maintains strong relationships with international carriers through its global network.

Urban air mobility optionality: Eve’s ~2,800 provisional orders represent a long-term bet on an entirely new industry, where Embraer brings engineering credibility and a service backbone no startup can replicate.

6) Valuation & Investor Sentiment

The stock has rallied a lot already this year, outperforming both Airbus and Boeing significantly. Investors recognize Embraer’s position and prospects, which led to this upward trend. However, with the company’s massive backlog, >15% revenue growth, and a strong pipeline, there is no reason to suggest a slowdown. Embraer is in a prime spot to capitalize on macro trends, and still, the stock is trading at a very fair to cheap Forward P/E ratio of ~21 – lower than Airbus’ ~23.

7) Risks & Challenges

Nevertheless, the manufacturer also faces challenges, however many seem insignificant or short lived:

• Margins under pressure: Embraer reported a negative free cash flow in Q2, which seems bad on first glance. However, if the reason for this is massive demand, which requires major investment into production capabilities to facilitate all orders, it does not seem so negative anymore.

• Tariff uncertainty: While President Trump has backed down from putting additional taxes on Embraer’s deliveries, this could potentially change in the future and further damage profitability.

eVTOL market uncertainty: Eve is one of Embraer’s future projects and growth drivers. However, there is no clarity about commercialization, regulation, and adoption as of now. While the prospects of eVTOL are undeniable, the how and when is still unclear.

8) Catalysts & Timeline

Embraer has had several successful quarters behind it, but signs point to continual growth, underpinned by multiple potential factors:

• Delivery ramp-up in H2 2025: Embraer is poised to significantly boost production, which should drive improved margins and stronger cash flow. The company continues to enhance its operational efficiency each quarter, and with a robust backlog providing a solid revenue foundation, Embraer is well-positioned to strategically invest in expanding its production capabilities and advancing its development facilities.

• Geographic expansion: As mentioned earlier, Embraer heavily targets Emerging Markets. India, one of the key players, is expanding its fleets rapidly, primarily with regional jets – something Embraer can capitalize on. The company has shown progress in talks with Indian carriers, which could materialize in the form of announcements, agreements and orders in the future.

• Defense deals: C-390 export wins could materially boost backlog. As nations pledge higher spend on the military, Embraer profits, especially since competitors struggle to deliver past orders, let alone new ones. Notably smaller countries including Austria, the Netherlands and Portugal, rely on the Millennium as their prime military transport aircraft.

eVTOL launch: Eve commercialization likely happening over the next few years, although without a concrete timeline. However, this trend is noticeably gaining traction and could become a crucial part of Embraer’s structure in the future.

9) Conclusion

Embraer is highly impressive in multiple ways: record revenue and margins, towering backlog, geographic expansion, defense diversification, and a stake in the future with eVTOL. Its strategy to nearly double revenues by 2030 – anchored on its core, modern product line – is credible. The leadership does not throw around baseless projections, but rather build on a historically strong execution and increasing demand for Embraer’s products.

For a well-rounded aerospace exposure beyond the Airbus/Boeing duopoly, Embraer shines. Yes, the company sits in Latin America, which has proven to be volatile in the past, however the landscape is changing and the economy is stabilizing, further solidifying an investment case. Most importantly, the pipeline is incredible: Eve commercialization is likely to come soon, Defense spending grows exponentially, commercial aircraft demand is booming, while private jets are as prevalent as never before. Embraer is at the intersection of all that. The company is a diversified behemoth in the sector and has a very bright future.

$EMBR3
$ERJ (+1,56%)
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$TXT (+1,67%)

Introduction

It has now been a little bit over a month since I published my first portfolio review. I started this portfolio on July 23 and will continue to share monthly recaps from now to, hopefully, a very long time. My goal with these updates is simple: transparency. They are to document performance regularly, explain my investment process, and create a track record of decisions that I can learn from and reflect on over time. I will focus on what worked and what did not, while keeping the macro picture and long-term perspective over short-term volatility in mind. As I pointed out in my last review, I strive to become a hedge fund manager, and while there is still a long way to go, and many lessons to be learned, this portfolio will be my primary credential for the future.

Unlike a traditional investor letter, this recap is designed to be professional yet approachable, so it can serve as a portfolio log and as a resource or inspiration for anyone interested in equity investing. Yes, I am doing this primarily because I love investing and diving into company reports and stock market news, but I also want to share my journey and hopefully be able to use my passion in a professional setting. Every month, I will share performance vs. benchmark indices, most suitable to asset allocation, highlights of the strongest and weakest performance, and any changes I have made to my portfolio. This is not about sugarcoating results. Since I genuinely want to improve, there is no point in trying to sweet talk mistakes and slip-ups. Over time, this series should build a narrative of my investing journey, through wins, theses, and most importantly long-term performance and improvement. My daily commentary usually serves as an opinion piece on companies on my watchlist or the most recent macro news, while these monthly recaps are intended to provide a comprehensive guide on my investing principles and execution.

Portfolio Performance

For the month of August, my portfolio delivered a strong +5.25% total return. Not a bad start for month one, but it is always important to remember that short-term gains are not the most meaningful metric. Consistency is key. Nevertheless, to put this month’s return in perspective, here are important benchmarks:

• S&P 500: +3.33%
• Nasdaq 100: +2.42%
• MSCI ACWI: +3.84%

This means the portfolio outperformed both global and U.S. benchmarks in its first full month, which is encouraging.

However, the performance was not linear. The first few days were negative, but as the month progressed, companies reported earnings and news surfaced, several key holdings – particularly those in healthcare and fintech – drove strong upward momentum. This led to an intersection between my portfolio performance and benchmarks around the middle of the month. Since then, the portfolio has outpaced the market’s broader rally.

The outperformance cannot be attributed to one single stock, but rather a combination of multiple holdings reacting strongly. This is exactly how I want my portfolio to behave: diversified enough to avoid cluster risk, but concentrated enough to benefit meaningfully from each of my highest-conviction ideas. It is crucial to strike the balance between diversification and conviction, without sacrificing returns or risk management.

Allocation Snapshot

The portfolio currently consists of 18 equity holdings plus cash, with cash representing the single largest allocation at 35.1%.

This is a short breakdown of my portfolio:

• Cash: 35.1%
• Largest equity holding: Eli Lilly (LLY) at 5.5%
• Other top allocations include: UNH (4.8%), ASML (4.6%), SLB (4.6%), DLocal (4.2%), Dynatrace (4.1%), Gambling.com (4.1%), Salesforce (4.0%), Novo Nordisk (3.9%), and Nu (3.7%).

The high cash balance is intentional. As this is the first month of the portfolio, it is important not to rush into not-well-enough researched positions only to reduce the cash quota. Even for my highest-conviction positions, like LLY or ASML, I want to remain disciplined with entry prices and only buy on pullbacks, after I initiate my first tranche. As I emphasized in my last report, I aim to invest opportunistically in great companies at discounts, and reduce my cash balance to below 10% by the end of the year. In fact, over the course of August I already reduced my cash position from 56% to 35%, by adding to and opening new positions, especially during the first half of the month.

However, I am not in a rush to close my cash holding right now, since I am convinced that this rally off the April lows is highly unsustainable, considering the economic tensions and tariff regime in place. AI hype is driving this rally, and if the enthusiasm cools down, some interesting opportunities could present.

Since I aim for high returns with acceptable risk management, the exposure to fast-growing industries like fintech and software comes naturally. However, I also own more defensive players in the energy and healthcare spaces that, in my opinion, offer a healthy risk/reward ratio not recognized enough by the market. Indeed, some of the companies I hold fall on the more expensive spectrum, but they also boast immense growth and potential for the future. My focus does not lie on momentum or trends, but rather fundamentals and underlying prospects.

Strongest & Weakest Performers

Strongest performers:

• DLocal posted strong earnings in a volatile market environment, which led to a jump in the stock of more than 40% the day after. I remain extremely bullish on the company, with a forward P/E ratio of 23, reflecting a more than fair valuation even after the recent rally. The fintech disruptor is revolutionizing payment solutions across emerging markets, with still a massive TAM left.

• UnitedHealth recovered more than 30% from the lows hit at the beginning of the month, due to improving sentiment and the news of several super-investors, most notably Buffett’s Berkshire Hathaway, opening a position in the healthcare giant. The company has a very healthy balance sheet and a strong moat as the largest health insurer worldwide, and that is not even taking into account all its other ventures.

• Nubank outperformed on strong user growth (over 127 million customers across Latin America) and rising profitability. As the leading neobank in Latin America, Nu delivers >25% annual growth and holds a stellar position. The TAM is hard to overlook, as the neobank operates in one of the most underbanked regions worldwide.

Weakest performers:

• Salesforce slightly recovered from recently hit lows, while still underperforming the broader tech sector due to a perceived lack of AI implementation. However, Salesforce is the largest provider of CRM services worldwide and in a very good position for a recovery if any good news hits. The company has not taken part in the recent rally and could be in for a rebound.

• Gambling.com sold off after solid earnings due to a cautious outlook. Online betting is inherently cyclical, and the current economic situation does not look great. However, Gambling.com is already trading at an extremely cheap valuation. Somehow, the market still finds a way to send the stock further down.

In both cases, I view the weakness as sentiment-driven rather than structural. Investors’ confidence is shattered at the moment. However, my theses on these companies have not changed. I think both of them are misunderstood and victims of short-term focus, rather than the broader picture.

Portfolio Activity

Because this was the first month, most activity was centered around building initial positions. I deliberately capped position sizes at ~3–5% each, which allows me to add more over time if conviction grows or valuations improve.

• New Buys: SLB, FTNT, DT, CDLR
• Adds: CRM, GAMB, LLY, UNH
• Sells: M12
• Cash: Meaningfully reduced from >55% to ~35%

My portfolio is still “under construction.” While I reduced my cash position and invested aggressively, especially after earnings hit, I still hold a significant chunk of my portfolio in cash, which I plan to reduce by the end of the year. When I decide to buy into a company, I always do it in tranches and build a position over time, rather than buying all at once. Take Lilly for example: I opened an initial position in July and then bought multiple times this month after the earnings-related dip, and now I am almost 10% in the green with the position.

Market & Macro Context

Markets in August were shaped mainly by speculation around interest rate cuts and the earnings season, both of which contributed positively to my return. Several of my holdings jumped after stellar earnings, while others fell and therefore created opportunities to add, increasing long-term upside. Economic data was two-edged: while unemployment continued to increase, so did GDP, and tariff impacts were largely absorbed by corporations. My portfolio specifically profited from improving sentiment around some beaten-up healthcare names and increasing momentum for fintech and Latin American stocks. August has also been a good month for many tech investors due to continued growth and AI momentum.

Outlook

September historically is a very difficult month for markets. These are the key catalysts I will be looking at over the next month:

Jerome Powell has hinted at a possible rate cut at the next meeting, which the market has now priced in. It seems likely, at this point, that interest rates will be falling. However, if the Fed has a sudden change of heart, it could mean a cold awakening for stocks across the board.

On the other hand, if the most likely scenario – a rate cut – comes in, the already started shift from tech stocks to more cyclical industries profiting from lower interest rates could get a boost in September.

Apart from that, I still wholeheartedly believe that the current recovery rally from April lows is highly unsustainable and will eventually cool down, which could create buying opportunities. Whether that will be in September or a later month, I cannot determine. However, it seems strange to have such bullish sentiment ruling the markets, considering the tariff-inflicted strain on the economy. If signs of a cooling cycle thicken, markets could tumble very quickly.

Nevertheless, I am not worried about a broader pullback, since conviction is unwavering for the holdings in my portfolio. If anything, selloffs create possibilities to add to existing holdings or initiate new positions at attractive entry prices.

Closing Thoughts

This first month has been a promising start, with outperformance vs. benchmarks, and multiple adds to my highest-conviction positions. My strategy of investing opportunistically has proven correct so far. However, it has only been one month and I understand that markets fluctuate, which means that patience is key. While it is tempting to deploy cash all at once in order to ride the rally, that is not how I play the game.

In my daily comments I talked about many companies on my watchlist, some of which I will probably never own, because they do not reach my entry prices. That is not important. I have my eyes on countless stocks and continue to research new companies every day. There are always opportunities in the market, and often they are the ones most under fire.

Furthermore, I look forward to continuing this series monthly. Transparency, accountability, and consistency are the main goals. I strive to be the best investor I can possibly be, and this is my log. The target is as clear as ever: beating the market consistently and transforming that experience into the real world.

$ACWU (+0,76%)
$LYPS (+0,81%)
$CSNDX (+1,22%)
$LLY (+0,36%)
$UNH (-1,98%)
$ASML (+6,23%)
$ASML (+6,5%)
$SLB (-0,51%)
$DT (+2,23%)
$DLO
$CRM (+1,21%)
$GAMB (+2,92%)
$NOVO B (+6,8%)
$NVO (+6,86%)
$NU (+0,44%)
$NU
$MSCI (-3,31%)
$FTNT (+1,13%)
$EFX (+0%)
$FI (-0,69%)
$ERJ (+1,56%)
$OSCR
$CDLR (+2,31%)
$CADLR (+2,43%)
$MBLY