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%)
$EVO (-7,33%)
$EVVTY (-7,52%)

$FLTR (-0,35%) , $EVO (-7,33%) .... 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.

Destaques Econômicos do Trimestre 📊

- Receita líquida: €524,3M (+3,1% YoY) vs expectativas de mercado de €517M;

- EBITDA: €345,3M (margem de 65,9%, em linha com a guidance de 66-68%);

- Lucro operacional: €306M (-2% YoY);

- Free Cash Flow: €192,3M (-31% YoY, devido a impostos e aumento de NFM).

O segundo trimestre não foi claramente o melhor trimestre da Evolution. O lucro do trimestre foi de €248,3 milhões abaixo dos €269,1 milhões no ano anterior, houve um aumento das necessidades de fundo de maneio (o qual deverá ser temporário) e não existe uma guidance explícita para 2026. No entanto, em termos operacionais e estratégicos, considero que a empresa está a avançar na direção certa. O trabalho em termos de disciplina regulatória, a diversificação geográfica e a forte alocação de capital estão a criar uma Evolution mais forte e resiliente para o futuro, ao mesmo tempo que remunera o acionista. 📈

Para saberes mais: https://dalemcapital.substack.com/p/evolution-ab-resultados-q2-de-2025?r=5

#investing
#tech
#stocks
#ações
#moat
#longterm
#equityresearch
#getquin
#evo
#evolution
$EVO (-7,33%)
$EVVTY (-7,52%)

📆 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 (+2,54%) (Canada): Monthly dividend darling surges to the top with +16.3%, now the biggest holding at 8.13%. 🍁💵
• $3679 (-1,33%) (Japan): Our trusted performer stays strong with +15.7%, now at 7.16% weight.
• $EVO (-7,33%) (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 (+1,59%) (Canada): small cap, big potential — +6.15%
• $4GLD (+0,87%) : 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 (+1,19%) 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 (-0,38%) 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. 📬🤑

I have been building my portfolio this year and it is doing quite well. Currently my focus is diversifying my portfolio. I have some nice performers in my portfolio like $BESI (+4,48%) , $ABN (+0,22%) , $EVO (-7,33%) , $VLK (+0,68%) . A few others are still underperforming for now but are known stable companies like $ALV (+0,06%) and $TTE (+0,81%) . My focus now is also a bit towards US stocks due to dollar diversification since I am mainly invested in Europe, Switserland and Scandinavia. I am always looking for companies with strong balance sheets, low debt ratio's compared to their peers, growth, dividend and maybe undervalued. One great example is $EVO (-7,33%) which I expect to launch🚀 in the coming year.

I'm looking at three dividend stocks right now: $PFE (-0,23%), $AEP (-1,14%) and $ENEL (+0,7%). They each have different profiles, and I'm trying to figure out which could be the most attractive at this point.

$PFE (-0,23%) seems undervalued. The stock is still well below its pre-COVID levels, the balance sheet is strong, and the dividend is over 5 percent. The real question is whether the company can return to solid growth with its pipeline.

$AEP (-1,14%) is a US utility with stable cash flow, a solid dividend track record, and relatively low debt. It doesn’t move fast, but it offers a good level of reliability and income, especially if rates come down.

$ENEL (+0,7%) is more of a question mark. The dividend is growing by nearly 9 percent a year and paid in multiple installments, which I like. But the stock is already up over 20 percent this year. Debt is quite high, and revenue growth is limited. I like the exposure to renewables, but I'm not sure if this is the right entry point.

• What do you think of these names?
• Any clear favourites? Or red flags?

Also curious: what are your expectations for the USD-EUR exchange rate in the second half of the year? I'm considering the FX angle too, since two of these names are US-listed.

#DividendInvesting
#Pfizer
#AEP
#Enel
#StockIdeas
#USD
#InvestingEurope

🪿📈 Monthly update – June 2025 in #PatitosFortune: the nest is taking shape!

After a strong May, June brought a changing of the feathers.

The new top 7 now make up 37.33% of the portfolio (vs 42% in May), and the 🦆 is now fully embracing stock-picking conviction powered by the Patito Score + WB Score.

🚫 Most ETFs have flown the coop — only $4GLD (+0,87%) remains, but it didn’t make this month’s highlight reel.

🧹 Even $NDA FI (+0,02%) (Nordea) was let go — a stock we like, but others showed stronger fundamentals. If numbers improve we’d be happy to get it back, for now it gave a 4.85% profit we welcome.

On to current standings!

🎮 Gaming stocks are thriving:

• $BETS B (+1,19%) (V72) holds the crown again (+14.6%, 6.71% of portfolio)
• $6460 (+1,56%) (RYU) enters the top ranks with +7.8%
• $EVO (-7,33%) (E3G1) debuts with a strong +10.6%
• 
  $2660 brings Hong Kong twist

Covering roughly 20% of the nest thanks to their fundamentals and some personal conviction, all four are part of our interactive entertainment exposure — and Patito’s loving the 🎰 + 📱 combo.

🏠 $PAG (+0,26%) adds steady UK-based growth

🌋 $MAU (+3,22%) returns from May — still bringing energy to the nest

💼 $3679 (-1,33%) solidly held its ground from May and now leads the entire portfolio by weight at 7.02%, surpassing $BRK-B thanks to it’s value appreciation and Berkshire’s recent (but hopefully not lasting) underperformance. Zigexn quietly compounding into leadership. ➡️🦆

🔁 $V72, $MAU, and $3679 all held firm from May and strengthened their standing. That’s conviction in motion. 💪

🧠 Conviction Strategy Update:

This portfolio is no longer passively feathered. We’re leaning into high-quality stocks:

✅ ~60% Elite

✅ Nearly 38% scored 9+

✅ Majority of gains from top-rated stocks identified by Patito Score and WB Score system.

It’s not just about quick profit — it’s about picking moaty, efficient, and #undervalued businesses to grow the nest long-term. 🥚🧠

We are waiting for the US picks to catch up, even with solid fundamentals with the exception of $PRDO (+0,96%) for now they are dragging a bit behind. We are looking at you $CINF (+0,07%)
$WRB (+1,2%)
$BRK.B (-0,38%)

Stay tuned — July’s looking game-ready.

$EVO (-7,33%)

1. 🔍 Key Insights

• Undervalued Compounder: Evolution AB demonstrates strong fundamentals, robust free cash flow generation, and industry leadership in the live casino segment. Current market pricing suggests a significant discount to intrinsic value based on multiple valuation methods.
• Moat-Driven Business Model: Its sustainable competitive advantage lies in proprietary technology, global regulatory licensing, brand reputation, and high switching costs for B2B partners.
• Management Discipline: High ROIC, conservative debt levels, and consistent capital returns (dividends + buybacks) reflect owner-oriented stewardship.
• Resilient Operations: Despite a deceleration in growth, Evolution maintains best-in-class margins and minimal capital reinvestment needs.

2. ⚙️ Core Evaluation Areas

📈 Valuation

• P/E (TTM): 11.6x vs. peer median ~15–20x
• PEG Ratio: 0.22, indicating undervaluation relative to earnings growth
• FCF Yield: 9.92%, implying strong value vs. market expectations
• Intrinsic Value Range: SEK 1,350–1,450
• Current Price: ~SEK 656 (≈50% discount to fair value)
• Margin of Safety: >30% suggested buy range below SEK 1,000

🚀 Growth Potential

• 5-Year Dividend CAGR: 66.64%
• Global Expansion: North America, Latin America, and Asia remain underpenetrated markets
• Product Pipeline: Investment in RNG games and game shows complements core live casino dominance

🧮 Operational Efficiency

• Gross Margin: 100% (digital, asset-light model)
• Operating Margin: 64.1% (best-in-class)
• ROIC vs. WACC: 30.5% vs. 8.6% — significant value creation spread
• CapEx/FCF Ratio: ~11% — signals capital-light reinvestment model

⚠️ Risk Factors

Company-Specific (High/Moderate):

• Regulatory Review (High): Ongoing UKGC license investigation poses near-term uncertainty
• Litigation (Moderate): Class-action suits related to unregulated market exposure
• Reputational Sensitivity (Moderate): Allegations of rule-bending could deter institutional investors

Market/Systemic (Low/Moderate):

• Currency Risk (Moderate): Global operations subject to SEK/EUR/USD fluctuations
• Consumer Discretionary Exposure (Moderate): Online gaming may decline during downturns, though historically resilient

3. 📊 Supporting Metrics & Comparisons

Metric

Evolution AB

Peer Median

Notable Competitors

P/E

11.6x

18.0x

Playtech, Flutter

ROIC

30.5%

15–20%

Industry leading

FCF Yield

9.92%

3–5%

Outperforms peer average

Net Debt/EBITDA

0.06x

1.5x

Extremely low leverage

4. 📉 Projections and Scenarios

• Base Case Growth: 10–12% revenue CAGR over 5 years (conservative vs. historical ~20%)
• DCF Fair Value: SEK 1,350–1,450 (WACC: 8.56%, Terminal Growth: 2.5%)
• High Sensitivity: Regulatory outcomes, expansion pace, and macro factors can materially affect valuation

✅ 6. Conclusion & Recommendation

Intrinsic Value: SEK 1,350–1,450

Current Price: SEK 656

Margin of Safety: ~50%

Final Recommendation: ✅ BUY

Summary:

Evolution AB is a high-quality business available at a significant discount to intrinsic value. With exceptional profitability, low capital intensity, and strong management, it aligns closely with long-term value investing principles. While regulatory overhangs exist, they appear manageable given Evolution’s track record and global footprint. The company offers a rare mix of high yield, growth, and compounding returns — a strong candidate for long-term capital appreciation.

JUST NOW: Louise, Chief HR Officer at Evolution, has acquired 62,500 options at SEK 30.5 each under the new warrant program — a total investment of SEK 1.9 million.

A strong bet on the company’s future performance!

$EVO (-7,33%)
$EVVTY (-7,52%)