In the 2025 year-end letter, I detailed Tadpole’s approach to generating investment ideas, from screening for specific company characteristics, to finding companies through other companies, using eyes and ears, and talking to other investors. With >20,000 publicly traded companies in the countries we look at,^[1] the hard part usually isn’t creating a list of targets, it’s progressing that list through underwriting and investment philosophy to figure out what to buy or sell. Therefore, in this letter, I want to take things a step further and discuss Tadpole’s approach to underwriting investment ideas, and in particular how the firm approaches margin of safety, which is ultimately what drives conviction in specific investments. In short, how do we get from “that looks interesting,” to “let’s put in an order”?

A quick note: this is a long letter. Buckle up!

Margin of safety, the Tadpole way.

Anyone who has left their house 15 minutes early for an important appointment understands the concept of margin of safety. Leaving a little extra buffer reduces the risk that something unforeseen like traffic or an impromptu stop at your local drive-through will derail your trip and cause you to be late. In investing, margin of safety is one of those bedrock concepts that means different things to different people. Many investors view margin of safety through a mostly quantitative view related to price vs intrinsic value: If I can buy a dollar of assets for 80 cents, then that 20 cent discount is my margin of safety. If it turns out that the asset I bought is worth less than a dollar, at least I have 20 cents of buffer until I take a loss on my 80 cent investment. The lower my purchase price relative to that intrinsic value, the safer I feel.

At Tadpole, I define margin of safety as the set of things that increase the chances of a successful investment outcome. That is, the group of quantitative or qualitative things that either increase my return profile or reduce my risk. The more of these factors that I can find, the higher the margin of safety is and the more conviction I have in the attractiveness of a security. Importantly, this is very context-specific. I like to say that both venture capitalists and vulture investors can make money, they are just looking for different factors in margin of safety.

Venture investors, who invest in early stage businesses that often times aren’t profitable and face significantly wide eventual outcomes, prioritize the strength of the founding team, the size of the problem that team is solving, the differentiation of the product or solution being brought to market, the cash runway, and the deal terms when deciding whether there’s margin of safety. All of these things can increase the chances of a successful outcome, even though they look very different from the “buying a dollar for 80 cents” view.

At the exact opposite end of the spectrum, vulture investors look for broken businesses or end-of-life assets such as bankrupt companies or deep restructuring situations. Vulture investors are often looking for hard assets that they can sell (a bit closer to the dollar for 80 cents approach), but they are also looking at the direction of the demand cycle (is this depressed industry going to recover?), the court process for a Chapter 11 case, the ability for management to cut costs, and the potential for hidden assets to create additional value or optionality. Different set of factors, but same underlying goal of increasing the chances of a successful outcome.

Of course, there are similarities in the categories of things each investor is underwriting, and at Tadpole those categories are what drive the underwriting process. Here are a few:

· Balance sheet strength

· Competitive position

· Strength of products and services

· Valuation

· Structural advantages or disadvantages

· Management team

· Margins and ROIC profile

· Growth profile

· Industry backdrop and cyclicality

· Key risk factors

· “X factors” and hidden assets that drive optionality

· M&A or exit potential

Generally, I believe that for earlier stage companies, qualitative factors often outweigh quantitative factors (there probably isn’t a P/E ratio to analyze), while for later-stage businesses and fixed income investments, price paid and quantitative factors carry the bulk of the analytical weight. All else equal, entry price is the clearest and most direct way to increase margin of safety.

I believe that venture investors, vulture investors, and investors in between can make money by reducing their risk and increasing potential returns when they view margin of safety contextually and update the mix of qualitative and quantitative factors they underwrite depending on the situation. This flexibility and opportunistic approach is the underlying philosophy driving Tadpole’s investment decisions and underwriting process. It is the core reason why we own some businesses that look “growthy” and some that look like more traditional deep value investments. For example, in the sections below you will see that during 1H2026 we made investments in both a technology company with minimal current profitability but strong revenue growth, as well as a >90-year-old industrial business.

Applying margin of safety, and Tadpole’s underwriting process:

In practice, once an interesting idea has been identified, Tadpole’s research process is based on discovery and valuation. The discovery phase is the core research effort undertaken for new investments: read the annual report and other investor materials the company has released, understand the history of the firm and current market dynamics, figure out what has been going right vs what has been going wrong for the company lately, what the key products or services are and how they stack up against competitors, what resource conversion events have taken place recently (M&A, spin-offs, changes to the capital structure), and what the balance sheet looks like. Speaking with management is often an important part of the underwriting process in order to better understand their approach.

The valuation phase usually involves building a full financial model to contextualize the current price of the stock or bond. I often look at both a cash flow-driven valuation (discounted cash flow approach) as well as a multiples or sum-of-the-parts analysis. The view on margin of safety is what drives initial conviction and position sizing. Generally, I start with small starter positions that I scale up over time as I learn more and can benchmark actual results against initial expectations.

But that’s enough about that… What’s going on in the portfolios?

Here’s a selection of investment theses for companies that have made it into client portfolios during 1H2026.^[2] These are examples meant to illustrate my approach to investing, rather than an exhaustive list given the number of new names in each portfolio and their differing compositions.

Carlo Gavazzi Holding AG (GAV):

Carlo Gavazzi is a Swiss-headquartered industrial automation company that designs, manufactures and markets a variety of electronic components centered around three core competencies: controls (39% of revenue), switches (36%), and sensors (25%). The components that Gavazzi produces are used in diverse end markets, including food production, EV charging, access control, semiconductor manufacturing and HVAC. Gavazzi’s products generally allow customers to measure and control electricity and power, sense movement, and transmit related data to company systems. Founded in 1931 by Carlo Gavazzi himself, the firm today is still controlled by the Gavazzi family.

After a period of very strong demand in 2022 and 2023, in which supply chain investments by manufacturers post-Covid and a buildout in EV charging networks drove revenue and earnings higher, the company has since experienced a material slowdown. This has been compounded by margin pressure due to the opening of new manufacturing facilities in Mexico and China and the closure of the firm’s plant in Malta. However, headwinds appear to be giving way to tailwinds, with bookings starting to grow again and costs expected to decline following the closure of Gavazzi’s Malta plant. What’s more, Gavazzi appears to have a significant amount of excess capital on its balance sheet. The total market cap of the firm is CHF 110M at the time of writing, yet Gavazzi holds CHF 70M of net cash and bank deposits, meaning that the underlying industrial automation business is only valued by the market at CHF 40M. At peak in 2023, Gavazzi produced almost CHF 40M in operating income, meaning that investors today are buying the business at roughly 1x peak EBIT. I expect revenue and margins to benefit from the ramp in new capacity in Mexico/China, the improving demand backdrop, and new product introductions, while it seems likely that pressure will build on management and the board to start returning capital to shareholders.

US Technology Companies:

Over the first half of this year, there has been an interesting divergence within the technology ecosystem between semiconductor and technology hardware companies on one side and software companies on the other. Per Koyfin, from January through the time of writing, semiconductors and hardware stocks have been the largest contributors to the performance of the S&P 500, while software stocks have been the largest detractors. This is in large part due to AI, which is creating seemingly insatiable demand for physical infrastructure and seemingly doomsday potential for software companies. As a result, I believe that a number of software businesses have begun to trade at valuations that are overly discounting the threat of AI. In fact, some of these companies seem more likely to benefit from AI than be hurt by it.

GitLab (GTLB)

GitLab is a platform that helps developers collaboratively build and deploy software. It acts as the central repository for code as well as the place where engineering organizations can review and monitor the performance of that code. Modern software development is built with version control and quality checks at the center. When a single engineer builds an application on their computer, they may not need guardrails, version history or the other tools that GitLab provides, however as soon as you have multiple engineers, product managers and other stakeholders collaborating asynchronously across code, the need for a central source of truth to analyze and integrate code from multiple contributors becomes crucial.

GitLab competes with GitHub and Bitbucket in a relatively consolidated part of the software ecosystem. GitHub, owned by Microsoft following a $7.5B acquisition in 2018, is the market leader, with GitLab as second with a historical niche of heavily regulated industries such as healthcare and banking, and Bitbucket (acquired by Atlassian in 2010) as third. The stock has sold off with other software businesses due to the perceived threat of AI on traditional SaaS business models, including pressure on per-seat pricing (which GitLab uses). In my opinion, the introduction of AI in the software development life cycle (commonly referred to as the “SDLC”) should increase GitLab’s addressable market. These days, engineering teams are working side by side with coding agents and as a result the number of code changes has increased. Further, management has noted that they’ve seen an increase in nontraditional users like product managers and designers who are interacting directly with GitLab and need access to the repo, which historically was used only by engineers. Meanwhile, GitLab has net cash worth ~25% of its market cap, is expecting to grow revenue >15% this year, and is improving its cost structure. Balancing revenue growth vs costs seems like the biggest risk worth watching, as GitLab still has negative operating earnings and recently announced an internal restructuring. With a total enterprise value of $4.1B (4.7x TTM gross profits), the company is small enough to be of interest to strategic acquirers given its position at the core of engineering workflows.

HubSpot, Inc. (HUBS)

HubSpot operates a go-to-market platform primarily used by sales, marketing, and customer service teams at mid-sized companies (2-2,000 employees) to drive growth. In particular, HubSpot users can create and manage ad campaigns, build a CRM and store their customer data, and service existing customers. As of 1Q2026, HubSpot served ~300K customers globally with an annual revenue per customer of ~$11K. Similar to GitLab, HubSpot has seen its share price decline alongside fears of AI disruption and pressure on its per-seat pricing model. The company has responded by introducing a suite of AI agents that can prospect and nurture sales leads, create content for ad campaigns, and perform customer service.

The secret sauce as to why anyone would want to use a HubSpot agent vs just using Claude, ChatGPT, or any of the other popular AI tools available today is context. By acting as the central store and source of truth for customer data, HubSpot has a better understanding of the key customer characteristics and dynamics that drive sales conversion. With better data, HubSpot can deploy agents that should be able to outperform general-purpose chatbots, preserving the stickiness and utility of its platform and doing so in a controlled, compliant enterprise environment. HubSpot itself remains a relatively affordable software platform on a per-person basis and is able to layer on outcome-based pricing so that customers can pay directly for outcomes generated by its agents (whether that be customer service calls answered, leads generated, etc), which helps drive revenue even in the absence of seat growth. Similar to GitLab, a key risk is HubSpot being able to continue scaling without sacrificing margins. The stock trades at 3.1x gross profits at the time of writing, has a net cash balance sheet worth 17% of the market cap, and is expecting to increase revenue by ~17% this year per company guidance.

Amazon.com, Inc. (AMZN)

Amazon finds itself in an interesting situation. Although being hailed as one of the winners of the AI race with AWS, it’s industry-leading public cloud, a native integration with leading AI model providers through its Bedrock platform, and what appear to be structural cost advantages in infrastructure given its Trainium semiconductors designed in-house, Amazon shares have taken a hit as the investor community questions the company’s free cash flow and ROIC trajectory. In other words, is Amazon spending too much? And, will they ever earn a return on that spending? I believe that the answer in the short term is yes, they will earn a return. In the long term, I expect the company to be able to adjust capital spending appropriately as long as AWS and the core retail business remain healthy.

Amazon has seen revenue accelerate, driven by AWS, with 1Q2026 AWS revenue increasing 28% y/y and now at a ~$150B annual run-rate. Margins for AWS were down slightly year over year in 1Q, but overall Amazon margins were up, aided by the e-commerce segment, which brings me to my next point: Amazon should be one of the leading beneficiaries of AI-driven automation given its expansive retail operation, anchored by e-commerce, physical stores, and a logistics network that, per FreightWaves, has overtaken the US Postal Service as the largest delivery network in the US.^[3] In the long-run, if returns on AI-related capex are weak, then I’d expect the company to cull back those investments, at which point I’d be much more worried about the AI infrastructure providers selling memory, GPUs and networking equipment to hyperscalers than I would be about Amazon. Shares trade at roughly 30x TTM earnings, a significant discount to historical multiples. Further, margins in the retail business seem likely to continue grinding higher, aided by Prime subscriptions and higher-margin Amazon Ads revenue.

Spotify Technology S.A. (SPOT)

Spotify is the leading audio streaming company globally with >760M monthly active users (approaching 10% of the global population), of which ~290M are monthly subscribers of Spotify Premium. Users are split between Europe (25% per 1Q2026 results), North America (16%), Latin America (22%), and Rest of World (37%). For a long time following its public listing in 2018, Spotify was under pressure from negative sentiment surrounding the unit economics of its core business. Since the company pays the majority of its gross revenue out in royalties to songwriters, performers and music labels, the bear case was that Spotify would never be able to realize a large amount of profitability, an issue compounded by an expensive buildout of an in-house podcasting platform that reduced gross margins. In the past few years, however, Spotify has shown the ability to improve its gross margins (now >30%) while maintaining strong user growth. After a recent pullback, shares trade at 32x TTM EPS. Going forward, Spotify has the potential to continue increasing gross margins as the advertising business reaches maturity and new audio types such as podcasts and audiobooks grow share on the platform. Net cash and investments are worth ~12% of the market cap.

Investment-oriented holding companies:

Markel Group Inc. (MKL)

Markel is a global specialty insurance company operating in the property and casualty space. The company is often classified as a “mini Berkshire” given its preference for managing a large, active equity portfolio funded by the float generated from its insurance business, and pursuing private acquisitions through its Markel Ventures segment. Despite a strong long-term track record of creating shareholder value by combining insurance profitability, investment returns, and operating cash flow from Markel Ventures, Markel has lagged recently. The company has had to deal with a weaker insurance environment with higher combined ratios (which measure insurance profitability and came up in our previous discussion of Allianz Malaysia), as well as somewhat muted results from the industrial businesses within Markel Ventures. Management has taken steps to improve insurance results, installing a new CEO for that segment in 2025 and exiting global reinsurance. Insurance profitability has been improving, with a 93% combined ratio in 1Q2026 (below 100% is good). Meanwhile, cash generation from insurance and Markel Ventures have allowed the company to repurchase stock (~$1.7B of stock buybacks in the past 4 years, or 7.5% of current market cap). Shares trade at 1.4x book value and 11x TTM adjusted operating income.

Investment AB Latour (LATOB)

Investment AB Latour is a Swedish holding company founded by the late entrepreneur and investor Gustaf Douglas. While the investment holding company model is fairly popular in Europe, it is less familiar to US investors. However, one can think of Latour as a publicly traded investment fund that buys stakes in both public and private industrial companies. As of 3/31/2026, Latour managed an investment portfolio of SEK 145B (~US$15B) split between stakes in public companies, including 9% of ASSA ABLOY (locks and access control), 8% of Securitas (security services), and 27% of Sweco (architecture and engineering consultancy), as well as full ownership of several large private industrial companies such as Swegon (HVAC), Hultafors (hand tools) and Nord-Lock (industrial fasteners). The Douglas family continues to hold a majority stake in Latour of 76%. Shares trade at a mid-single-digit discount to underlying net asset value (per company calculation).

Berkshire Hathaway Inc. (BRK-B)

A company that needs no introduction but will get one anyway: Berkshire Hathaway started life as a small textile mill in the northeast before being transformed into the largest investment-oriented holding company globally, steered for decades by Warren Buffett and Charlie Munger. Berkshire owns a diverse portfolio of operating businesses and investments in publicly traded companies anchored by a global insurance franchise that generated almost $90B in premiums last year. Berkshire’s largest wholly-owned subsidiaries are BNSF, one of the biggest railroads in the US with >30K miles of tracks, and Berkshire Hathaway Energy, which produces more than 30GW of power (enough to power ~20M homes). The secret sauce of Berkshire for many years has been to combine strong insurance results with long-term value-oriented equity investing and to take full ownership of companies when the opportunity presents itself and returns look attractive. Over time, Berkshire has been happy to sit on its hands when investment opportunities are scarce. The company currently holds ~$400B in cash (a balance that by Tadpole’s estimates exceeds the combined cash of Microsoft, Amazon and Google). In 2025, Buffett announced that he would be stepping down as CEO of Berkshire, handing the reins to Greg Abel, who joined Berkshire with the acquisition of MidAmerican Energy. Shares have stagnated recently given uncertainty about how this leadership transition will shape up – Abel has some big shoes to fill. Today, the stock trades at ~1.5x book value.

Unit Corporation Warrants (UNTCW)

Unit Corporation is an oil & gas producer based in Tulsa, Oklahoma. The company went bankrupt in May of 2020 and emerged from bankruptcy after restructuring its debt in September of that same year. As part of the emergence from bankruptcy, Unit Corporation issued both new common stock as well as warrants, which function like long-dated stock options and are available for purchase by outside investors. While Unit Corporation itself is an interesting case, the specific situation with the company’s warrants is the topic of this discussion.

Similar to call options on a stock, warrants work by granting their owner the right to buy the underlying stock at a specific price. In this case, that “exercise price” was set at $63.74. This meant that if the stock traded above $63.74, say at $70 for example, the warrant holder could exercise their right to buy at $63.74, sell at $70, and earn a $6.26 profit per warrant.

Here’s where it gets interesting.

The terms of the warrants are set out at the time of issuance in a contract called a Warrant Agreement. Unit Corporation created and distributed their warrant agreement alongside a package of contracts and documents that was approved by a judge before Unit could exit bankruptcy in late 2020. However, Unit Corporation made a last-minute change to their Warrant Agreement without the bankruptcy judge’s approval. This change altered a very important clause in the agreement called an antidilution provision.

Without getting too in the weeds, an antidilution provision is a relatively standard provision in a warrant contract that says that if the company takes certain actions, such as paying dividends, then the exercise price (that $63.74) of the warrants will be adjusted. This is meant to protect warrant holders from situations where companies pay massive dividends, thereby taking cash out of the company, reducing the value of what’s left over, and robbing the warrant holders of a return.

What seems like a minor change can have large ramifications. In this case, post-bankruptcy and through the time of writing, Unit Corporation has paid >$50 per share in dividends. Without the antidilution provision, none of this capital return has gone to the warrant holders, who are now suing. Had the antidilution provision been in place, these dividends would have reduced the exercise price on the warrants from $63.74 to $12.33 by my estimate, compared to a current price for the stock of $30.50 (implying that the warrants would have been in-the-money). The price of the warrants has declined to ~$2.30/warrant at the time of writing. The cases are working their way through the court system, and this situation involves a large amount of uncertainty (including the potential for complete loss should the courts side with Unit), so the position size has been kept small.

West Coast Office REITs:

One of the worst performing asset classes in the US over the past 3 years has been the office sector. Coming out of Covid, many US companies pivoted to remote-first or hybrid office policies that saw them terminate or fail to renew their office leases, which has caused vacancy rates for US office properties to soar. On the west coast, the tech companies that populate much of the office square footage were leaders in pivoting to remote-first. Vacancy rates for office properties in markets like San Francisco rose from <5% pre-covid to well over 30% by 2023.^[4] Many of the publicly traded office landlords have had a depressing run in the stock market over the past few years, compounded this year by fears about the impact of AI on white-collar employment. However, I believe that the winds are finally shifting given the combination of cheaper asset prices, minimal new supply, and a demand uplift caused by AI-related leasing and return-to-office mandates.

Kilroy Realty Corporation (KRC)

Kilroy Realty is a west coast office REIT, headquartered in Los Angeles, that owns a portfolio of office and life sciences properties spanning ~17M square feet as well as 600 residential units. As of 3/31/2026, top tenants include Apple, Cruise, and Stripe, with key asset clusters in San Francisco’s SoMa neighborhood, the Oyster Point life sciences complex near the San Francisco airport, a large life science and office complex in Del Mar, San Diego, Denny Triangle office assets in Seattle and the 760K sf Indeed Tower in Austin, TX. Kilroy’s properties were 82% leased as of 3/31/2026. Kilroy also maintains an active development pipeline with two key projects: Kilroy Oyster Point (“KOP”) Phases 2, 3 and 4, and the Flower Mart, a >2M sf project in San Francisco’s SoMa district. After weathering the storm, Kilroy seems well-positioned to benefit from leasing up vacant space in their existing properties in a backdrop where new supply is limited, monetizing select non-core assets, and returning capital to shareholders through buybacks and dividends. The key risk for Kilroy, as well as the other REITs in this section, is the path of interest rates and the resulting impact on underlying property values.

Hudson Pacific Properties, Inc. (HPP)

Hudson Pacific Properties (“HPP”) is a Los Angeles-based REIT that owns and operates a portfolio of Class A office properties spanning 13M sf across key west-coast submarkets such as the Bay Area (70% of rents at share), Los Angeles (18%), Seattle (11%), and Vancouver (2%). In addition, HPP has a 51% stake in Sunset Studios, which leases soundstages and production facilities to media companies (1.7M sf), and a 100% stake in Quixote, a studio rental and services company. HPP is the largest independent operator of sound stages in Los Angeles. The company’s largest office tenants include Google (9% of rents), Netflix (6%) and Amazon (6%). HPP’s in-service office portfolio was 78% leased as of 1Q2026.

Hudson Pacific stock has been under pressure as occupancy rates in its office properties and studios have fallen. Unique to HPP is the large studio exposure, a portfolio that carries a significant amount of debt and may ultimately be handed back to lenders. I believe that the focus on the studio assets is obscuring the fact that the core office properties are recovering, with new leasing activity being driven by AI companies in the San Francisco Bay Area and return-to-office mandates. Regardless of what happens to the studio assets, there seems likely to be significant value in the San Francisco-centric office properties above and beyond what the current share price implies, however given the leverage, this position will likely remain small for now.

Douglas Emmett, Inc. (DEI)

Douglas Emmett owns and operates a portfolio of office properties concentrated in West LA and Hawaii spanning >17M sf, as well as a residential portfolio with 13 buildings and 4.4K units. In contrast to Kilroy and Hudson Pacific, which mostly lease their office buildings to larger technology and life sciences tenants, Douglas Emmett’s bread and butter is the smaller financial, legal, and other professional services firms that take 5-20K sf. This granular approach shows up in the tenant roster: While Kilroy and HPP’s top 3 tenants are 15% and 20% of total rent respectively, Douglas Emmett’s top three tenants are only 6%. As of 3/31/2026, the portfolio was 81% leased with average rents psf of $48. Over time, the company seems well-positioned to increase occupancy without needing to build or acquire many new buildings.

Pentair plc (PNR)

Pentair is a US-based producer of water and filtration products that became a fully independent company following the spin-off of its electric components business in 2018. Today, Pentair supplies water and filtration components, including pumps, filters, valves, chlorinators, automatic controls and more to a variety of commercial and residential end users. The company produced $4.2B of revenue in 2025 and primarily goes to market through third party distributors (75% of revenue). Shares have slid following a broader decline in non-AI industrial stocks due to the US/Iran war, a weaker US residential market (impacting residential and pool sales), and a reduction in 2026 revenue growth guidance. However, the long-term outlook for Pentair’s end markets seems intact given the basic human need for reliable water supply as well as an increasingly health-conscious population that wants cleaner, less contaminated water. Shares trade at ~15x trailing earnings (adjusted).

Atmus Filtration Technologies Inc. (ATMU)

Similar to Pentair, Atmus is a US industrial company focused on filtration products that was recently involved in a spin-off. In this case, Atmus represents the engine and industrial filtration business of Cummins, a leading medium-to-heavy-duty engine manufacturer. Interestingly, Cummins founded and incubated Atmus’ core Fleetguard brand in 1958 and grew it into one of the leading providers of engine filtration products for both on-highway commercial trucks and off-highway vehicles such as bulldozers, forklifts, and other construction and mining equipment. When it comes to operating heavy machinery, the cost of downtime or engine failure is high. Fuel filters and other types of engine filters play a key role in keeping heavy duty vehicles operating, especially in dusty off-highway environments like mines, where filters may need to be replaced several times per month. The filters are also fairly inexpensive relative to overall maintenance costs. Hence, operators have little incentive to skip out on replacing a filter or to hunt around too hard for low-cost options. Atmus derives the vast majority of its revenue from aftermarket replacement sales (management estimates >85%), creating a highly recurring revenue profile. Since spinning off from Cummins, Atmus has been focused on optimizing its supply chain, expanding margins, and navigating an entry into industrial filtration adjacencies.

GE Healthcare (GEHC)

GE Healthcare is one of the largest medical imaging companies globally and was one of several business split apart from the legacy General Electric in 2023. GE Healthcare designs, manufactures, and sells MRIs, CT scanners, ultrasound devices, and patient monitoring devices. The company also has a pharmaceutical diagnostics segment that produces imaging agents taken by patients to help improve the visibility of their scans. GE Healthcare operates in a global oligopoly with two key competitors: Siemens Healthineers (itself a spinoff of German industrial giant Siemens), and Philips. Despite producing what appear to be solid underlying results, GE Healthcare shares have been negatively impacted by tariffs and a slowdown in hospital capex in China. The company has a stated goal of reaching 17-20% operating margins (vs ~15% today) with mid-single-digit organic growth.

Nareru Group Inc (9163)

Nareru is a Japanese staffing company that specializes in dispatching civil engineers to manage construction projects for clients. This is purely a people business. Nareru, through its core subsidiary World Corporation, sources, hires and trains engineers before booking them out to construction sites on behalf of general contractors, earning fees for each match that they make. These engineers typically remain as Nareru employees while they are on project, providing a flexible labor source for developers and construction companies. Given demographic headwinds in Japan, labor shortages have become severe in many parts of the economy. In fact, despite large construction backlogs at the biggest general contractors in Japan, many projects have stalled out recently because of a lack of skilled tradespeople. Over time, Nareru seems well-positioned to help ease these labor bottlenecks through its recruiting and training. The company has a net cash balance sheet and trades for roughly 10x TTM earnings.

These aren’t the only names that will be showing up on your brokerage statements – I’ll be writing about additional investments in future updates, and of course you can always see your full portfolio by logging into your Interactive Brokers account.

As always, please don’t hesitate to reach out with any questions or concerns. My line is always open.

All the best,

Gabriel Nardi, CFA

Founder, Tadpole Investments

Disclaimer:

Tadpole Investments is a registered investment advisor in the state of Connecticut. Registration as an investment adviser does not imply a certain level of skill or training.

This letter is for informational purposes only and is not intended as investment advice or a recommendation to buy or sell any security and may not be suitable for any particular investor. References to specific securities are for illustrative purposes only and may not represent all securities purchased, sold, or recommended for client accounts. Past performance is not indicative of future results. All investments involve risk, including possible loss of principal. Opinions expressed are as of the date of this letter and subject to change without notice.

The specific securities identified and described do not represent all of the securities purchased, sold, or recommended for advisory clients, and the reader should not assume that investments in the securities identified and discussed were or will be profitable.

Third-party data and news sources cited are believed to be reliable, but Tadpole Investments does not guarantee their accuracy or completeness.

^[1] Source: Koyfin data, includes companies with >$25M in market cap in the following countries: AU, AT, BE, CA, DK, FR, FI, DE, GR, IE, IT, JP, MY, MX, NL, NZ, NO, PT, SG, SE, CH, TW, GB, US.

^[2] Selected investment theses are based on new positions added during 1H2026 to a reference portfolio managed under Tadpole’s global opportunistic strategy and may not correspond to the positions added or removed from all client portfolios during this period.

^[3] Source: Freightwaves: Amazon overtakes US Postal Service as largest parcel carrier, March, 2026

^[4] Source: SF.gov Office Vacancy Rate