Our Portfolio

What they do

Deutsche Telekom AG is Europe's largest telecom by revenue (€119B FY2025) — successor to the German state operator Deutsche Bundespost (privatized in 1995). HQ Bonn, Germany. ~200,000 employees worldwide. ADR DTEGY (1 ADR = 1 ordinary share). History: 1995: privatization of Deutsche Bundespost Telekom 1996: IPO in Frankfurt 2001: acquisition of VoiceStream Wireless in the US (seed of T-Mobile US) 2014: Tim Höttges becomes CEO 2018: announces T-Mobile US + Sprint merger April 2020: T-Mobile US + Sprint merger closes — DT left with ~43% of TMUS initially 2024: DT exercises call options on SoftBank, reaches majority control of TMUS 2025: Höttges contract extended +5 years June 2025: SoftBank sells 21.5M TMUS shares (Project 9) — DT rises to 57.1% ownership January 2026: DT announces FY26 buyback of up to €2B (extension of program) May 2026: ver.di union extends strikes (60,000 workers demanding +6.6% + €660 bonus) 4 Segments: (1) T-Mobile US (~64% of revenue, ~52% of EBITDA AL) — the anchor: DT owns 57.1% post-2024–2025 SoftBank deals TMUS market cap ~$209B May 2026 — DT's stake worth ~$119B #2 wireless carrier in the US (~110M postpaid customers) Leader in 5G mid-band coverage in the US (3.5GHz) Q1 2026: revenue €19.7B / $23.1B (+10.9%), Adj EBITDA AL €7.7B / $9.1B (+12.9%) (2) Germany (~21% of revenue, ~25% of EBITDA AL): Legacy ex-Bundespost operator #1 mobile (~38% market share) #1 fixed broadband + fiber (FTTH 12.6M homes passed, target 25M by 2030) Brands: Magenta (consumer) + Deutsche Telekom (B2B) Q1 2026: revenue €6.3B (+2.1% organic), EBITDA AL €2.7B (+2.5% organic) (3) Europe (~10% of revenue, ~10% of EBITDA AL) — 10 countries: Austria, Croatia, Czech Republic, Greece, Hungary, Poland, Slovakia, Montenegro, North Macedonia, Netherlands Exiting Romania (joint venture with OTE) 8.6M converged (FMC) customers as of Q3 2025 5G population coverage 89.3% Q1 2026: revenue €3.1B (+2.1% organic), EBITDA AL €1.2B (+3.5% organic) (4) Systems Solutions / T-Systems (~3% of revenue): B2B corporate IT services Cloud, cybersecurity, system integration Q1 2026: revenue €1.0B (+2.1% organic), EBITDA AL €84M (+4.0% organic) Leadership: CEO: Tim Höttges since 2014 (re-contracted +5 years in 2025) CFO: Christian Illek since 2019 CEO T-Mobile US: Mike Sievert (since April 2020) Q1 2026 (reported May 13, 2026): | Metric | Q1 2026 | YoY | |--------|---------|-----| | Service Revenue | €25.0B | +4.6% organic | | Net Revenue | €29.9B | +4.7% organic | | Adj EBITDA AL | €11.5B | +7.5% organic (+2.0% reported due to FX) | | FCF AL | €5.7B | Q1 record | | Adj Net Profit | €2.6B | +6.5% | | Adj EPS | €0.54 | +7.9% | FY2025 (reported Feb 2026): | Metric | FY2025 | YoY | |--------|--------|-----| | Revenue | €119.1B | +4.2% organic | | Adj EBITDA AL | €44.2B | +4.7% organic | | FCF AL | €19.5B | +2.0% | | Adj EPS | €2.00 | +5.2% | FY2026 Guidance (raised in Q1): Adj EBITDA AL ~€47.5B FCF AL >€19.8B Adj EPS ~€2.20 Capital Return: FY2025 dividend €1.00/share (+11% vs €0.90 — record) Paid April 8, 2026 (ex April 2, AGM April 1) ADR DTEGY (1:1 ratio) received ~$1.18, yield ~3.5% Policy: 40–60% of sustainable Adj EPS FY26 buyback up to €2B (announced January 5, 2026) - Tranche 1 (Q1): ~15.6M shares for ~€471M (completed) - Tranche 2 (Q2–Q3): up to €550M (April–June) Total capital return ~5% of market cap per year Germany Fiber Buildout: 12.6M homes with FTTH at YE 2025 (Germany) 24M homes with FTTH total European footprint Target +1M new homes in 2026 (Germany) Long-term goal: 25M FTTH homes in Germany by 2030 Run-rate ~3M homes/year build capacity Berlin reached 1M FTTH milestone in 2026

Why we like it

DTEGY at $33.82 (near 52-week low of $30.31–$40.58) is buying Europe's largest telecom with a 3.5% yield + €2B buyback (~5% total market cap return) when the market is almost entirely discounting the European business after pricing in the T-Mobile US stake. Specific reasons: (1) 'Germany + Europe for almost nothing' — the most quantifiable setup in the thesis: DT market cap $165B. Its 57% stake in T-Mobile US (TMUS market cap ~$209B) is worth ~$119B. That means the market assigns only ~$46B to the rest of the business — all of Germany (#1 operator, 12.6M homes with fiber, ramping to 25M by 2030), 10 European countries with 8.6M converged customers, and T-Systems IT services. That remainder generated €20.5B of Adj EBITDA AL in 2025. This implies a stub valuation of ~2.2x EV/EBITDA when European telecom peers trade at 5–7x — a brutal discount. (2) Q1 2026 delivered +7.5% Adj EBITDA AL organic + record Q1 FCF of €5.7B + EPS +7.9%: the gap between +7.5% organic and +2.0% reported is 100% FX (weak USD suppresses TMUS translation). Underlying operating performance is healthy across all segments. FY26 guidance was raised in the same print. (3) Growing dividend + record €1.00/share FY2025 (+11%): 3.5% yield on the ADR. Plus FY26 buyback up to €2B (~3% market cap retirement) — €471M / 15.6M shares already completed in Q1. Total shareholder return ~5% per year before any capital gain. Payout policy 40–60% of Adj EPS = sustainable ratio, not overleveraged. (4) T-Mobile US is the best-performing US wireless carrier Q1 2026: TMUS contribution to DT: revenue +10.9% USD, EBITDA AL +12.9% USD. Leader in 5G mid-band coverage. Mike Sievert (TMUS CEO) continues to execute — postpaid net adds leading the industry. DT's stake ~$119B in TMUS already covers 72% of DT's market cap before even considering Germany/Europe/T-Systems. (5) Tim Höttges: 12+ years as CEO, extended another 5: architect of the T-Mobile US + Sprint merger (2020) — the deal that transformed TMUS from #3 to #2 wireless in the US and created a functional Verizon/T-Mobile duopoly. Re-contracted in 2025 = strategic continuity + execution track record. One of the most respected telecom CEOs in Europe. (6) Germany fiber rollout — structural long-term moat: 12.6M homes with FTTH at YE 2025, ramping to 25M by 2030. DT passes ~3M homes per year = sustainable capacity. Fiber is a 30–50 year asset — once the cable is in, churn goes to zero. Vodafone Germany and O2 have fallen behind — DT is consolidating #1 mobile + #1 fixed broadband + #1 fiber with converged bundling. (7) ver.di strike + cable MVNO = temporary noise, not a structural problem: ver.di is demanding +6.6% pay + €660 bonus (60,000 workers). Will resolve with a ~4–5% pay deal — an absorbable cost (~€500M run-rate against €119B in revenue). Comcast/Charter MVNOs on TMUS are capturing ~39% of net adds = real, but MVNO margins are poor for cable companies and TMUS continues to grow. Both narrative drivers resolve in 2026–2027. (8) Defensive cash flow + sector resilience: telecom is ~recession-resistant — people pay their phone and internet bills before almost any other discretionary expense. FCF AL FY2025 €19.5B = ~12% FCF yield on market cap. In a recession scenario, DT outperforms cyclicals by a wide margin. (9) Analyst consensus Strong Buy + average target €37.11 = ~+24% upside on ADR: 18 Buy / 0 Hold / 0 Sell on MarketScreener. Wall Street target ~$42/ADR vs $33.82 spot. Re-rating to 14x forward P/E = $39+ = +15% capital + 3.5% yield + 3% buyback = ~22% total return. (10) Backup thesis: even if TMUS drops 20%, DT is still cheap: if TMUS falls to $167B, DT's stake = $95B. DT market cap at $165B implies stub Europe = $70B for €20.5B EBITDA AL = 3.4x EV/EBITDA — still a discount. Structural margin of safety via TMUS hedge.

What they do

Teradyne (Nasdaq: TER) makes automated semiconductor test equipment (ATE): the machines that take every freshly manufactured chip and put it through millions of electrical tests before it can be sold. No chip in the world — the one in your iPhone, in a car, an AI accelerator, a memory chip — reaches the market without passing that exam. And in practice, that exam is given by only two companies in the world: Teradyne (US, founded in 1960 by MIT-trained engineers) and Advantest (Japan). The 3 businesses (Q1 2026 figures): Semiconductor Test ($1.11 billion in the quarter — 87% of sales) — the core. Machines that test processors and logic chips (the ones in phones, cars and data centers) and also memory — including HBM, the stacked memory that feeds AI accelerators and is especially hard to test. Its customers are the world's big chip fabs and assemblers: the TSMC, Samsung, SK Hynix ecosystem. Robotics ($91 million) — Universal Robots (the Danish pioneer of 'cobots': robotic arms that work alongside people without safety cages) and MiR (mobile robots that move material through factories and warehouses). This is the part that has disappointed: it peaked in 2022 and has seen declines and layoffs since, though it has now grown for 4 straight quarters. Product Test ($80 million) — testing of systems and circuit boards, storage drives, and wireless testing (LitePoint). Why it's exploding now: each generation of AI chips is more complex — more transistors, stacked dies, HBM memory bonded to the processor, networks connecting thousands of accelerators. More complexity = more test time per chip = more Teradyne machines. In Q1 2026, ~70% of its revenue was already tied to AI demand (up from ~60% the prior quarter): custom accelerators for the cloud giants, next-generation HBM memory, and networking chips. Leadership: CEO Greg Smith (in the role since February 2023). Headquarters in North Reading, Massachusetts. ~6,600 employees worldwide, with major operations in the Philippines, Denmark (home of Universal Robots), Costa Rica and Asia. Dividend (symbolic): $0.13 per share per quarter (raised from $0.12 in early 2026) = $0.52 a year = ~0.1% at today's price. It also buys back shares, but let's be clear: nobody invests here for the income — the bet is growth. 2026 context: a record Q1 ($1.28 billion, +87%, 18% above the previous record set back in 2021), 60.9% gross margin, and a company 'target model' for the full year of ~$6 billion in revenue with adjusted EPS of $9.50-$11.00 — nearly double 2025's sales ($3.19 billion). Next report: July 28, 2026.

Why we like it

TER at $362.67 means REINFORCING a position we already owned (bought July 6 at $386.58), now ~6% cheaper thanks to a drop across the whole chip sector — not the company itself. You're still buying the toll booth of the AI chip boom: you're not betting on NVIDIA, AMD, or the cloud giants' in-house chips winning — whoever wins, their chips have to be tested on machines like Teradyne's. Specific reasons: (1) Real duopoly: in semiconductor test equipment, practically only Teradyne and Japan's Advantest exist. Designing these machines takes decades of accumulated technology, and customers don't switch suppliers lightly — an extremely high barrier to entry. (2) AI multiplies the testing hours: AI chips are huge, stacked, and very expensive, and each generation needs more test time (HBM memory is the extreme example). In Q1 2026, ~70% of Teradyne's revenue already came from AI-tied demand, and sales grew +87% — the best quarter in its 66-year history. (3) The year is set to nearly double: the company's target model for 2026 is ~$6 billion in revenue (2025 closed at $3.19 billion) with adjusted earnings per share of $9.50-$11.00 — the kind of jump almost no company this size pulls off. (4) Elite profitability: gross margin of ~61% and adjusted net income equal to 31% of sales in Q1 — when the cycle cooperates, this business prints money. (5) Wall Street keeps raising its bets: 'Strong Buy' consensus (11 of 12 analysts say buy), with recently raised targets — BofA to $525, Susquehanna and Cantor to $550. Honesty: the average target (~$417) sits only ~8% above today's price, and the stock already hit $488 in June before correcting — it's not a hidden bargain, it's an exceptional business in the middle of a rally.