One Year of Rebound Capital Portfolio

One year ago, on August 25, 2025, we launched the Rebound Capital Portfolio with this post. The goal was to put our money where our mouth is. We started investing in our highest conviction ideas, beginning with the Healthcare basket.

Over the past year, our portfolio has beaten the S&P 500 by roughly 7.3%, and we've kept you updated every single month, good news or bad.

Rebound Capital’s portfolio compounds faster than the index while trading at a slightly premium valuation. We present the data on which this is based below:

To gauge it, we take a weighted average of each holding’s metrics. The headline numbers for the RC portfolio are:

Here is the interesting part. Our portfolio is set to compound EBIT at around 17% per year, ahead of the low-teens estimate for the S&P 500, based on our calculations using data from FactSet (we assume earnings growth in 2028 and 2029 will be the same as in 2027, even though they should grow more slowly in the later years).

On a relative basis (RC portfolio/Index), the statistics are:

So the RC portfolio compounds at 1.3x the S&P 500’s rate but is only 1.1x as expensive. The premium we pay is smaller than the earnings advantage we get.

Rebound Capital Portfolio & Ratings

Through our proprietary QGV framework.

RC Portfolio North Star: We are targeting 15% long-term compounded returns and are not aiming to beat the market across all time frames. At 15% CAGR, the portfolio doubles roughly every 5 years. This is a reasonable goal to reach without taking on unnecessary risk (At RC, our mantra is reasonable returns for an unreasonably long time).

We are value investors and will invest across industries. As long as we can buy a dollar bill for 80 cents or less, we are interested. In addition to requiring a gap between intrinsic value and the stock price, we look for opportunities with clear catalysts to close that gap.

Our idea generation process involves:

After covering more than 30 companies over the past year, here are our wins, losses, and learnings!

AMD

This has been the single largest contributor to our outperformance. We made ~2.5x our invested capital in AMD. When we were buying AMD in February 2026, the market had just sold off the stock ~20% post-earnings. The market had ignored AMD’s future potential in the CPU and GPU divisions just because it had missed certain quarterly metrics in the earnings.

Eli Lilly

This stock was bought in the Healthcare basket 1 year ago. Our thesis was simple. As the better executing player in the GLP-1 market, Eli Lilly’s recent 25% drawdown was unwarranted. Mounjaro sales had just grown ~35% QoQ when we bought Eli Lilly.

Google

We entered Google once the antitrust uncertainty around its business model had resolved. From our research, we saw no real threat of immediate pressure on the Search business and were bullish on Google’s capabilities across the AI stack. In fact, we had posted that only Google was present across the 3 pillars of the AI stack: Frontier models, custom AI semiconductor chips, and distribution to consumers and enterprises.

Mercado Libre

This is a recent position but a significant one. The market is over-indexing on lower reported margins due to MELI's growth investments in its core e-commerce and credit businesses. There are valid concerns about the business's future, but the market has excessively derated the stock.

Cochlear

We had entered the stock close to a month after it had suffered a ~40% drop in a single day after lowering full-year guidance. We analyzed the company and the industry it operates in, and our thesis was that the headwinds behind the weaker-than-expected results were temporary and that the steep drawdown presented an attractive opportunity for a rebound.

Constellation Software:

Despite the business doing well, CSU’s stock has not recovered, as the market has de-rated all SaaS stocks amid fears of AI disruption.

We remain invested and expect the stock to re-rate as the business continues to deliver. CSU's total investments in the first half of 2026 have exceeded those made in all of 2025. Furthermore, the organic growth rate has held up, indicating no visible AI-related disruption. The management has been transparent and follows the ideology set forth by the legendary founder, Mark Leonard.

LVMH:

We entered too early. Our key learning is to wait for KPIs to improve before investing in any turnaround situation. The business is solid and has an amazing moat. But the stock is weak due to the war in the Middle East (among other factors), delaying the recovery in revenue growth.

Novo Nordisk:

As with our investment in Eli Lilly, we were bullish on the entire GLP-1 sector. Even though Lilly was performing better, we preferred Novo due to its lower valuation and its development of the first oral GLP-1 drug. The key mistake was investing in a turnaround situation (Novo was expected to lose market share to Lilly) before the business metrics improved. Low valuations are attractive, but if the business continues to degrow (like Novo), the market will not re-rate such a stock.

This is a market of extremes. On one day, the semiconductor index is up 3%, and SaaS/High quality compounders are down, and on the very next day, the reverse plays out. This trading pattern also highlights how much the market depends on the AI trade.

Many institutions are heavily invested in semis/AI stocks and are shorting other themes (like SaaS). We saw an ugly version of this play out with the Situational Awareness fund shutting down. Amid all this hype, the market offers great opportunities for value investors.

We are preparing and researching to invest in areas of the market ignored due to the AI mania:

Immediately, here is a tentative list of deep dives we have planned for the next few months: Zoetis, Adyen, Spotify, PayPal, Etsy, AppLovin, and Estée Lauder.

To access our portfolio, archived research, and upcoming deep dives into promising potential rebounds, consider upgrading your subscription.

Attaching a screenshot of the latest portfolio below: