From our Q1 Letter - The below table is a quite telling one. We’ve reflected on the cumulative FCF after all M&A and CAPEX (everything we’ve modeled to grow intrinsic value) and compared it today’s market cap (as of Q1 2026).

HEICO’s CEO once said they’re good at not burning money. In today’s world, investors look for growth, and the more, the better. Analyzing the return profile from growth at all costs to boost revenue, EBITDA, and EPS often reveals a very disappointing conclusion around the difficulty to sustain high growth and the risks when you’ve got to refinance borrowings, et cetera.

We believe our companies can earn around 10% annual growth in NOPAT euros or dollars, in normal inflation regimes. There’s a lot of excess cash to be distributed thanks to high ROIICs. As most of our companies’ valuation has come down, we’ve now entered a clear “value” state, it’s another compelling argument to own the type of quality growth names we’re interested in - growth at a reasonable price and incrementally growing excess cash and thus optionality to climb the next wall of worry. We own companies with stable economics and favorable competitive landscape; these won’t change overnight.

For some of our holdings, there’s some kind of formal statement of paying out dividends, and buying back stock. For others (mainly serial acquirers), it’s more of a wait-and-see on how much more capital could be deployed, thus any M&A spend on top of our base assumptions.