Global businesses
we're watching

The MSCI World Index is currently trading at a premium – about 30% above its 20-year average and 17% above the 10-year norm – underscoring just how expensive global markets have become.

As bottom-up investors, our focus is on identifying quality businesses from a fundamental perspective and valuing them based on what we believe are reasonable expectations of their long-term cash flows. Accordingly, we don’t take too much notice of overall market levels – but these statistics do provide a sense of the likely number of interesting opportunities out there.

The companies that have caught our attention include:

Kaspi

Kaspi owns a Kazakh super-app with one of the strongest moats we’ve ever seen. Around 50% of Kazakhstan’s adult population uses the app daily, and almost every adult uses it at least once a month. Within a single platform, Kaspi combines a digital wallet for payments, a fintech operation that facilitates loans and a leading e-commerce marketplace – creating an exceptionally powerful ecosystem. On top of this, the app offers access to various government services, for example, driver’s licence renewals.

The company’s founders still own over half of the business, which continues to grow at more than 20% a year and is highly cash-generative. The price is compelling, with a forward price-earnings (P/E) ratio of less than six times. This reflects both the jurisdictional risk and uncertainty surrounding a recent acquisition in Turkey.

Kaspi is listed on the Nasdaq and we expect dividends to resume in 2026. While we would typically avoid a conventional business operating in a market like Kazakhstan, the strength of Kaspi’s network effects lifts it into a different category – one that justifies a small position in the stock.

TSMC

We consider Taiwan Semiconductor Manufacturing Company (TSMC) one of the world’s truly great businesses. As the near-monopolist in advanced chip manufacturing, it has exceptionally strong moats and plays a critical role in the global economy. We also view it as the broadest, most predictable way to gain exposure to the rise of AI.

In early 2024, TSMC guided that AI chips would account for 15% of its revenue by 2027. This figure was reached much earlier than expected – by the same year – and the company now projects that AI chips will make up around 30% of revenue in 2025. We expect this number to exceed 40% by 2029.

Given this backdrop, it’s reasonable to ask why we recently trimmed our position. Since initiating it in January 2024, TSMC has delivered a return of 172% in our global equity mandates. While the company’s expected profits have risen meaningfully, the share price has risen even faster. The key shift is the price one pays for future cash flows: the forward P/E ratio has increased by 30% since January 2024. This means the current market price now reflects our bull-case scenario and sits well above our base case.

At the same time, we remain mindful of the tail risks tied to TSMC’s geographic location. China’s ambition to reclaim Taiwan has persisted for over 70 years, and while it has not acted on that goal, the risk remains real. We therefore believe it is prudent to keep the size of our holding at a level that reflects both the company’s strengths and the broader context in which it operates.

Adyen

Adyen is a high-growth European payments company listed in Amsterdam. It generates more than half its revenue from settlement fees and another quarter from processing fees. During the Covid period, the stock ran well ahead of fundamentals, peaking at a forward P/E of over 100 times. Since then, it has been steadily derating – even as earnings per share grew at an average of 24% per year between 2021 and 2024.

We’re drawn to the fundamentals: return on equity in the mid-20% range, a strong net cash position, free cash flow margins of 40-45%, and near-100% cash conversion. This is a business we’d like to own – at the right price. In our view, the market price isn’t interesting yet, but Adyen remains firmly on our watchlist.

UPS and FedEx

US package delivery businesses UPS and FedEx saw exceptional earnings growth during the Covid period, as remote work and the e-commerce boom drove a surge in package volumes. This led to unsustainably high earnings bases in 2021 and 2022, and at the time, both stocks were priced as if that elevated performance would continue indefinitely. Since then, earnings and share prices have both declined meaningfully.

Our modelling suggests earnings should bottom in 2025 for UPS and in 2026 for FedEx – yet we believe this potential inflection point is not fully reflected in current market prices. We view current prices as interesting, with free cash flow yields for 2026 in the 6.5-7.5% range. We’re continuing to do deeper work to assess the durability of each company’s competitive advantages and the likelihood that expected growth can be delivered.

The above businesses provide a small window into the much broader universe of companies we assess and then either consider or reject for our client portfolios in our ongoing search to populate the portfolios with the best businesses at attractive prices.