Dear Quality Investing Community,

If you’re a member of our Global Quality Investing Discord, you’d have already heard the news—I initiated three starter positions today in The Trade Desk (TTD), ASML, and M&A Research Institute ($9552.T). Our Discord community is where I share real-time updates, dive deeper into my investment decisions, and engage in lively discussions with fellow quality investors. If you’re a Substack subscriber who hasn’t joined yet, I highly encourage you to hop on board—it’s free, and you’ll get a front-row seat to my investment journey! Join us here and let’s grow this community together. Now, for those catching up, let’s dive into the details of these new positions and why I’m excited about them.

This community is free, but if you’re enjoying the deep dives and want to fuel more, you can treat me to a coffee on Buy Me a Coffee. Every bit helps keep the fire burning, and I’m truly grateful for your support!

Subscribe now

As markets continue to reel from the recent tariff storm and the S&P 500’s sharp drop last three days (incuding today)—its worst since 2020—I’m reminded of Warren Buffett’s timeless advice: “Be fearful when others are greedy, and greedy when others are fearful.” With the VIX signaling “extreme fear” and the Dow down 10% from its December peak, I see opportunity amid the panic. After careful analysis, I’ve initiated three starter positions in high-quality companies that I believe are poised for long-term success: The Trade Desk (TTD), ASML, and M&A Research Institute ($9552.T). These are calculated moves, and I’m keeping cash on hand to double down if the market presents even better entry points. Let’s dive into why I’ve made these investments, and I’ll also share my updated portfolio allocation with a pie chart for transparency.

Why These Starter Positions?

For those new to my approach, a starter position is a smaller initial investment—typically 2-3% of my portfolio per position—that allows me to establish a foothold in a company I believe in while managing risk. I keep a cash reserve to double down if prices drop further, ensuring flexibility in volatile markets like this one. These three companies align with my quality investing philosophy: durable cash flows, strong moats, and fair (or undervalued) prices. Here’s the breakdown.

1. The Trade Desk (TTD) at $43.50 – A Moat Master in Programmatic Advertising

I’ve been eyeing The Trade Desk for a while, and at $43.50—down from its $100+ highs last year—it hit my conservative fair value calculation. TTD is a leader in programmatic advertising, a sector I believe has immense long-term potential despite its cyclical nature. As I detailed in my recent Substack article, The Trade Desk (TTD): A Moat Master, TTD’s data-driven precision and AI platform, Koai, give it a competitive edge. The company’s 30%+ revenue growth and 95%+ customer retention rate for ten consecutive quarters signal a business built for the future. Yes, its beta of 1.6 means it’s 60% more volatile than the market, and a recession could pressure ad spending. But at this price, I see a margin of safety for a quality compounder looking at the long-term. This starter position lets me build exposure while I monitor the ad cycle and broader economic risks.

2. ASML at EUR 515.00 – A Semiconductor Giant with a Resilient Moat

ASML, the world’s leading supplier of lithography systems for the semiconductor industry, is another quality name I’ve added as a starter position. Despite the tariff storm, I don’t expect ASML to be heavily impacted in the long term. Chip companies are poised to continue investing in new machines, driven by unrelenting demand for smaller, faster, and greener chips.

Why Chip Companies Will Keep Investing

The semiconductor industry is in a structural growth phase, fueled by trends like AI, 5G, and the Internet of Things (IoT). According to a 2024 report by McKinsey, global semiconductor demand is expected to grow at a 6-8% CAGR through 2030, with capital expenditures (capex) by chipmakers projected to rise to meet this demand. ASML’s monopoly on extreme ultraviolet (EUV) lithography machines—critical for producing advanced chips—positions it as a key beneficiary. For example, TSMC, a major ASML customer, announced in 2024 plans to invest over $30 billion annually in capex through 2025 to expand capacity, despite tariff pressures. Similarly, a Reuters report from March 2025 notes that Intel and Samsung are ramping up investments in new fabs, with ASML as their primary equipment supplier. Japan, home to major semiconductor players, is also a growth hub for ASML, where they note close collaboration with TSMC and other fabs in the region.

ASML’s rock-solid cash flows and dominant market position make it a quality anchor for my portfolio. Tariffs may cause short-term volatility, but the long-term demand for chips—and thus ASML’s machines—remains intact. This starter position reflects my confidence in ASML’s ability to weather the storm and grow over the coming years.

3. M&A Research Institute ($9552.T) at JPY 936.00 – An Undervalued Japanese Growth Gem

Finally, I’ve taken a starter position in M&A Research Institute, a Japanese M&A brokerage firm that I believe is a true hidden gem. At 936 JPY, this company is trading at a price that I consider extremely undervalued given its growth trajectory and fundamentals. As I shared in my X thread on March 18, 2025, M&A Research Institute is a compounding machine in Japan’s $124 billion M&A market. Here’s why I’m excited:

AI-Driven Efficiency: Their AI technology matches buyers and sellers in just 50 days—far faster than the industry’s 7-month average. This is a game-changer in Japan’s SME succession crisis, with 2.45 million firms at risk by 2025.
Client-First Model: They charge no upfront fees, only taking a cut when deals close. This alignment of incentives has fueled explosive growth—revenue nearly doubled in 2024, and they’re scaling to 360+ advisors.
Stellar Financials: Zero debt, a 67.6% gross margin, 57% ROA, and 94.7% of net income converting to cash. This asset-light, high-return profile is what quality investing dreams are made of.
Visionary Leadership: Shunsaku Sagami, the 34-year-old founder, owns 53.52% of the company (a $400M stake) and has built a top-4 M&A firm in just five years. Owner-operator companies are the companies I like a lot because of the alignment of interests with shareholders.

Yes, there are risks—fast growth could lead to missteps, and competitors might try to replicate their model. But with Japan’s M&A market heating up (JPMorgan estimates SME M&A deals will double to ¥500 billion by 2033), I see significant upside. This starter position lets me capitalize on this undervaluation while I keep an eye on execution risks.

Cash Reserve Strategy: Ready to Double Down

These are starter positions for a reason. I’ve allocated a small portion of my portfolio to each—roughly 3% for ASML and TTD and 1% for M&A—while keeping a healthy cash reserve. This gives me the flexibility to double down if prices drop further, a strategy that’s served me well in past downturns. Markets are volatile, and with recession odds rising (JPMorgan now pegs it at 60%), I want to stay nimble. Quality investing isn’t about timing the bottom—it’s about owning great businesses at fair prices and compounding over time.

Updated Portfolio Allocation

Below is my updated portfolio with the new positions. I’ve included a pie chart for clarity, showing the weightings of TTD, ASML, M&A Research Institute, and my other holdings.

This tariff storm isn’t fading anytime soon. If it escalates, we could see a deeper market correction—potentially pushing the S&P 500’s Shiller CAPE ratio from 31 to 25 with another 15% drop. But as long-term quality investors, we thrive in chaos. I’ll continue refining my models and share in the Discord app, monitoring these new positions, and sharing updates with you. What’s on your watchlist? I’d love to hear your thoughts—join the conversation on our Global Quality Investing Discord or drop a comment below.

If you’re enjoying this journey and want to support more content like this, consider treating me to a coffee on Buy Me a Coffee. Every bit helps keep the fire burning! Let’s keep growing this community together.

To quality and long-term compounding,

Arnold - Compound & Fire

Feel free to like the post and share it with friends!

Share

Disclaimer

The information in this article is provided for informational and educational purposes only.

The information is not intended to be and does not constitute financial advice or any other advice, is general in nature, and is not specific to you. Before using this article’s information to make an investment decision, you should seek the advice of a qualified and registered securities professional and undertake your own due diligence.

None of the information in this article is intended as investment advice, as an offer or solicitation of an offer to buy or sell, or as a recommendation, endorsement, or sponsorship of any security, company, or fund. The author is not responsible for any investment decision made by you. You are responsible for your own investment research and investment decisions.

Compound & Fire

Seizing Opportunity in Market Chaos: New…