The Hermit Podcast

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We had another very interesting chat with Yegor from “From $100K to $1M” & More.
Check out all of our previous content here.
During the chat, we went over the following topics:
* Buy Now, Pay Later (BNPL) & Accounting Quirks: Banter around the “Buy Now, Cry Later” brand joke, the consumer psychology of 0% interest promotions (including joking around about “g…

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Make the most out of your subscription to The Hermit.

Check out all our series, verify the data, and form your own independent assessment using the web version to squeeze the maximum value out of our weekly content.

A great place to start is our latest post.
We’ve published one on the first Wednesday of every month since June 2024… that’s 27 editions and counting.
Everything we’ve built, our full thought process, and the underlying data behind our decision-making, distilled into an extraordinarily thorough 30-minute read.
Here are the easy-access links to every series mentioned in the video, in the exact order we cover them:
* Pick of the Week (Mini Thesis)
* The Institutional Deep Dive (Full Thesis)
* The Hermit Portfolio
* Priority Briefs
Hope you enjoy!
Alejandro Yela


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For starters, thanks to everyone who came out for the live session. We are not the largest community, but we’re definitely one that is growing in both numbers and aura.
I’m truly honored to have you by my side on this journey.
This update is less numerically driven and more about the precise direction we’re taking with both our holdings and our project.
As with every update, we’ve included a TL;DR summary that you should be able to blast through in None of the following should be construed as investment advice. Please consult a financial advisor before making any investment decision. You will find a full disclaimer at the end of this post.
It is currently a brutal 47°C (116°F) in Europe, and Paris apparently had to ban alcohol because people were getting drunk, overheating, and melting into the pavement.
That’s why we’ve swapped out our usual cozy fireplace background for a much more appropriate virtual beach.
You’re welcome for the teaser! 😂😂😂
Engine #2: SaaS-pocalypse & Oil
Most oil and gas dependencies have been sold off (Saturn, Yangarra, Constellation). The oil cycle is getting twitchy due to macro sanctions and an impending supply wave (nuclear pivots in Germany, new Canadian West Coast gas pipelines targeting Southeast Asia).
The One Exception: TGS. It was a 15% position, yielded a massive return, and remains an elite business with capital allocation skills that make serial software acquirers look like amateurs. Expect wild volatility forever, but it’s a long-term compounder.

Ongoing Favorites
* ASG: A major write-up went out last Friday on the company. Zero competition in a niche space, stellar management, and a highly probable medium-term acquisition catalyst by a medical giant.
* AEP: A slow-burning 10-year cyclical play handling construction and housing material logistics. They are perfectly positioned to profit from global housing supply shortages.
* CNO: A high-quality micro-cap that has been stalling due to shifting military/aerospace contractor priorities. They recently pivoted into nuclear cash flows. There is no immediate short-term catalyst, but the management team is young and highly competent.
Write-Up Pipeline
You have screened 2,000+ companies so far this year. The cream of the crop is dropping soon in a super detailed format:
* Computer Modeling Group: High-margin Canadian reservoir simulation software. They have acquired 4 companies in 33 months and should return to their historical 40% EBIT margin. A massive deep-dive report is completely ready to drop in the next week-ish.
* Blackline & Monday: The SaaS-pocalypse narrative (AI replacing software) has created absurdly cheap valuations. Blackline is positioned to take over the back-end auditing work of the Big Four accounting firms. Monday.com has 33% of its market cap sitting in pure cash and is aggressively buying back shares.
* Portillo’s: Juicy Chicago hot dogs and beef sandwiches. Debt is a bit high and the share structure is slightly weird, but they hit every single operational metric they set for themselves.
* Smart Organic: A €200m Bulgarian (Eastern European) organic protein food company. Exceptional quality and cost leadership. An interview with the CEO is scheduled for tomorrow, with a write-up following shortly after.
Engine #1: Our Private Ecosystem
We are no private equity firm flipping companies for a quick buck. As prviously discussed, we are building a permanent home for small businesses generating sub-€1m in EBITDA.
Valuation Rules: We strictly target an adjusted free cash flow yield of 15% or higher (roughly less than 6x EBIT/FCF). There are no competing bidding wars in this tiny niche, os patience is a virtue.

Closing Notes
* Possible PropTech Bets: We are exploring 10–20% minority checks into early-stage AI software game-changers like Kausa and Fragua to capture massive productivity tailwinds. More on this soon.
* Subscriber Submissions (Rubo + Genius Sports + BeWhere): We looked at them, but they failed a few of our tests. No major price dislocations, no scalability, and zero catalysts to make them massive home runs.
As a closing thought, we are officially re-addicted to Chess.com after a multi-year hiatus.
We are looking to learn and welcome anyone who wants to challenge us.
Tag = alyela
Hope to see you around!
Disclaimer
This presentation is provided for informational purposes only and is not intended to be, and should not be taken as an offer or solicitation to buy or sell any securities or to invest in any investment strategy. The information contained in this presentation is not investment advice and should not be relied on as the basis for any investment decision.
The views, thoughts, and opinions expressed in this presentation belong solely to the author and are not necessarily indicative of the views of Equity Focus FIL, Hermit Ventures Ltd., 25Delta E.A.F., their management, affiliates, or employees. This presentation may contain forward-looking statements, which are based on beliefs, assumptions, current expectations, estimates, and projections of the author. Such statements are subject to risks and uncertainties that could cause actual results to differ materially.
Readers should consider the investment objectives, risks, charges, and expenses of any investment carefully before investing. The author does not guarantee the accuracy or completeness of the information presented, which is subject to change without notice. The author is not responsible for any errors or omissions, or for the results obtained from the use of this information.
This publication does not take into account the investment objectives, financial situation, or specific needs of any particular participant. It is not to be construed as legal, tax, investment, or other advice, and the author recommends that investors seek independent financial, legal, and tax advice before making any investment decision.
Investments involve risks, including the loss of principal. The value of investments and the income from them can fluctuate, and investors may not get back the amount originally invested. Past performance is not necessarily indicative of future results.
This presentation is confidential and is intended solely for the use of the person or entity to whom it is given or sent and may not be reproduced, distributed, or transmitted without the prior written consent of the author. By accepting this presentation, the recipient agrees to be bound by the foregoing limitations.


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Here is a look behind the curtain at what we're building.
No time for the full video? We’ve got you covered.
Skip straight to the 2-minute breakdown below.
Also Coming Up: In a few weeks, I’ll be hosting a live session with our incoming cohort of interns. We will be building out live valuation models (Comparable Companies, Precedent Transactions, and DCFs) and breaking down case studies in real time. Stay tuned.

And feel free to start your due diligence by…
From Fund to HoldCo
This project marks the culmination of a decade in the trenches. After starting as an intern in 2014 and moving up to manage a family office portfolio, handle full due diligence at an M&A boutique, and run a Spanish hedge fund with an audited 16% annualized return, everything has converged onto this moment.
We are expanding. We started with 13 partners in the fund; today, we are a community of over 35+ committed backers. The ultimate roadmap? Hit 100 stakeholders and take this entity public via a reverse merger.
Note: This breakdown is recorded rather than live-streamed to protect the privacy of an active, confidential transaction.
Capital Allocation Engines
We have structured a UK-based operating company (OpCo) designed to acquire 100% of unsexy, cash-generative micro-caps and manage them from a centralized head office.
This centralized framework will handle all heavy lifting, including due diligence, legal, auditing, HR, etc. Unlocking operational efficiencies, but most importantly, efficiently allocating capital.
Our Reallocation Strategy
Instead of hitting capacity constraints, we will dynamically shift capital across independent, decentralized engines based on where the best valuations sit:
* Engine #1 (Private Ops): Sourcing private small businesses at rock-bottom multiples to compound capital at 20% to 25%.
* Engine #2 (Public Markets): Opportunistic allocations in listed equities and monetary funds when public markets misprice assets.
* Engine #3 (The Accelerator): Unlocked at £30m. Led by a specialized 4-man team, this engine will take 20% stakes in tech companies doing ~$1m in recurring revenue and scale them to $3m within 12-14 months.
* Engine #n: There are a few additional teams we’d love to set up once we exceed £50m. More on these once we get there.
Key Terms & Structure
* Share Classes: Divided into A (voting) and B (non-voting) shares for maximum early-stage flexibility, merging fully upon public listing.
* The Window: All core legal architecture (Shareholders & Subscription Agreements) is finalized. The initial capital subscription window officially runs from June 1st to July 31st.
Leadership & Alignment
Joining me on the board are two powerhouse M&A corporate veterans with over 10 years of experience across the Big Four and Spain’s top advisory firms.
They are actively aiding the due diligence on our pipeline and will transition to full-time, autonomous management of Engine 1 once we cross 5 to 6 portfolio companies.
Anchor Deal: Elderly Care Facility
Our first proprietary deal is a textbook cash cow. A regional leader in the elderly care space operating at near 100% capacity.
* Rough Numbers: Generating roughly €2.8m in revenue with stellar 29% EBIT margins (conservatively modeled at 20%), zero debt, and zero required organic CAPEX.
* Arbitrage: We are buying this business at a low single-digit multiple of free cash flow via a structured earn-out and vendor financing, making it largely self-funding. Because we mark our book at a constant, conservative 8x free cash flow, this triggers an immediate, near triple-digit paper gain upon closing.
* The .gov Moat: Massive regulatory barriers to entry (strict square-meter mandates, staffing ratios, and union hurdles) mean building a competitor from scratch is a bureaucratic nightmare. Meanwhile, revenues are effectively guaranteed, tied directly to inflation-protected public pensions.
* Next Steps: The founding CEO is locked into a 5-year contract. He will spend the first 2 years mentoring a younger, internal successor, and the final 3 years acting as our regional expert to spearhead accelerated due diligence on additional sector-related acquisitions.
Next Steps
To perfectly balance our public and private pipelines, our current target is an initial £10 million capital raise.
Our framework is fully visible across two years of granular, weekly performance updates dating back to June 2024, focusing heavily on circle-of-competence sectors: oil & gas, asset-backed healthcare, and cyber defense.
If you have any questions or are ready to explore joining the holding company, let’s set up a time to talk.

alejandro@hermit.es

See you next Wednesday!
- Alejandro Yela — CEO, Hermit Ventures Ltd


This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.hermitresearch.com/subscribe

As promised, here is the recording of our China trip insights. While financially focused, much of the content explores the cultural and human aspects of both the people and the businesses.
This is our lived experience of what feels like a futuristic country paving a well-constructed road into the future.
Hope you enjoy!
Beyond the recording, here are a few insights on our top three picks of the companies we visited.
For all of them, we met with middle and senior management for sit-down meetings and toured their facilities.
Their reactions were of pure astonishment; they were surprised by the level of international interest in their business methods.
As they were mostly accompanied by interpreters, the language barrier was also part of the experience.
Rather than a deep dive, we’ve focused on their business models and the lessons we can extract to make them more applicable and approachable for a Western audience.
Read about our top 3 by reading the post on The Hermit
Hope you enjoy!
- Alejandro Yela — CEO, Hermit Ventures Ltd.


This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.hermitresearch.com/subscribe