November 2025 Portfolio update

‘I get knocked down, but I get up again’ Chumbawumba

It seems a strange time to be excited, as Mr Market continues to cast a shadow on our portfolio. Yet excited we are!

8 years ago, I wrote a principle (linked here) which includes the phrase: We will look to the performance of the business for signals of its success or failure and not to the price attributed to the business by the market.

The current disconnect between operational progress and market prices is serving up quite the opportunity for us.

Bloomsbury Publishing 

Bloomsbury released interim results at the end of October, which included a profit upgrade for the full year. This is largely due to having signed their first non-exclusive AI licensing deal; the first in what we expect will be a new, albeit sporadic, revenue channel for the business. As the company is UK-listed, the mention of AI unfortunately did not lead to an immediate reappraisal of the appropriate valuation metrics to employ (price-to-books, anyone?). But we are pleased with the characteristically thoughtful way in which Bloomsbury’s team is engaging with the challenges and opportunities facing all publishers. 

Performance across the business continues to be pleasing, even with the well-documented headwinds from lower US and UK educational spending, and we are looking forward to new CFO Keith Underwood joining the business in early 2026. 

I am repeatedly told that I am the only portfolio manager who meets with the company and doesn’t try to get an answer to when the new Sarah J. Maas title will be released. I’m not sure what to make of that, but released it will be at some point. This possible release, along with the new TV adaptations of the Harry Potter books and continued growth in digital resources, means there is much to look forward to as Bloomsbury shareholders in 2026, while the team continues to execute on their 2030 strategy. 

Watches of Switzerland Group 

Discussion of Watches of Switzerland (WOS) this year has been dominated by the potential impact of the US’s 31% “Liberation Day” tariff imposed on Switzerland, which was then increased further to 39%, in a shock to many. We added substantially to our position when the share price fell below 350p in August, making WOS our second-largest holding. 

As students of game theory, we do not expect the punitive tariffs on Switzerland to be permanent. More importantly, our thesis is that WOS is a highly valued and trusted distribution partner of several Swiss brands, especially Rolex. Therefore, while we expect the eventual response to tariffs to be some combination of price increases, manufacturer margin sacrifice and distributor margin sacrifice, we believe that Rolex will ensure that WOS retains sufficient economics in the value chain to remain highly motivated to continue to meet (and often exceed) Rolex’s expectations as a partner. 

Indeed, as I write, it is being reported that Rolex was among the businesses that met with President Trump last week to urge him to reconsider his position, which he seems willing to do. This forms part of a sophisticated charm offensive dating back to at least September, when Rolex invited the President to a box at the US Open.  

It is no coincidence that Rolex is the only major watch brand that has not responded to the 39% tariff with further price increases or distributor margin cuts. It’s clear to me that they believe there is a deal to be done. Swiss watch prices go up every year, but they never come down. It is therefore understandable that Rolex wishes to wait until the tariff environment is clearer before adjusting its medium-term pricing strategy. This is particularly important, as price rises are likely to be worldwide, not US-specific. 

Amidst all this, last week WOS updated the market on H1 trading, reconfirming that they expect to meet guidance for the year. US sales are up 20% in constant currency, with the UK up 2%, but the new Rolex flagship in London is performing ahead of expectations. Management is monitoring developments but has so far seen no significant impact on consumer behaviour. We are doing the same. 

Auction Technology Group 

ATG continues to trade at prices far below our view of intrinsic value. Trying to attribute reasons to share price movements can often be a fool’s errand, but it seems highly likely that the continued share price weakness is due in part to management’s decision to acquire Chairish for what appears to most UK investors to be a very full price (10x “post-synergy” EBITDA). 

We think highly of John-Paul Savant, ATG’s CEO, who is very optimistic about the second-order opportunities arising from the acquisition. In particular, he believes that Chairish as part of the ATG ecosystem is a different proposition entirely to Chairish as a standalone business. This is predominantly because ATG currently loses the ability to monetise a losing bidder when an auction ends, but with Chairish, they will be able to offer a similar list-price product to losing bidders and capture a sale; something that no other competitor can do. John-Paul has also made significant on-market share purchases since the announcement. 

We consider ourselves to be more open-minded to deals of this kind than many UK-focused investors. That said, our inclination is that the acquisition has raised the stakes for ATG at a time when we believe the emphasis should probably have been on proving out their core strategy. We also naturally dislike M&A that results from competitive processes, as the Chairish acquisition did. Overall, though, we partner with exceptional CEOs because they see things others don’t, and ATG has a good record integrating acquisitions, so we are giving John-Paul the benefit of the doubt for the moment. 

In their 28 October trading update, management confirmed that the business continues to trade in line for FY25 and FY26, which translates to c. $75m of adj. EBITDA in FY25 and c. $85m of adj. EBITDA in FY26, with leverage coming down to well under 2x by September 2026. If that holds true and the Chairish acquisition integration remains on track, our faith in John-Paul should be well rewarded. 

Yours

Jack

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