2025 Portfolio Part I: Global Champions from Europe
Update on IWG and HelloFresh; New Positions: Sixt, EVS Broadcast, Evolution Gaming
Portfolio Update 2025 Q1
Below is a snapshot of my current portfolio as of January 12, 2025. My “AI basket” represents 35% of the portfolio and will be the focus of Part II of the Portfolio Update.
The Investment Case for European Global Champions
The global investment landscape is at a fascinating crossroads. U.S. equities remain expensive, with the S&P 500 trading at a forward P/E of 22.5x, while international markets tell a different story. The MSCI World Index, excluding the U.S., trades at less than 15x forward earnings, reflecting a valuation premium for U.S. stocks of over 50%.
Meanwhile, the valuation gap between U.S. and European equities has reached historic extremes. As shown in the chart below, European stocks now trade at a discount of over 40% relative to their U.S. counterparts, marking the widest valuation gap in more than 35 years.
This historic valuation gap raises a question: could there be meaningful opportunities among global champions headquartered and listed in Europe? Many of these European companies operate on a global scale, resembling their U.S. counterparts in sectors like technology, consumer goods, and industrials. Just as U.S. giants derive a large share of their revenues internationally, these European firms are far from being tied solely to their home economies.
This makes European equities a compelling hunting ground for investors seeking to capitalize on the valuation mismatch. By focusing on globally competitive European companies with strong fundamentals, investors may capture outsized returns while benefiting from a reversion in relative valuations. After all, while U.S. stocks are fair to fully valued, the rest of the world may indeed be too cheap.
This backdrop sets the stage for today’s focus: “Global Champions from Europe.” These are world-class companies that, despite being unfairly punished by the markets, dominate their industries and operate globally. Together, they make up 40% of my portfolio, including my top two positions, IWG and HelloFresh, as well as three exciting new additions: Sixt, EVS Broadcast, and Evolution Gaming.
Let’s start with IWG, the undisputed leader in the flexible workspace revolution and one of my top portfolio convictions.
1. IWG
Business Model
IWG offers serviced offices and coworking solutions under brands like Regus and Spaces, addressing the rising demand for flexible, hybrid workspaces. Its value proposition lies in providing cost-effective, scalable workplace solutions that free businesses from the long-term commitments of traditional leases. IWG has transitioned to a capital-light model, partnering with office owners through management and franchise agreements to minimize capital expenditure while maximizing recurring revenue. This shift positions IWG as a “Marriott for offices,” with the potential for significant long-term value creation.
Is IWG a Global Champion?
IWG's is by far the global leader in the flexible workspace industry. IWG is the only platform with a truly global footprint, operating 3,751 locations, significantly outpacing its closest competitors like WeWork (582 locations), Industrious (160), and Servcorp (150). This scale provides operational leverage and positions IWG to meet the needs of multinational clients.
Before getting to the details of IWG’s valuation, it’s worth asking: is IWG a potential global champion that just happens to be headquartered and listed in Europe and may thus be unfairly punished by the capital markets?
While IWG headquartered in Zug, Switzerland, and listed on the London Stock Exchange (LSE), the company has already begun transitioning to US GAAP accounting, signaling its intent to align more closely with US market standards. Furthermore, IWG is actively pursuing a US stock listing, which could help unlock greater valuation potential by appealing to US investors who better understand the growth trajectory and profitability of flexible workspace businesses. This move also reflects IWG’s ambition to position itself as a truly global player that is not limited by European capital market biases.
Does IWG face AI Disruption Risk?
I believe IWG's business model is more likely to benefit from recent AI developments and the associated uncertainties in workplace dynamics. Here's why:
Flexible Workspace Demand: As companies face uncertainties about their staffing needs and workspace requirements, the demand for flexible office solutions is expected to increase. IWG, as the global leader in providing serviced offices, coworking spaces, and hybrid work solutions, is well-positioned to capitalize on this ongoing shift. Firms hesitant to commit to long-term leases will prefer IWG's short-term, scalable contracts, which allow them to adjust their space requirements as needed.
Hybrid Work Trend: AI is accelerating the trend toward hybrid work, enabling more remote and decentralized work setups. IWG’s model, which offers access to a network of flexible workspaces worldwide, supports this trend by providing employees with professional, on-demand spaces closer to home or client locations, reducing the need for large centralized office hubs.
Reduced Costs for Clients: AI-driven automation may reduce the need for large administrative teams, prompting companies to downsize their office spaces. As companies choose not to extend long term leases for their offices, IWG’s value proposition of offering efficient, pay-as-you-use office solutions, makes it an attractive option for businesses aiming to streamline costs.
Adaptability and Tech Integration: IWG can integrate AI technologies into its operations, such as optimizing space utilization, personalizing customer experiences, and streamlining booking systems, further enhancing its value to clients.
In sum, IWG stands to benefit from the increasing need for flexibility and agility in the workplace, positioning it as a winner in the evolving AI-driven business environment.
Valuation
IWG currently trades at a market capitalization of $1.85b. Net financial debt stood at $0.7b in the last report, which puts the current enterprise value at $2.55 billion. IWG achieved EBITDA of $274m in 2024 H1, so should comfortably achieve $500m for the 2024 full year, which puts current EV/EBITDA at less than 5x.
Near term, IWG’s capital allocation policy remains to continue to work towards a target 1.0x net financial debt / EBITDA. IWG should achieve its near term target at some point in H1 2025. After that, IWG will return cash flow to shareholders, preferably in the form of buybacks, which should be extremely value-accretive at the current valuation.
Over the mid term, IWG sees itself on track to achieve $1 billion EBITDA. With strongly reduced capital expenditures due to the transition to the capital light business model, IWG will produce significant free cash flow in the years to come.
I would like to offer an alternative, more medium term view at IWG’s valuation as compared to the long term vision laid out in my full writeup on IWG. Hotel operator Marriott currently trades at an EV/EBITDA multiple of 22x. While IWG is certainly more dominant in offices as compared to Marriott in hotels, and offices as a service arguably have much lower market penetration and hence a much larger growth runway, it could be argued that Marriott’s brands and franchise system are stronger than IWG’s or that there are other systematic differences.
Lets imagine the following situation in five years from today: IWG trades on a US stock exchange; it has successfully demonstrated the capital-light growth that brought its EBITDA to $1b as targeted, while strongly reducing capex as a fraction of EBITDA compared today. Given Marriott’s 22x EV/EBITDA valuation in the hotel sector, does an EV/EBITDA multiple of 15x for IWG seem that unreasonable? It would put IWG’s market cap at $14b if the 1x EBITDA/net debt ratio is maintained. This scenario represents an upside of 7.5x compared to today’s share price. It does not even account for buybacks in the meantime, whereby IWG might even increase net debt by $0.5b over the horizon, or any dividends.
IWG thus remains the most compelling opportunity I see in the market today, so I have bought more to make sure IWG remains a 15% despite the underperformance compared to my other holdings.
Further Reading:
My full writeup on IWG can be found here:
2. HelloFresh
Business Model
HelloFresh operates a direct-to-consumer subscription model, delivering pre-portioned meal kits with fresh ingredients and easy-to-follow recipes directly to customers. Its value proposition lies in convenience and variety, catering to individuals and families seeking home-cooked meals without the hassle of meal planning and grocery shopping. With Factor75, HelloFresh expands this convenience further, offering fully prepared, health-focused meals that require no cooking, targeting time-strapped, health-conscious consumers. The rapid growth of Factor to a €2.1 billion business in just a few years underscores HelloFresh’s strength as a leading food solutions platform. Leveraging advanced logistics and data-driven insights, the company continuously optimizes operations and enhances customer satisfaction. HelloFresh’s other platforms, such as Pets Table, have already reached annualized revenues of over €100 million, growing 118% year over year as of Q3 2024.
Is HelloFresh a Global Champion?
While headquartered and listed in Germany, HelloFresh is a clear global leader with highly international revenue streams. It operates largely as a U.S. business in terms of cash flow, with over two-thirds of its AEBITDA generated from North America. In the meal kit delivery market, HelloFresh holds the top market share in North America, Europe, and Australia, far outpacing competitors like Blue Apron and Marley Spoon. Additionally, through its RTE segment, HelloFresh is the undisputed leader, with Factor75 expected to generate approximately €2.1 billion in U.S. revenues, significantly ahead of rivals like Freshly and Daily Harvest.
Does HelloFresh face AI Disruption Risk?
As a mostly physical business, I believe HelloFresh does not face any immediate AI disruption threats—to the contrary, it is well-positioned to benefit from AI advancements. With its leadership in the meal kit and ready-to-eat (RTE) segments, HelloFresh can leverage AI to optimize demand forecasting, supply chain logistics, and inventory management, reducing food waste and improving operational efficiency. Additionally, AI-driven personalization can enhance customer retention by tailoring meal offerings to individual preferences, while robotics and automation in warehouses can further streamline its physical operations. Given its scale, extensive data, and established infrastructure, it seems to me that HelloFresh is uniquely positioned to capitalize on these improvements, reinforcing its market leadership and operational efficiency.
Valuation
HelloFresh management has raised its AEBITDA guidance for 2024 to €360 million–€400 million and laid out a mid-term strategy aimed at expanding free cash flow (FCF) through increased labor productivity, streamlined fixed costs, and optimized marketing ROI. These initiatives, alongside selective CapEx investments, position the company for meaningful AEBITDA and FCF growth.
I expect HelloFresh’s FCF to reach €300 million by 2027 and around €500 million by 2029, with significant upside potential thereafter. At a current market cap of €2.17 billion, the valuation suggests material upside over a 3- to 5-year horizon. As FCF grows, HelloFresh has the flexibility to either accelerate growth or increase the pace of share buybacks, further enhancing shareholder value. Despite the strong share price recovery since my last writeup, I still find the valuation highly attractive. HelloFresh currently represents a 10% position in my portfolio.
Further Reading:
For readers further interested in Hellofresh, I recommend my original writeup and my follow-up post on Factor:
3. Sixt
Business Model
Sixt operates a global car rental and leasing business with a vehicle fleet ranging from economy to luxury models. It differentiates itself by offering premium vehicles from brands like BMW and Mercedes-Benz, appealing to both corporate clients and individuals seeking a higher-end experience. Sixt also provides SIXT+, an all-inclusive monthly subscription service, offering flexibility beyond traditional leasing contracts. Its digital-first approach integrates all services into a single app, delivering a seamless and user-friendly experience that sets it apart in customer satisfaction.
Is Sixt a Global Champion?
While headquartered and listed in Germany, Sixt operates internationally, with 58% of revenues originating from Europe and 42% from North America in Q3 2024. It is the No. 1 car rental company in Germany and No. 2 in Europe. In the U.S. market, where Sixt currently holds just a 3% share, its growth potential is significant, with a 21% year-over-year increase in Q3 2024 and 461% growth since Q3 2019. While not yet a global leader in the highly competitive car rental market, Sixt dominates the premium segment and is well-positioned to grow into a global champion through continued innovation and expansion.
Does Sixt face AI Disruption Risk?
Sixt faces potential disruption from AI-driven trends such as robotaxis and autonomous vehicles, which could reduce demand for traditional car rentals. However, a shift toward robotaxis could decrease personal car ownership, increasing demand for short-term rentals and mobility solutions.
On the positive side, Sixt appears to have the right culture to stay at the forefront of AI and mobility innovations. Beyond its digital platform, other examples include Sixt’s Car Gate technology: an “...innovative, AI-supported vehicle inspection technology in the form of a vehicle-sized scanner with built-in sensors, cameras and a lighting system.”
Moreover, partnerships like the one with Mobileye hint at the potential that Sixt might one day integrating autonomous vehicles into its fleet.
Overall, Sixt demonstrates a strong history of adaptability which suggests it may be more ready than its competition to benefit from AI advancements.
Valuation
Sixt has an impressive track record of value creation, with a 13% CAGR in revenues over the past decade. Consensus estimates for 2025 earnings per share stand at €7.12, translating to a forward PE ratio of 8.2 for the preferred shares and a current dividend yield of 6.7%. Even if Sixt delivers only half its historical growth, the shares appear significantly undervalued. With continued earnings growth and a potential re-rating to a more market-aligned multiple (15x), Sixt’s share price could realistically double or triple over a five-year horizon, dividends included.
Further Reading:
For investors further interested in Sixt, I recommend the detailed writeup by .
4. EVS Broadcast Equipment
Business Model
EVS Broadcast Equipment specializes in live video production technology, enabling broadcasters and media companies to deliver high-quality, real-time content for major live sports, entertainment, and news events. Its solutions support critical aspects of live production, including video replay, content management, and media infrastructure.
EVS’s hardware revenue is effectively recurring, driven by the need for regular maintenance, upgrades, and replacements as broadcasters adopt evolving standards like 4K and IP-based workflows. Its strategic shift toward cloud-based and software-defined solutions addresses the growing demand for flexible and remote production, helping broadcasters improve efficiency and integrate seamlessly with digital platforms. By bundling hardware with software licenses, support, and training, EVS fosters long-term customer relationships, ensuring repeat business and reinforcing its competitive position.
Is EVS a Global Champion?
Although headquartered and listed in Belgium, EVS operates a highly international business. In 2023, less than 5% of its revenues came from Belgium, with 50% from the EMEA region, 33% from the Americas, and 17% from APAC. EVS serves broadcasters and media companies worldwide, with clients that include major sports and live event producers, such as those covering the Olympics and FIFA World Cup.
EVS is the global leader in live production technology through its LiveCeption® solution, which holds an estimated 45-50% market share in the live production workflow market. This dominance highlights EVS’s ability to innovate and deliver mission-critical tools for live sports and entertainment. In sum, while EVS operates in a niche market, its leadership in live production makes it a global champion, with significant opportunities for growth through new business models and geographic expansion.
Does EVS face AI Disruption Risk?
I believe EVS faces limited AI disruption risk due to its focus on live production for sports and entertainment, where human judgment and creativity are vital. Instead of posing a threat, AI offers EVS opportunities to enhance its workflows. The company has identified AI applications such as automating repetitive tasks, improving content tagging, and optimizing live replays and highlights, which can streamline operations and improve customer offerings.
AI can also enhance real-time content analysis, enabling broadcasters to deliver more engaging experiences to audiences. EVS’s emphasis on innovation, as seen in its investor presentation and annual report, ensures that it is well-positioned to integrate AI-driven tools and maintain its leadership in live production technology. While certain media workflows may face disruption, EVS seems well positioned to capitalize on AI advancements rather than be displaced by them.
Valuation
EVS aims to grow its revenue to €350 million by 2030, up from approximately €197 million in 2024. With a forward P/E ratio of 10.9, the current valuation appears highly attractive. Additionally, EVS has a €10 million share buyback program, representing 2.4% of its market capitalization, and pays a dividend with a current yield of 3.62%. These factors suggest significant upside potential for long-term investors. Similar to Sixt, a combination of a market multiple on earnings (15x), and just some 50% EPS growth until 2029 would allow for a doubling in the share price, without accounting for share buybacks, or dividends.
Further reading:
For investors further interested in EVS I recommend the detailed writeup by .
5. Evolution Gaming
Business Model
Evolution AB operates a B2B model, providing fully integrated online casino solutions to over 800 gaming operators globally. The company specializes in Live Casino, streaming real-time games from over 20 studios worldwide. The business model is primarily commission-based, where Evolution earns a percentage of its operators' gaming revenues. This aligns Evolution’s financial success with the growth of its clients, creating scalable and recurring revenue streams. The company differentiates itself through constant innovation, including new game formats and advanced engagement tools like the Lightning Series and Game Shows, which drive higher player retention and activity.
As shown in the graph above, Evolution has demonstrated phenomenal growth in its history, though recently growth has been slower with 14.7% revenue growth in Q3 2024 and 11.6% EBITDA growth. Recent growth has been impacted by challenges. Operational disruptions in Georgia, where Evolution operates at 60% studio capacity due to union-led strikes, have constrained delivery volumes. Additionally, cyberattacks in Asia have disrupted video streams, leading to revenue loss. Despite these setbacks, Evolution has successfully mitigated some of the impact by shifting capacity to other studios and bolstering security measures.
Growth Outlook
Longer term, the online casino industry is projected to grow at a compound annual growth rate (CAGR) of 12.4%, reaching USD 45.88 billion by 2029. The next leg of Evolution's growth is likely to come from its continued global expansion, particularly in emerging and newly regulated markets like Brazil, Colombia, and the Philippines. Brazil, as one of the largest untapped online gambling markets, presents significant opportunities following recent regulatory advancements. Evolution has already established a foothold in Latin America with its studio in Colombia, and its experience in the region positions it well to capture further market share as other countries like Brazil develop their online gaming frameworks. Similarly, the Philippines represents a gateway to further growth in Asia, a region already contributing heavily to Evolution’s revenue. With increasing internet penetration and regulatory developments across these regions, Evolution can expand its customer base while capitalizing on its leadership in Live Casino, which remains a key driver of growth. Combined with the company’s ongoing innovation and studio launches, these markets are should play a crucial role in Evolution’s long-term growth trajectory.
Is Evolution Gaming a Global Champion?
Evolution Gaming, headquartered and listed in Sweden, operates a highly international business. As of Q3 2024, 62.5% of its revenues came from Asia and Europe, with 202.2 million EUR (38.9%) from Asia and 194.9 million EUR (37.5%) from Europe. The North American market contributed 12.5% of total revenue (64.8 million EUR), while Latin America and Other regions accounted for 7.2% (37.4 million EUR) and 3.9% (20.2 million EUR), respectively.
In sum, Evolution Gaming clearly is a global champion in the online casino industry, particularly in Live Casino, where it holds a dominant market share. Its leadership is reinforced by constant innovation, global expansion, and a strong foothold in emerging markets.
Does Evolution face AI Disruption Risk?
While fully autonomous AI-driven games (e.g., AI dealers) could emerge as competitors in the long term, Evolution’s core value proposition relies on delivering real-time, immersive gaming experiences with live dealers, which remain difficult to replicate purely through AI.
Instead of displacing its offerings, AI may enhance Evolution’s operations and customer experience in several ways. AI can personalize gaming recommendations and improve user interfaces, boosting player engagement and retention. It could also streamline operations by automating tasks like dealer performance analysis and fraud detection, reducing costs and improving scalability. Furthermore, AI-driven content innovation, such as the upcoming AI Slot Recommender, will allow Evolution to offer more personalized and engaging experiences for players.
In sum, given its clear leadership position, Evolution Gaming may be more likely to face AI-driven opportunities than significant disruption risks.
Valuation
The current share price of Evolution appears to offer an attractive entry point after dropping 28% over the last 12 months. Evolution currently trades at a next 12 months earnings multiple of only 12.3x, which seems highly attractive to me given the growth prospects. Again, just a little earnings growth and a market multiple would do wonders to the share price from here. That does not even account that Evolution has no debt, but €664m in cash (4.3% of the market cap). Evolution bought back €248m in shares last quarter (1.6%) of market cap, and pays a dividend (current yield: 3.7%).
Further Reading:
For readers further interested in Evolution Gaming, I recommend the detailed writeup by .
Thank you for this excellent writeup and congratulations on the 2024 performance. I wish you an even better 2025.
Could you tell us in short why you ditched the rest of your q4 24 portfolio (Stef, OUE reit, Dreamfinders, Autopartners, Match)?
We share IWG and HFG holdings. Among my tops is the greek Euronext just listed THEON, high growth founder led European defense but growing in the US small cap, it may interest you. Thanks for your great work!