December 2025 Update

Our fund appreciated 5.1% in the month of December and 4.2% for the quarter, taking the calendar year return in 2025 to 14% in Australian dollars.

Our fund returned 21.8% in US dollars in 2025, considering that the Australian dollar appreciated 7.8% against the US dollar in 2025. This comfortably outperformed the MSCI World Index, US’s S&P500 and Australia’s All Ordinaries, which appreciated 21.1%, 16.5% and 14.9% in US dollars respectively.

We delivered this strong performance without taking excessive risks or overly exposing ourselves to a highly concentrated and expensive US equity market. Global benchmarks like the MSCI world index are now virtually US equity market proxies, with the United States representing 73% of the MSCI world index. By contrast, our fund only has 19% of its gross exposure in the United States and only 15% on a net basis. As seen in the chart below, we believe valuations in the US are stretched, where on a Case Shiller basis, US stock market valuations are at their highest levels since the dotcom bubble.

2025 was a year where Donald Trump’s geopolitics and tariff agenda created significant volatility in global equity markets. In April, global markets were down close to 20% at one point, but our fund during that period demonstrated its resilient characteristics, remaining flat at its worst levels. Markets rebounded sharply as Trump showed that he was negotiating rather than trying to send the global economy into recession. We have seen a surge of liquidity in the past six months chase commodities such as gold, silver (+60% and +140% for the year in USD terms), AI exposed companies and meme stocks. The people that never thought of buying gold over the past fifteen years as the gold price languished, have started to queue up in the street to buy physical gold after the price has surged. Large capitalization technology stocks had a good year with Alphabet appreciating 65% and Nvidia up 38% in USD terms. December 2025 Update Profeta Global Investments Fund December 2025

While economies remain healthy, we have taken the opportunity to take profits in our gold exposure and areas of the market that appear to be overheated and have concentrated our portfolio into high quality companies that we believe are significantly undervalued.

The outlook for 2026 is supportive of continued strong earnings growth with supportive monetary policy expected in countries such as the United States. We are positioned predominately in small to medium sized businesses like Legal Zoom and Expedia in the US, which should benefit from this accommodative monetary policy. We also continue to see good earnings growth from our investments outside of the US and expect strong returns from both earnings growth and multiple appreciation in our positions in Australasia, Europe and Latin America. The average PE of our portfolio is 13x for FY26, compared to 22x for the S&P500. This is despite the expected earnings per share growth of our companies at 23% compared to 15% for the S&P500.

Quarterly performance

Our fund appreciated 4.2% for the quarter in Australian dollars. This compared to a 1.75% increase in the MSCI World index in AUD, a 1.3% fall in Australia’s All Ordinaries and a 1.2% increase in the S&P500 in AUD.

Our top performers for the quarter included York St Brands, Alphabet, Expedia and HMC Capital. Our largest detractors were Rightmove, Pinterest and Alibaba.

York St Brands (YSB), launched in Boots this quarter, a major UK pharmacy chain, with both Boost Lab and The Breakout Hack (TBH) brands getting shelf space. BOUF, their new haircare brand, is expected to launch in the UK in early 2026. TBH has also just launched the UK website this week. Boost Lab online sales in the UK are already tracking at over $3m p.a. YSB continues to outperform our expectations. The group is expecting to double sales in FY26 to $62 million and EBITDA to grow to $6 million. As they launch new products and their distribution into retail grows globally, the group expects revenue of $111 million and EBITDA of $16 million in FY27.

YSB won a number of industry awards this quarter including coming 6th in the AFR Fast 100 list and was recognised as the fastest growing business in Australia in the manufacturing and consumer goods categories. In 2025, they entered the haircare category with the tremendously successful launch of their BOUF brand, which uses patented technology that stimulates hair growth. This brand has had wonderful success in its first six months of launch with some tongue in cheek marketing from their brand ambassadors, Indy Clinton and Jack Steele. It is impressive that BOUF was nominated for the TikTok ‘Business of the Year’ award even though they have only just launched.

The company completed a $2 million equity raise in December at a market capitalisation of $100 million. This values the company at 1.6x FY26 Price/Sales multiple (see chart below for comparable multiples). We think this is a reasonable price but leaves room for significant upside if the company hits its FY27 targets. We expect the company should be worth 15x EV/EBITDA or 2.5x the current valuation if it hits those targets in 2027. We have confidence that the company can get over $100m of revenue in Australia alone. This is due to the fact that they have a strong pipeline of new products coming to market in 2026 and the company expects to gain much more shelf space in Priceline. The company has also taken the view that they are better off focusing their efforts on Priceline but if they chose to sell into Chemist Warehouse, this could double sales alone.

Alphabet delivered another strong quarter. In Q2 2025, revenues increased 14% YoY, net income increased 19% and EPS increased 22%. Contrary to the market’s prediction that AI will decrease engagement with Google Search, Search experienced continued strong growth with revenue up 12%, boosted by the engagement with features like AI Overviews. AI Overviews, now powered by Gemini 2.5, are driving over 10% more queries globally and monetising at the same rate as traditional search ads. YouTube continues to be the most-watched streaming platform in the US, with 12.8% of total TV time in June, a jump ahead of Netflix’s 8.3%. Google Cloud revenue jumped 32% YoY, driven by increasing enterprise demand for AI, where 85,000+ enterprise clients use Gemini. Google is quietly building its market share in agentic AI. This next wave of AI capability could be the most undervalued part of Alphabet’s portfolio. Agentic AI are intelligent systems that can autonomously plan, execute, and adapt across multi-step tasks. The system operates like a virtual assistant, handling complex goals such as researching, booking appointments, or automating workflows. These agents represent the next evolution of AI, and Google expects 2026 to be a breakout year.

Pinterest reported a strong 3Q25 result with revenue growth of 17% and net income growth of 18%. Global monthly active users increased 12% to 600 million. We believe that Pinterest’s revenue outside of the US has significant room for growth and revenue grew 41% in Europe and 66% in the rest of the world. The stock dropped over 20% as the market was disappointed with the 4Q25 guidance for revenue to grow at 14-16%, slightly below market estimates. We never get too concerned with market estimate misses and see the 14-16% growth guidance as a reflection of the continued strong user growth and uptake of the platform by advertisers. We have been accumulating shares into the recent stock price weakness.

Eurazeo – Stock in Focus

We have recently taken a large position in Eurazeo. It is not often that we find a company that is growing its core business successfully, while at the same time trading at a 50% discount to its book value (value of its assets).

Eurazeo was founded in 1969 in Paris, France. It was formed through the consolidation of two Lazard-linked investment vehicles. Lazard is a French investment bank, founded by the Lazard brothers in 1848. For decades, the David-Weill family used various vehicles to control Lazard. Today, the David-Weill family still own 10% of Eurazeo. The largest shareholder is the Decaux family through their JCDecaux Holdings company, which owns 20% of Eurazeo. The Decaux family are founders of the global outdoor advertising giant JCDecaux. They acquired their stake in 2017, and Jean-Charles Decaux is the company’s Chairman.

Eurazeo is a leading global investment group with €36.8bn in diversified assets under management, including €27.5bn on behalf of institutional and private clients through its private equity, private debt, real estate and infrastructure strategies, focused on the mid-market and primarily Europe. The group supports more than 600 mid-market companies, leveraging over 400 experts in a variety of industries in 13 offices across Europe, Asia and the United States.

We like investing in asset managers that generate good performance and are organically growing their business with consistent fund inflows. Eurazeo saw inflows of over 4 billion euro last year from external parties, with over 70% of these flows coming from outside of France. Over the past two years, the company has embarked on a strategy of transforming the company’s balance sheet from a listed investment company into a pure private asset manager.

Over the past two years they have increased the volume of divestments and have used the proceeds to buyback shares, considering the large discount that the company trades at. The company has bought back 10% of its outstanding shares over the past year. We think the company is worth double the current stock price, and that the market is missing the increasing value of the underlying asset management business that the company is building out. The net value of their investment portfolio is worth €82 and we value the asset management business at circa €20. This gets you to a total value of €102 compared to the current stock price of €52.

The price to book value hasn’t traded this low since the global financial crisis. We expect the company to trade back towards book value as the company continues its transition to a pure play asset manager.

LegalZoom – Stock in Focus

At Profeta Investments, we have a long history of investing in legal software businesses, being one of the first investors in Smarter Drafter, an unlisted legal software company in Australia now selling into the UK. Profeta Investments is a substantial shareholder in this business. We began tracking LegalZoom at its IPO in 2021 and took advantage of what we saw as an attractive entry point last year. We accumulated shares over the past year at an average stock price of USD 6.95 in 2024. While the stock has recently rebounded to $11, following a strong 2Q25 result, it is still well below its $28 IPO price. We still think the shares are significantly undervalued.

LegalZoom was founded in 2001 and was the first company to bring basic legal services such as LLC formation and wills online. Through the 2000s, it steadily expanded into areas like intellectual property, nonprofit formation, and real estate legal services. Today, it continues to innovate with new tools, subscription-based services, and partnerships with platforms like ChatGPT and Perplexity, offering personalised legal care and transforming how people navigate the legal system.

LegalZoom is an owner-managed company, with CEO Jeff Stibel joining the board in 2014 and having chaired it since 2018. He stepped into the chief executive role in 2024 with a comprehensive knowledge of LegalZoom’s products, technology infrastructure and attorney network, as well as the competitive landscape and customer segment. As one of the largest individual investors (5%) for LegalZoom, Stibel’s step into the executive role indicates ownership-centred leadership and strong alignment with shareholders.

Before his journey with LegalZoom, Stibel increased profitability by subscription offerings at tech services companies, which pivoted to become LegalZoom’s main profit driver. Additionally, Stibel was the CEO of Web.com, where he grew the business into one of the world’s largest web services providers, resulting in a roughly 200% increase in shareholder value during its sale.

LegalZoom’s subscription model (6-month or 12-month) offers predictable costs, making legal services affordable for customers who might otherwise avoid them. For the individual customer sector, LegalZoom targets customers who need support with wills, trusts and personal legal matters. And for small businesses, LegalZoom helps business owners with business formations, intellectual property protection and ongoing legal advice.

We feel that the market is underappreciating the transition that LegalZoom has made to subscription revenues, which now represent over 65% of total revenue. These revenues are stickier and more predictable, similar to a software company. The company has a strong balance sheet with over $250m of cash and is generating over $150 million a year in free cashflow. It is also growing its earnings per share at a double-digit rate and only trades on a PE of 14x FY26, significantly below the S&P500 at 22x. We expect the stock to continue to appreciate with earnings growth as well as the multiple re-rating.

I wish you all a healthy, happy and prosperous New Year. I am sure geopolitics will mean that equity markets will not move in a straight line in 2026. Maybe equity markets are getting used to Trump’s unexpected decisions. Equity markets reacted favourably to the US’s takeover of Venezuela. Whatever happens politically around the world, we are confident in the quality of businesses we have invested in at Profeta. Our focus on companies that are leaders or emerging leaders in their industries, run by capable management teams, with strong balance sheets and trading at attractive valuations, should ensure we generate formidable returns into the future.