It’s been a busy few weeks for me, both in the markets and at home.
While investors debate whether the markets have hit a top or have more room to run, my wife and I just experienced a major double-beat on expectations, with our twin boys being delivered safely last Thursday.
Just like the market, we’re now managing double the volatility, double the noise, and hopefully double the long-term return on investment. Sleep is now a much rarer commodity, but morale remains as bullish as always.
If it takes me a little longer to respond on Discord, via email, or on the Q&A, I apologize in advance. The first while here as new parents might get difficult, so take it easy on me!
My portfolio moves on the week
My moves this week were a bit telegraphed from last week, as I had mentioned I was just waiting for USD to hit my account to take a position in Taiwan Semiconductor (TSM).
I did take that position this week, and I plan to add to this company routinely. Some may believe that, valuation-wise, the company is stretched at this point in time. I would argue that right now it is priced fairly, reflecting future demand for semiconductors.
With continued demand, it is hard not to see a path to $2T or even $2.5T in market cap for Taiwan Semiconductor over the next 3-5 years.
While that may seem “boring” in the AI market these days, as one can realize 30%+ returns in a matter of a few months, I’m not interested in chasing any of that noise.
As I have mentioned, I love the “picks and shovels” plays in this industry, and I believe that two of the best on the planet are Taiwan Semiconductor and ASML Holdings, both of which are on the Bull List and both of which I own.
Could a rollback in capital expenditures or a cyclical low in terms of semiconductor spending send these companies down by 20%, 30%, 40%? Absolutely. I would be one of the first lined up to buy more shares at discounted prices.
Finally, my other move would be adding to my Constellation Software (TSE:CSU) position. I’ve been aggressively adding to this one and Topicus (TSEV:TOI) ever since the drawdown, and will continue to make it a priority while valuations remain discounted.
Let’s get into earnings.
Earnings
TMX Group (TSE:X)
TMX continues to deliver exceptional quarters. This is the company’s fifth consecutive quarter of double-digit revenue growth and the diversity of the business away from strictly an index provider is now starting to show. Look to the chart below, and what you’ll notice is the Global Solutions, Insights and Analytics segment is becoming a much larger portion of revenue now.
This is the higher margin, recurring revenue segment of TMX’s business and why it has done so well over the last few years.
Revenue increased 18% year-over-year and earnings increased by 27%. Across the board, each business line is contributing, and management continues to execute its plan to get to $2B in revenue in 5-7 years. I would not be shocked whatsoever if they manage to hit this target earlier.
Derivatives and clearing remains the most impressive segment of the exchange portion of the business right now, and considering the market speculation, I’m not surprised it is doing well.
Revenue in that segment jumped 27%, fueled by a 31% increase at the Montreal Exchange, which is an exchange primarily used for derivatives. If you want to get an idea of how popular options are on the markets these days, open interest surged to a record 33 million contracts in September, up 57% from a year ago.
Equities and fixed income trading delivered a more inline level of growth I’d say, with trading revenue up 10% and clearing revenue up 2%.
Trading volumes were strong on TSX Venture, which saw an 86% increase versus last year, which again highlights some extended speculation in the markets right now that TMX is taking advantage of.
The main story here and one of the main drivers of growth is the company’s Global Insights segment, which includes TMX VettaFi, Trayport, and Datalinks. Have a look at the chart below. The growth is simply outstanding.
I had mentioned above this company is diversifying away from just being an exchange company and instead is expanding into data. These are those growth verticals.
Global Insights saw revenue grow 18%. VettaFi led the way with 21% organic growth. Trayport revenue rose 16% in CAD, with recurring revenue up 18%, reflecting the growing demand for energy trading analytics, despite energy prices being in the gutter. Datalinks grew by 12% due to a combination of new pricing but also higher adoption.
I am going a bit more in-depth here as this segment is critical for TMX’s future.
These are the higher margin, recurring revenue, and lower cyclicality businesses that are driving its higher valuations at this point in time. Acquisitions like Verity, a buy-side research management and analytics platform, kind of highlight that the company is not slowing down on this end of the market anytime soon.
On the listing side of things, listing fees climbed 42% and the listing pipeline looks stronger, with plenty of additional listings waiting. However, as you can tell below, we are still way below 2021 levels.
My only hesitancy here is the large quantity of mining listings. If we see precious metals take a step back, this segment might also take a step back. A prime example? Equity financings by TSX Venture issuers were up 67% year-to-date.
Strategically, the company is threading the needle between growth and stability almost perfectly. As mentioned, it is leaning harder into data and analytics, pushing international expansion, and leveraging platforms like Trayport and VettaFi to build more recurring, scalable businesses.
This is without question a company that has an economic moat, and is currently flexing it to post outsized growth elsewhere.
The company is no longer just about Canadian trading volumes or listings. It’s quietly building a broader platform, one that spans data, analytics, index licensing, and energy infrastructure.
You can view my full report on TMX Group here
UnitedHealth Group (UNH)
UnitedHealth’s third quarter played out pretty much exactly how management stated it would. This is a transition phase that’s still choppy, but with a clear pivot toward margin repair and tighter operations.
After the turmoil this stock went through at the start of the year, there was an immense amount of pressure to decide this one’s fate on the US Foundational list. And ultimately, I am very glad I sifted through a lot of unnecessary noise and came to the conclusion this is still a high quality company.
Those who bought in at the largest amount of fear are now up 60% off lows in a matter of a few months.
Yes, it still has a long ways to go to get back to peak prices. However, this is certainly a start.
Results on the quarter were solid. $2.92 in adjusted EPS and $113 billion in revenue, both of which were ahead of analyst expectations. You will see a lot of headlines about the company “boosting its guidance”. Yes, it did, but by a largely immaterial amount, going from $16 a share to $16.25 a share.
I won’t speak too much on results, as forward outlook is the key here with this company. At this point in time, growth is taking a backseat while the company retools its core businesses.
On the UnitedHealthcare side, this means reshaping its book to reflect higher medical costs. Medicare Advantage is being trimmed, hard. Benefits tightened, networks narrowed, entire plans exited, with full acknowledgment that membership will shrink by about a million lives next year.
UnitedHealth is taking it on the chin in 2025 so it can restore margins in 2026 and hit long-term targets.
The exception is Medicaid, where the outlook remains rough. States aren’t funding in line with real-world cost trends, and UnitedHealth doesn’t expect a turnaround here until at least 2027. Management also mentioned they’re only about halfway through new contract renewals, so it could get worse before it gets better.
On the Optum side, the company is in full turnaround mode. The growth-at-all-costs strategy from recent years was likely a mistake and has taken a back seat. Coverage will be cut, providers that don’t fit the model will be cut, and re-integrating care delivery with more consistent standards will be a priority. Memberships will likely shrink this year (look to the chart below) and next year, before growth resumes in 2027.
The end result of all of this? The company expects margins to more than double beyond 2027. If this does occur, the stock is definitely still cheap at these levels.
The company remains laser focused on the balance sheet, likely because it still understands operations could be a bit shaky over the next year or two. The company is prioritizing paying down its debt over buybacks or acquisitions in the near term but it mentioned dividend growth and buybacks are likely to come back in 2026.
The dividend remains safe and unchanged. Despite the drop in earnings, the company still only pays out around 30%~ of its free cash flow. The situation would need to get much worse for the dividend to be at risk.
Overall, this isn’t a quarter to get excited about in isolation, but it reinforces managements ability to execute on a much needed pivot. It’s a company pulling back so it can spring forward, something that a lot of management teams do not have the patience to do. For shareholders, 2026 will be about stabilizing. 2027 is when we can expect this story turns around.
Visa (V)
Visa wrapped up 2025 with a strong quarter. This isn’t a company that is going to move the needle in terms of large scale surprises in terms of earnings. However, it’s one that is able to put up consistent double-digit growth in virtually any macro-environment. I am a firm believer that Visa is one of the best “set and forget” companies in the world.
Revenue increased 11% in Fiscal 2025, while full-year earnings grew 14%. Payments volume was up 8% in constant dollars, cross-border growth held steady at 11%, and processed transactions climbed 10%.
While many are paying attention to hyperscalers in regards to artificial intelligence, Visa seems to be slowing growing itself into the hyperscaler of payment processing, and it’s working.
Part of this is the company’s foundation. Its “network of networks”, with approximately 12 billion endpoints across cards, bank accounts, and digital wallets, is what makes up a large chunk of the company’s moat. If we look to the chart below, total card counts of over 4.7B highlight how widespread Visa really is.
Stablecoins remain a recurring theme. A year ago, many would have thought of this being a bit speculative, myself included. Now, it seems somewhat strategic. They’re already offering over 130 stablecoin-linked card programs in 40+ countries, and that spend has quadrupled year-over-year. The company has moved past the experimentation phase and is now actively integrating stablecoins into Visa Direct and cross-border infrastructure.
Tap-to-pay now represents 79% of global face-to-face volume (up from 71%), and Tap-to-Phone adoption doubled to 20 million devices. These are underrated metrics in my eyes. In this day and age, convenience is everything. Make something easier and quicker to use, and more people will use it.
The financial setup for next year looks rock solid. Visa is guiding for low double-digit revenue growth in, which would be similar growth it posted in Fiscal 2025. They mentioned that expenses will increase as the company leans heavier into marketing around the Olympics and FIFA World Cup, but management was pretty clear that this spend will likely materialize into growth.
The company also continues its torrent pace of buybacks. Visa repurchased $4.9 billion in stock and paid out $1.1 billion in dividends, with $24.9 billion still left on the buyback authorization.
If you look to the chart below, you will see the long-term trend of Visa’s buybacks. The pace at which they’re buying back shares now is exceptional. How can they do this? Well, the business is so capital-light to run, they can fuel expansion and buyback shares with free cash flow. An investor’s dream, really.
This quarter reinforced to me why Visa generally commands a premium valuation multiple from the market. It’s not just the overall growth, but the future trajectory from a company that already has a dominant moat. Stablecoins, commercial payments, tokenized rails, AI-powered fraud detection are all areas where Visa is already at scale or has a very reliable roadmap to get to scale.
