Welcome | The Hermit's Protocol (Start Here)
The Research Exhaust of an Active Hedge Fund
Welcome to đ§ââď¸ The Hermit.
You havenât just subscribed to a newsletter. You have gained access to the research engine of, previously, hedge fund Equity Focus FIL, and now our Operating Holdco, Hermit Ventures Ltd.
Whether you found us via a friend, an algorithm, or pure luck, you are here because you suspect that Wall Street is looking in the wrong places.
And⌠Youâre probably right.
Our Edge: The âToo Smallâ Advantage
We focus exclusively on extraordinary companies with a market cap under $2bn.
Why? Because big funds canât buy them. They are structurally forbidden from owning these stocks due to liquidity rules.
That leaves the field open for us. We exploit this information asymmetry to find mispriced monopolies, forgotten compounders, and deep-value assets.
Our Process Explained
We hunt for certainty. Our system demands patience. On average, weâve uncovered 2 to 5 purchasable companies per year, which doesnât sound like much until you see how these have compounded for us at 22%+ over the last 8 years.
As you can probably imagine, when we find one, we donât hesitate.
Every investment is the result of a 3+ month due diligence process:
đ Financials: We rebuild the statements from scratch.
đ Filings: We read every footnote.
đľď¸ Scuttlebutt: We interview management, suppliers, and competitors.
đ Technical: We thoroughly review price action for entry points.
Navigating The Hermit (Your Deliverables)
We publish heavily researched content twice a week. Here is how to use it:
1. The Institutional Deep Dive
For Paid Subscribers
A 30+ page thesis covering the business model, vetted competitive advantages, catalysts, valuation, and risks.
2. Priority Briefs
For Inner Circle
We share direct and actionable insights from our 1-on-1 interviews.
3. The Hermit Portfolio
For Paid Subscribers
Full transparency. We share exactly what we are buying/selling with audited returns.
4. Pick of the Week (Saturdays)
For Paid Subscribers
A concise snapshot of a company on our radar. It focuses on one or more key angles: Asset Value, Backlog, or Margins.
5. Our Investing Journey
For Everyone
Essays on cognitive biases, the psychology of money, and the reality of running a business.
Hall of Fame (Start With These)
If you are new, donât start with todayâs post. Start with our Hall of Fame.
These write-ups demonstrate exactly what we do and how we do it.
The Monopolies (Our Bread & Butter)
Limes Clinics: [Mostly Free] The worldâs most exclusive mental health operator. High margins, high barriers to entry
Crox: [Mostly Free] The ultimate Ugly-Cool monopoly. A masterclass in high-margin manufacturing (60% gross margins) and the art of the brand reset
California Nanotechnologies: The US monopoly on advanced materials (SPS/Cryomilling). A deep dive from prototype to production
The Compounders & Consolidators
Atlas Engineered Products: A structural winner in the Canadian building market. âTruss(t)â the process of consolidation
QXO: The âBrad Jacobsâ Playbook. How a serial compounder is building the next construction giant
Omni-Lite Industries: Inside a multi-division Aerospace & Defense powerhouse making precision components
The Special Situations
Spartan Delta: An Oil & Gas consolidator with massive operational leverage. A masterclass in acquisition-driven value creation
Aurora Spine: How a screwless, minimally invasive approach is disrupting the $10B spinal implant market
BluMetric: The water-tech turnaround with a massive backlog of military contracts
The Mindset
Why Bitcoin Is Going to Zero: A framework for valuing non-productive assets
The K-Shaped Reality: Navigating the widening gap between the haves and have-nots in a high-interest, AI-driven labor market
The Toolkit
We believe in open-sourcing our methods. Here are the tools we use regularly:
Valuation Tool: The simple model we use to sanity-check price targets
The Scuttlebutt Guide: How to interview management like a journalist
The All-Weather Portfolio: How to structure your capital for decades of survival
Skin in the Game
We are capital allocators. And weâve been successfully doing the job for over a decade with independently audited returns since 2018.
We started as allocators in a family office.
Then, we set up and operated Equity Focus FIL, our regulated European Hedge Fund. No longer adding LPs.
While we continue buying listed stocks, weâve expanded the team to help us acquire entire companies and run them directly through Hermit Ventures Ltd.
Feel free to verify all of our actions since June 2024. Itâs all published right here.
Welcome to the community!
- Alejandro Yela, CEO, Hermit Ventures
The transparency in your portfolio performance is what this industry desperately needs.
This is beautiful. Thank you for the detailed introduction!