I wrote 5,000 words on Adyen back in March. Since then, the stock has kept taking on water, with the US ADR down 10% as of this writing. The underfollowed Dutch company has been unusually busy with earnings, executive departures, two acquisitions to expand beyond payment processing (the first two in the company’s history), and a continued refusal to have any common sense over capital returns.

All payment stocks are in the gutter. So much so that Stripe is reportedly making a bid for PayPal at $53 billion, which is less than 10x LTM GAAP operating earnings of $6 billion. Quite the pessimistic price for a levered buyout. I do not know when the sector will turn things around, but with a reasonable P/E and double-digit revenue growth poised to continue, Adyen should deliver strong, inflation-protected gains over the next five years. The only question is how to manage any position in the stock.

On this update, I will cover:

• Steady Q1 results

• Accessing the two acquisitions

• Management changes

• Is there still an emerging moat?

• My investment decision

• Portfolio update

Steady Q1 results

Read more

Next three weeks: Adyen (quarterly update), Coupang (quarterly update), BBB Foods (Full Research Report)

Twice a year, the Friday newsletter will update readers on the performance of the Emerging Moats portfolio (unpaywalled) and go through the existing short book (paywalled). My strategy should be evaluated over a multiyear period, but I think it is only fair for anyone curious about the premium newsletter to see how Emerging Moats is progressing.

In these newsletters, I will also highlight any previous research that I have removed the paywall from. Again, in the interest of transparency for potential paid subscribers.

The Emerging Moats portfolio encapsulates 100% of my invested assets. As someone staring down the barrel of 30 and no family obligations, I have one goal: to maximize long-term returns. Performance will always be evaluated using money-weighted returns since this is not a fixed pool of capital. Returns will be compared to the S&P 500 money-weighted return – meaning what my returns would be if simply investing in an index fund every time I deposited funds –, but this does not mean I am scratching and clawing to chase the S&P 500 annually. If the S&P 500 has ripped 100% in a few years while the portfolio lags at a 60% return in a low-risk portfolio, I will not be concerned. Conversely, if the S&P 500 has crashed 40% over a three-year period and the Emerging Moats portfolio has “beaten” it by only falling 20%, I will be disappointed in myself. This is a strategy that should deliver positive returns over almost any three-year period.

All that said, here is how the Emerging Moats portfolio has performed in the two years since I began tracking performance in July 2024:

• Total Return since inception: 30.57%

• S&P 500 total return since inception: 43.37%

• Annualized since inception: 14.00%

• S&P 500 annualized since inception: 19.34%

• YTD returns: 11.1%

• S&P 500 YTD returns: 10.28%

I am not unhappy with 14% annual gains over two years in the face of a raging AI bull market I have not participated in, and where some holdings have been deemed direct losers due to memory chip price hikes. 7% of the portfolio remains in a long-term treasuries ETF, which has been put on for optionality in a down market.

There have been some losses, sure, but they have been outweighed by gains from a few larger winners. All the portfolio’s gains from inception can be netted out to four winners: Oscar Health, Nelnet, IBKR, and Remitly Global. Half of these gains are from Oscar Health alone. My best outcomes are when I make 8-12 decently sized bets in growth compounders and let the few winners run.

All Oscar Health updates now have the paywall removed. With many years of expected returns within a few months (gains from the purchase on March 6th are already at 120%), I don’t believe I am cheating paying subscribers by giving everyone access to these reports. Any future Oscar Health updates will still be for paying subscribers only.

Here are the three Oscar Health reports in the last year that anyone can now read:

• Oscar Health: Unstuck (May 22nd, 2026)

• Oscar Health: 2026 Rebound (December 26th, 2025)

• Oscar Health: Undervalued or Overhyped? (July 30th, 2025)

Now, let’s talk about the short portfolio.

Short Portfolio Performance

The strategy of highly diversified shitco shorting has delivered positive returns (net of interest expense) since its start in April of last year.

Read more

Three previous research reports: Nelnet, Nu Holdings, MercadoLibre

It says a lot about a business if you can maintain profitability operating under a socialist government delivering hyperinflation to its citizens. In fact, it might just be an indicator that the business has an incredibly wide moat.

I know of just two publicly traded companies that grew their earnings power in the latest bout of inflation in Argentina. One is well known: MercadoLibre. The other is less covered, and the subject of today’s comprehensive research report for Emerging Moats subscribers: Corporacion Americas Airports (CAAP, for short).

It is a testament to the airport operator model – of which CAAP is now one of the largest and most diversified in the world – that it has maintained positive operating earnings in Argentina every year for the last decade except for 2020 and 2021, which were severely impacted by COVID-19 lockdowns.

Now, after years of battling these economic headwinds, CAAP’s largest country by revenue may have the free-market man (and former CAAP economist), Javier Milei, to finally produce an economic recovery in what was once one of the wealthiest nations in the world. Maybe. At the same time, it is steadily reinvesting in new airport assets, diversifying away from reliance on a single economy.

The stock still trades at just 6x EBITDA. This should make any investor’s ears perk up.

In this comprehensive research report, subscribers will read:

• Why airports are great businesses

• The history of CAAP, the Eurnekian Family, and Javier Milei

• Betting on the Argentine Economy

• A different capital allocation strategy

• Is there an emerging moat?

• My investment decision

Why Airports are Great Businesses

Read more

“This summer, we’re going further. We’re adding new categories of services to make every part of your trip easier, and new experiences you can only find on Airbnb—including exclusive access to the FIFA World Cup 2026. We’re also bringing boutique and independent hotels to Airbnb. And we’re upgrading the app with AI-powered tools to help you find the perfect place to stay, plan your trip, and get help the moment you need it.” - Airbnb 2026 Summer Release, May 20th, 2026

Airbnb is attractive as an investment because of its wide moat and optionality. This optionality comes in two forms: products and monetization. We are in the early stages of a constellation of services getting built around the powerhouse lodging platform, as well as the steady pulling of levers to monetize both sides of the travel marketplace.

Founder Brian Chesky is well aware of Airbnb’s potential and has pushed a sense of urgency in product development, leading to a short-term boost in expenses. At the same time, the core business remains a cash machine, enabling an aggressive stock repurchase program. Since peaking in Q3 2023, shares outstanding have fallen at a 2.5% annual clip.

The first quarter of 2026 showed the flowers of this strategy starting to bloom. More growth in nights and experiences booked, more product depth, and a further reduction in total shares outstanding.

In this update, I will cover:

• Steady as she goes (Q1 results)

• The LLM holy grail

• Chesky’s side hustle?

• Is there still an emerging moat?

• My investment decision

• Portfolio update

Steady as she goes (Q1 earnings)

Read more

“Look, I don’t love Wix’s management team. But the stock is now at $68, and the company repurchased a third of its outstanding shares in a tender offer earlier this month. We are at a price where management is going to repurchase 99% of shares outstanding over the next five years” – Emerging Moats, April 10th, 2026

“It also means we need to become a faster, leaner, and flatter organization. We are moving to a structure with fewer levels between any member of our leadership and the most junior person on the team. Fewer layers means faster decisions, clearer ownership, and less distance between the people setting direction and the people building the product - but it also means a smaller number of people.” – Founder Avishai Abrahami, May 28, 2026

“While Wix Harmony and Base44 continue to perform as we expected when we issued guidance as part of the first quarter 2026 earnings release, the Company expects an approximately $50 million reduction in bookings and an approximately $25 million reduction in revenue in FY 2026 as a result of our organizational realignment as well as a more pronounced slowdown, beyond our previous expectations, in the growth of our Partners business during the second half of May and early June.” – Wix 6-K, June 8th, 2026

The hits keep coming for Wix. Despite posting solid growth in Q1 and repurchasing a third of its shares at a normalized free cash flow yield of north of 10%, shares have fallen 56% this year and are now down 87% from highs. Management just laid off 20% of workers. Guidance has been reduced due to a slowdown in intake from agency website builders over the last few weeks. Pessimists fear this is the tip of the iceberg.

Shares are priced as if the company may see its entire business model evaporate within a few years, with a market cap of $1.8 billion, a P/S ratio of 0.9 (on a 67% gross margin business), and a P/FCF of 3.5, meaning an investor just needs a few years of existing cash generation to achieve an acceptable rate of return.

I wrote my introductory research report on Wix in February, asking whether it was actually an AI winner trading at 10x cash flow. Good news, we now have the opportunity to buy it at 5x cash flow. Yipee. Right?

Or should we? Last week, I covered my recent trades with Wix. This week, Emerging Moats readers will get in depth analysis of a company at a crossroads.

In this article, I will cover:

• Q1 earnings and guidance revision

• Navigating the AI turbulence

• Is there still an emerging moat?

• My investment decision

Q1 earnings and guidance revision

Read more

“For a random week in January, there is currently only one direct round-trip flight from Monterrey to Cabo. For the same dates, there are six leaving Los Angeles. You will not have six daily flights from Monterrey to Cabo by 2030, but is there room for two? Three? As Monterrey citizens become wealthier, there should certainly be. This is a metro area with over 5 million people and an ideal population pyramid to grow this population and per capita incomes over the next two decades.”

I wrote this in late December of last year. Grupo Aeroportuario Del Centro Norte (Grupo OMAB) has since fallen 11% year-to-date (YTD) in US dollar terms, driven by a slowdown in international traffic at Monterrey.

Investors are concerned about a simultaneous slowdown in international traffic (passengers are down 2.9% YTD through May) and the threat of higher airline ticket prices due to rising fuel costs. We also had a short scare when the cartels “terrorized” Mexico in March (remember that story?). With this stock drop, shares have traded back to an EV/EBITDA of 9.

Many of the catalysts discussed previously are still in play, including the expansion plans at the Monterrey airport, inflation-protected price increases, and this summer’s World Cup in Mexico driving a temporary boost to the economy. Long-term, there is still a massive tailwind from the reshoring thesis and escape from the middle-income trap for Northern Mexico.

In this Friday newsletter, I will cover:

• Traffic update

• Incoming price hikes

• Remaining catalysts

• Is there still an emerging moat?

• My investment decision

• Portfolio update

Traffic Update

Read more

“We believe we still have a significant amount of unrealized value in these businesses as well as in real estate, solar tax equity, and other major ventures.”

I have been invested in Nelnet since the beginning of 2021, making it the longest-tenured holding in my portfolio (I am 29). My hope is to hold Nelnet not just for five years, but 50, and even in perpetuity long after I pass.

It can be our Berkshire Hathaway.

Who wouldn’t want that?

Comparisons to Berkshire Hathaway create tension. Buffett is the top dog for a reason, and trying to say your small-cap is the next legendary conglomerate can elicit eye rolls. Don’t tell them the business is also located in Nebraska. Are they just cosplaying Berkshire for fun?

In the case of Nelnet, I think it does have the culture, track record, and size to generate returns similar to Berkshire. If one can actually find the next Berkshire, you are setting up a trajectory for 1,000x returns over the next three to four decades, with a low risk of ruin. All you have to do is keep buying and never sell.

Again, I will ask readers: who doesn’t want this?

In this full introductory research report, subscribers to Emerging Moats Stock Research will receive:

• A history of Nelnet

• Segment overview

• Idiosyncratic leadership

• Monetizing hidden value

• Is there an emerging moat?

• My investment decision

A long and winding history

Read more

So, here you go.

Rambling thoughts on SpaceX and the state of the Elon Empire.

SpaceX is planning to go public at a $1.8 trillion valuation, selling $75 billion in stock to fund orbital data centers and a ~Mars colony~. 30% of the $75 billion — $22.5 billion — is expected to come from retail investors. The cult of the empire apparently has deep pockets nowadays.

The space/connectivity business is good. Nobody should pretend it isn’t just because you don’t like Elon’s antics. Elon wants you to forget about launch costs when analyzing the Starlink segment (63% adj. EBITDA margins!), but that is not what an objective observer would do. There is no such thing as a free launch.

If SpaceX were forced to buy a Starlink launch from a third party, it would incur real costs of revenue.

Combining the Space and connectivity businesses makes sense if the goal of the space segment is to send SpaceX's internal payloads into orbit. That way, you get the true economics of the rocket launch and the services associated with it.

$15.5 billion in revenue in 2025, up from $7.4 billion in 2023. Combined EBIT/operating income of $3.8 billion. That’s it.

For round numbers, let’s say $10 billion in EBIT is well within sight over the next five to ten years. A vertically integrated rocket launch and satellite network is not cheap to build, which is why the combined capex was $8 billion last year.

$15.5 billion in revenue. $8 billion in capital expenditures. Not exactly FICO or Visa.

Capital intensity should lower your expectations on intrinsic value. A high-quality business is one that can durably generate cash that can be returned to shareholders. SpaceX is not that, and I don’t think it ever will be?

Yes, sure, it will always be cooler than FICO.

Cool does not generate excess cash flow to be redistributed to shareholders.

No matter what the tech bro media ecosystem tells you — and they will tell you their opinion on anything if it means a potentially marking up of their bags before dumping them on the public — SpaceX is not a monopoly for much longer. If we are going to value SpaceX stock on a time horizon of a one-million-person Mars colony (Musk’s goal, not mine!), then the next few years do not matter. And a few years from now, its monopoly on large payloads will have ended. If Blue Origin and Firefly continue to flop around, that’s fine; you still have Rocket Lab and its Neutron rocket coming around the bend.

I am guessing that customers like Amazon, Leo, AST SpaceMobile, or any other Starlink competitors will want to fly on other rockets, if possible, especially after SpaceX crowded out the market with its own payloads for years, creating the current bottleneck waiting to be unleashed (and making everyone mad). Starship gives them a slight leg up in size and will help them efficiently send satellites/computing racks into orbit, but in practice, it is not much larger than New Glenn or Rocket Lab.

SpaceX is a good business because of Starlink. Starlink may turn out to be a great business one day. But is it a business worth more than a few hundred billion, even if we sprinkle in some Musk pixie dust? I think not. The path to $10 billion in annual free cash flow will be treacherous.

But sure, let’s dump this onto retail at a market cap of $1.8 trillion. Lovely. I am sure this will cool the populist flames if the stock rolls over and the $22.5 billion in retail capital gets wiped out.

Space and Connectivity are not the entire business, though. Who could forget the intense negotiations between Elon Musk and Elon Musk over SpaceX's acquisition of xAI for $250 billion earlier this year?

The AI/Twitter/X business is ugly. The financial media seems to be underrating the fact that it may bring down the entire Musk empire. It is that bad. Boy who cried wolf, yeah, yeah, but this is a real turd, stop looking at it with Elon-tinted glasses.

The financials are way worse than I thought, and I have personally been replying to every Bill Ackman tweet with “@Grok, is this true?” to spitefully waste compute resources.

Make sure to look at these charts properly. xAI (meaning SpaceX) is a massive loser in AI. In Q1, it generated $818 million in revenue and spent $8 billion on capital expenditures just for the AI division. Some are claiming the Anthropic deal of $1.25 billion in monthly spend as a white knight, but that is a flimsy contract that can be ended whenever Anthropic wants (and they will end it and go to Google Cloud and AWS eventually).

Also, please stop and think for a minute. xAI spent a gajillion dollars to build its own data centers on Earth, yet it is already begging its direct competitors to use them. And we are now going to build these in space within the next few years, justifying a 100x P/S ratio?

The IPO isn’t even the main event. Wait, what could be bigger than this?

Everything is being set up to merge Tesla and SpaceX. We have been talking about it all year. It almost has to happen unless SpaceX can keep raising capital ($75 billion will only cover a few years of burn). We just saw the next step in this process, with “leaks” dropping to financial news outlets about “discussions” over a Tesla and SpaceX merger. I wonder who would want that narrative to start building!

CNBC notes there may be “concerns” among shareholders of the two companies regarding a merger. Either I am very confused, or this was a nice bit of humor from a financial news outlet.

I guess Neuralink is now allowing Elon to negotiate with himself. Interesting. Maybe we can add a $1 trillion valuation to that as well.

I, for one, cannot wait for the fireworks to happen. It will be $3 trillion of a mess of companies. Optimus. Cybercab. AI data centers in space. Twitter. Grok. Starship. Financial incentives for a Mars colony. Cash burn you wouldn’t believe.

My bet is to short EchoStar stock as a SpaceX proxy heading into the IPO. It is heavily indebted garbage and will likely be screwed over, as most Elon counterparties are, giving it a good risk/reward skew over the next few years.

I could not care less if SpaceX stock jumps on the day of the IPO. The next few years are going to be a slow burn as insiders dump everything on retail.

If you were to conjure up a blow-off-top for the AI bubble, you couldn’t script it any better.

Good luck to all.

-Brett

Today, I bring readers an update on Sprouts Farmers Market.

Below is the upcoming schedule for Emerging Moats. Reports include Nelnet (full research report), Grupo OMAB (quarterly update), and Wix (quarterly update) in the next three weeks.

I have made my writing plan for July, which you can see below. An overdue introductory report on BBB Foods is in the works. These are subject to change for any emergency posts, but I want to generally adhere to the schedule since some paid readers churn on and off for a month at a time. Switching up the entire writing plan a week before would amount to rug-pulling you.

Also, expect periodic trading updates. All trades will be disclosed before I make them, and are for paying subscribers only.

Owning uncorrelated assets is beneficial. Plain and simple. Besides diversification advantages, it allows you to shift your portfolio to optimize after-tax returns, provides buying opportunities at all times, and can maximize absolute returns through the cycle. A year like 2026 may trick people into thinking the last point is incorrect (you need to chase the current hot thing or risk being left behind!), but this does not ring true through bear markets. Let the growth-at-any-price investors who drew down 80% in 2022 tell you firsthand the downsides of going all in on the hot thing of the moment.

You might wonder why I cover Sprouts Farmers Market – a grocery store concept – in a newsletter that focuses on emerging moat opportunities. Sprouts does have an underappreciated moat, but it is the stock’s uncorrelated or even inverse correlation to the US-AI bull market that makes it doubly fascinating to follow. Just as its health-focused grocery concept is a counterweight to big-box brands, its stock can be a nice counterweight in a growth-focused portfolio.

I have noticed that Sprouts and Philip Morris International generally trade in the opposite direction to the US indices. If Nvidia is up, Sprouts is down. I learned how beneficial this can be a year ago when rotating a soaring Philip Morris International into Airbnb and IBKR during the tariff tantrum. It was, without a doubt, my best trade of the year.

I could see the same happening to Sprouts one day. The stock remains off 52% from all-time highs, reporting what looked like sluggish Q1 results. Analysts are laser-focused on next quarter’s comp sales and the impact of inflation in 2026. I think we had three questions on the earnings call about whether fuel would have a 20-basis-point or 15-basis-point impact on gross margins this quarter. You know, the important stuff.

My analysis remains focused elsewhere: whether Sprouts can maintain its high return on invested capital (ROIC) and the size of its reinvestment runway. Add in capital returns, and the simple puzzle of valuing Sprouts Farmers Market stock is complete.

On this update, I will cover:

• Lapping a strong 2025

• A simple long-term growth algorithm

• Is there still an emerging moat?

• My investment decision

Lapping a strong 2025

Read more

As I mentioned in my newsletter on Oscar Health, I am making some trades today:

Read more

The largest winner for Emerging Moats has been Oscar Health. Up 104% since the end of March, the health insurance disruptor posted its earnings on May 6th, keeping its stock moving up and to the right in a trance-like line. Whatever Wall Street and the short-term pod shops were looking for, Oscar Health delivered.

Here is what I wrote on Oscar back in late 2025:

“My thesis is simple: 2025 is a temporary blip for Oscar Health’s MLR. Over the next decade, it has a clear path to MLR stability, improved operating leverage, and market share gains, which should provide the stock with upside in 2026 and the potential for ten-bagger returns over the next decade.”

The company is beginning to show us that it is executing on this thesis (scale, operating leverage) at a much faster pace than I assumed. Fears about the destruction of the health insurance market have proven overblown, providing management the opportunity to shift from defense to offense. The growth runway in the individual payor market is massive. Oscar Health remains the clear candidate to steal share.

A classic Peter Lynch stock.

In this update, I will cover:

• Why the stock finally got unstuck

• Remaining growth tailwinds

• Is there still an emerging moat?

• My investment decision

• Portfolio Update + addendum on Gambling.com Group

Why the stock finally got unstuck

Q1 headline numbers were fantastic for Oscar Health.

Revenue grew 53% to $4.6 billion, with guidance reaffirmed for the full year at $18.7 billion to $19 billion. More premium revenue gives Oscar Health the scale needed to operate profitability nationwide. Scale gives it the ability to offer “product parity” across healthcare services compared to legacy institutions, which Oscar Health has lacked in its early years (check out this Reddit post for anecdotal evidence). Premiums have grown at a 50% CAGR since 2019, and should continue to grow at a double-digit rate for the foreseeable future.

Another way to look at the topline and scale is the total number of Oscar insurance members. Investors were uncertain how the expiration of extended ACA marketplace subsidies would impact demand in 2026 and balked at the initial guidance in the Q4 2025 earnings release. I mean, the stock got down close to a market cap of $3 billion when it was guiding for close to $300 million in operating earnings this year; there had to be significant doubts these targets would be hit.

Mr. Market was clearly in “show me” mode, and, well, Oscar Health delivered:

Oscar grew its members by around 50% to 3.2 million at the end of Q1 2026. Normally, given the annual nature of choosing a health insurance plan, total members remain relatively steady throughout the year. However, with significant price increases imposed on ACA health insurance providers in 2026 and expiring subsidies, Oscar Health has seen much more churn than in previous years. It began the year with 3.4 million members, which fell to 3.2 million at the end of Q1 and has since fallen to 3 million, according to management commentary on the conference call. This is something to keep track of throughout the year, but the current churn levels are in line with management’s topline guidance for 2026.

Oscar Health’s profitability comes from operating leverage over its fixed cost base, and it showed further progress in this quarter. The SG&A ratio fell to 15.2% compared to 15.8% the year prior. Remember that in the individual payor market, current regulations cap the medical loss ratio (MLR) at 80%, leaving a 20% gap for overhead costs. The lower the SG&A ratio (operating expenses as a % of revenue), the more room there is for operating margin expansion.

LTM SG&A ratio continues to fall, hitting 17.1%. The full-year outlook calls for around 16%, which would be quite impressive if achieved.

Oscar Health generated $704 million in operating income in Q1 with an MLR of 70.5%. With guidance of $250 million to $450 million in operating income for the full year, the company expects operating losses for the last nine months of 2026. This is entirely normal seasonality for an ACA insurance provider, as monthly premiums remain the same while healthcare utilization rises throughout the year. You can see this in both the operating income line and MLR each quarter.

Q1 MLR was significantly lower than in prior years, suggesting Oscar may finally be pricing its plans to more closely target the 80% ceiling (its best annual ratio ever was 82%). Management may be sandbagging guidance or staying conservative given the volatility in healthcare utilization in 2025, because if it hits close to an 80% MLR, achieves a 16% SG&A ratio, and $19 billion in premium revenue, that is $760 million in operating earnings this year.

Unless we see more headwinds in healthcare utilization through the summer months, expect Oscar Health to upgrade its guidance later this year.

Remaining growth tailwinds

Long-term, what will matter to Oscar Health is whether it can scale up its membership from ~3 million to tens of millions. If it does, there is the makings of a 100-bagger, especially from the lows at the end of March.

It remains a market share gainer in the individual payor market. This is evidenced by the 50% membership growth at the start of 2026, while the entire market contracted amid rising prices and subsidy expiration. Many of Oscar’s competitors are leaving the individual market, allowing it to thrive and take a leadership position in this niche.

However, there is still only a limited addressable audience among existing individual payors. According to KFF analysis, the number of individual payors may fall to 17.5 million in 2026, down from 22.5 million in 2025. That already gives Oscar Health significant market share.

Oscar will need to expand into the employer market and turn them into individual payors, which it is doing through Individual Coverage Health Reimbursement Arrangement (ICHRA) plans. These are plans in which employers give tax-free dollars to employees, who then use those funds to buy health insurance through the individual market, potentially choosing Oscar.

The problem is convincing employers that their employees can find adequate coverage in the individual market. In order to fix this, Oscar has launched Lucie, an online marketplace where employees can find the best plans for themselves, even if it isn’t Oscar:

“Lucie helps employers offer great benefits at lower costs. Employers define their budget and fund tax-free employee wallets. Lucie brings it all together in a single platform where teams can choose the products they value most. No more juggling multiple point solutions or dreading unpredictable annual rate hikes.”

Oscar can win with Lucie in two ways. First, it should help more employers switch to ICHRA plans, some of which will flow through to Oscar Health plans. Second, I assume it is getting some of the economics of health insurance purchases made through the Lucie marketplace, which should have nice margins.

This expands Oscar’s addressable market from 20 million members to 100 million or more, giving it the opportunity to gain further nationwide scale. It will take many years of convincing, but the snowball is beginning to form, with incentives from everyone except the incumbent insurers to make the change. Employers want simpler solutions at a lower cost. Employees want a wider choice of healthcare plans that actually serve them.

“Oscar recently brought the industry together to launch ICHRAx to meet the rising demand. ICHRAx will be a plug-and-play data exchange connecting carriers, benefit brokers, and ICHRA platforms to create a more consistent employee experience. States like Mississippi and Illinois are taking steps to incentivize ICHRA adoption by giving tax credits to businesses. Oscar is now working with other state legislatures and business groups to advance similar ICHRA policies that support local economies and reduce the friction of traditional employer coverage. Building on this momentum, we recently launched the Lucie Health Marketplace. Lucie is a carrier-agnostic shopping platform for consumers, brokers, and employers built on one of 11 CMS-approved systems. Lucie brings together a wide selection of ACA plans with leading ancillary and supplemental products like Aflac. We are combining our technology capabilities with individual networks in nearly every zip code nationwide.” - Q1 2026 Conference Call

I think it is smart for Oscar to try to bring the entire industry to ICHRA plans, even if not everyone chooses Oscar for their health insurance needs (it would be egotistical to think this small player is perfect for everyone today). In the long run, Oscar can win significant market share by leveraging its technology-first systems to win over customers.

With continued growth in healthcare spending driven by an aging population, Oscar Health’s revenue per member should increase as well.

I don’t know if it will be 2030, 2032, or 2035, but the path to $100 billion in premium revenue is well within reach. That is simply how large the opportunity in health insurance is, one I underappreciated when initially looking at this stock. A standard 5% net income margin (remember that health insurers also earn interest income on float) would equal $5 billion in net earnings on $100 billion in premium revenue.

The current market cap is $6.7 billion. There is still plenty of upside for Oscar stock if it keeps on its current trajectory.

Is there still an emerging moat?

There is not much new to add about Oscar’s emerging moat, except that it is making progress faster than I previously assumed. Premium revenue of $19 billion is nowhere near the size of UnitedHealth's, but we are already seeing the fruits of potential operating leverage, with a steadily falling SG&A ratio and a positive operating earnings guide for 2026. Any new entrant into the ACA marketplace would have to subsidize losses for a decade while operating with a subscale healthcare network for members.

The only way a competitor can build a better mousetrap is by matching or beating Oscar’s technology and digital products. Assuming none of the legacy players will catch up feels like a reasonable bet. A start-up may try to attack them, but it will likely fail because of the lack of scale discussed above. Most healthcare start-ups are focused on wearables, devices, and software instead, with little focus on the insurance layer.

AI may be a lever for further expanding Oscar’s moat:

“Oscar is rapidly evolving our technology and deploying AI use cases at ever-increasing speed to drive growth, lower costs, and help members make smart choices. We recently launched several new transparency tools, including a real-time drug pricing feature that predicts when costs may cause a member to abandon a prescription. The tool instantly cross-references deductible status, local supply, and pricing, and guides members to lower-cost pharmacies or equally efficacious alternatives in the network.”

The company is deploying many LLMs and bots across its systems. While today this could be read as lip service to Wall Street, I think there is significant potential for the insurer to leverage these AI models to better serve customers in the complex healthcare system. You could even see them layering these models with Lucie to help a customer throughout the entire healthcare journey. The potential time saved is massive for all stakeholders in the system.

All theoretical today, sure. But with CEO Mark Bertolini’s relentless drive to win and Oscar Health’s growing scale, I think this business has the right to win with AI in health insurance, which will widen the moat and unlock even more P&L leverage.

My investment decision

The stock is now approximately 11% of the long portfolio after rising by over 100% in less than two months. An example of why my initial position sizing of 6% - 8% works best for a portfolio of 10 - 15 stocks. When a position starts working, it is in that Goldilocks zone where it can have an outsized impact on consolidated portfolio performance without overwhelming single-position concentration, unless it rises by hundreds of percent in a short period.

I remain bullish on Oscar Health with its current market cap of $6.7 billion and would not consider trimming solely on valuation concerns until it gets to a market cap of $20 billion or more. This is a business I think may generate $1 billion in net earnings in 2027 or 2028, it would be stupid to cut a flower that has so much potential to keep blooming.

From a portfolio concentration perspective, I will follow my standard rules – I am not sure these have been written down on these pages yet, or if I changed them in my mind, but here you go – of trimming back to 15% if a big winner gets to 20% of the portfolio. Not to get ahead of ourselves, but I think this is entirely possible for Oscar Health over the next year if guidance is beat and 2026 and 2027 growth remain on a similar trajectory.

Portfolio update + addendum on Gambling.com Group

Let me close today’s update with an addendum on Gambling.com Group. A few readers have reached out about this one, as the stock has collapsed 46% since my update on the company on April 10th. Ouch. Not a fun number to look at on vacation.

Well, what exactly happened? The company reduced its revenue and EBITDA guidance for the full year, initiated a restructuring that laid off a significant chunk of the workforce, and saw a huge decrease in gross margin while operating income collapsed. Oh, and cash flow from operations looked ugly yet again.

The gambling affiliate unit is clearly facing headwinds from the SEO/Google Search side of the business. However, it is seeing strong growth from non-SEO marketing revenue, which led to stable new depositing customers (NDCs) in the quarter. Plus, its sports data business is growing well at 13% year-over-year, with explosive growth in its enterprise sales.

A weak quarter, sure. But not one where I think a 46% drop was warranted by any means. The stock currently trades at an EV/GP of 1.2. As long as the marketing business stabilizes through the transition to non-SEO sources and the sports data business keeps chugging along, we should see a nice inflection in cash flow generation through the second half of 2026, which can be used to pay down debt (management is prioritizing a bit of deleveraging before repurchasing stock right now).

With an enterprise value of just $177 million, we only need a few quarters of debt paydown and/or buybacks to start making meaningful progress.

And yet, I want to sell the stock at a large loss vs. my cost basis of $5.23. Why? Tax loss harvesting. It is a risk to wait 30 days and change if the stock begins to rebound, but that is well worth the tax losses I can realize for 2026. At the same time, I see plenty of other buying opportunities across existing positions I feel comfortable rotating my GAMB proceeds into.

I am still thinking about what to buy/sell, but I will update readers with my thoughts and planned decisions later today.

This is what the portfolio looks like as of the close on Thursday, May 21st:

Taxes should never be ignored when making portfolio decisions. I do not intentionally try to lose money, but there will be varying volatility and mistakes each quarter that I can take advantage of with tax-loss harvesting. Think of realized losses as a tank you continuously want to fill to offset any gains taken in the year. As long as I have an equivalent stock I can get long or short with equal conviction, it makes sense to take the one-month opportunity cost risk by exiting the positions if there is a significant capital loss to realize.

Until next time.

-Brett

Upcoming schedule: Holiday week, Oscar Health, Sprouts Farmers Market.

“For the last year we’ve been experimenting with this send now, pay later idea, which is the short-term liquidity loan. We’ve had a very, very strong signal. This is a killer idea, we think. Customers have told us that the use of a card is extremely valuable. We’re wrapping up a number of ideas under this card construct, which obviously are gonna help the economics and allows us to really simplify how we go to market with this. Remember that the send now, pay later is an invite only. The customer’s already sent once on Remitly. We know some stuff, so we think it’s a very interesting product.

The signals of all the testing over the last year are very good. We see that launch as quite a lot of potential. We’ve obviously got a long list of things that we’re gonna add to a card to make it, you know, to make customers use it and loyalty, and you can imagine all the things that we can add to a card. It is U.S.-focused first. We’re doing it with the bank partnership. Our ambition is to make this global. As of right now we’re gonna go for the next few quarters with a U.S. launch only.” - Sebastian Cunningham, Q1 2026 Conference Call

Remitly Global is up 79.5% in 2026, as of this writing, before the market opens on Thursday, May 7th. It currently accounts for 12.3% of the Emerging Moats portfolio, which is 99% of my invested savings.

I wrote one of my first paywalled Emerging Moats updates on Remitly in late November of last year. As of this writing, I have removed the paywall, meaning anyone can read the report in order to see my thoughts at the time. The style of my writing and the formatting of the weekly updates have improved since then (nothing like a paywall and recurring revenue to motivate quality improvements), but my thoughts on the business are the same.

Remitly just posted Q1 earnings. These are the first earnings for new CEO Sebastian Cunningham, who has also publicly discussed his plans for the business at recent investor conferences. Long story short: Cunningham and the executive team believe there is still an immense growth opportunity ahead.

In this article, I will be covering:

• Q1 2026 Earnings

• New management perspectives

• Product acceleration and business opportunity

• Is there still an emerging moat?

• My investment decision

Q1 2026 Earnings

Remitly had all-around stellar results in the first quarter. Turns out stablecoins, AI, and immigration headwinds have not killed the business. Shocker. In fact, as I have argued many times, these are actually tailwinds.

Read more

Today, Emerging Moats subscribers receive a comprehensive research report on Nu Holdings. Below is my plan for the upcoming release schedule, along with some of my latest newsletters. In the middle of the year, I will produce a (free) guide on what I have covered so far in my first year and my plan for the rest of 2026.

“Let me now turn to how we’re thinking about 2026. As we enter 2026, we see this as an inflection year, the year we begin transitioning from a Latin American leader to a global digital banking platform. Our priorities are organized around three pillars. First, winning in our core markets…” - David Velez, Q4 2025 Conference Call

My brief experience with legacy banks in Latin America could be a short case study in how to drive someone insane. ATMs that charge ridiculous fees on withdrawals that barely work, have low withdrawal limits, and may not even give you cash but still debit your bank account (yes, this actually happened to me once). Every time you go to one of these branches, there are long lines of customers out the door, wasting their day away, waiting to get fleeced.

Luckily, our friends at Visa and Mastercard allow one to travel without interacting with these borderline criminal institutions, most of the time.

I can’t imagine as a local dealing with Banco Colombia, Santander, or the other stodgy banks on a regular basis. David Velez couldn’t either and decided to change the course of the banking industry in Latin America. Velez, of course, is the founder of Nu Bank (or Nu Holdings, or just Nu).

In 2013, Velez launched Nu Bank as a fee-free credit card available through a mobile app in Brazil. Just over a decade later, Nu Bank has grown to a full-fledged bank with 131 million total customers across Brazil, Mexico, and Colombia, with plenty of room to grow within its existing markets and through planned geographical expansion. It has rapidly grown to one of the largest consumer banks in the world and is currently one of the largest companies by market cap in Latin America.

But how? And why is this stock so intriguing to me at Emerging Moats? Today, we put the puzzle pieces together.

Readers of this report may also be interested in a semi-competitor to Nu Bank, MercadoLibre, which I covered four weeks ago.

In this research report, I will be covering:

• Nu Bank’s story and product evolution

• Current market opportunities (Brazil, Mexico, Colombia)

• Uncertain expansion plans

• AI as a superpower?

• Betting on a founder

• My valuation model

• Is there an emerging moat?

• My investment decision

• Portfolio update

Nu Bank’s story and product evolution

Read more

“The market cap at my cost basis was $71.5 billion, or less than 15x 2025 operating income. Today, we sit at a market cap of $128 billion, or just under 27x 2025 operating earnings. Not exactly a fire sale, but nowhere near a price where I would consider trimming solely on valuation. That would be closer to 50x-60x bull-market operating earnings, or a double from here.” - Interactive Brokers: Changes Brewing

I think about Nomad’s investment portfolio far too often. Amazon, Costco, and Berkshire Hathaway. Nothing more. Buying and holding these three stocks brought forth one of the best track records of the 21st century, and anyone could have copied them.

Is it really that simple? If one picks the correct stocks utilizing something like Nomad, one can beat 99% of investors by sitting at the beach while they stay at home and overtrade.

Who doesn’t want that?

The key is finding companies with increasing competitive advantages at scale (or, as you might say, an emerging moat) trading at a reasonable price. I believe I have 4-5 candidates within this framework – all existing holdings – that I could turn into a Nomad-style concentrated portfolio in a market downturn.

Which brings us to this week’s newsletter on Interactive Brokers. The trading platform is one of my favorite Nomad-style businesses that keeps separating itself from the competition through scaled-economies driven low prices, increased asset tradeability, and a culture of innovation.

Where I wrestle with the investment is balancing my love for the business and the stock’s current earnings multiple. When more money gets deposited into my brokerage account (at IBKR, of course), I have to decide whether to add to my position or keep diluting it down as a % of my assets. Hard decisions when the stock is up north of 100% over the last twelve months and trading at a P/E ratio pushing 40 on bull-market earnings.

In this quarterly update, I will cover:

• Q1 2026 Earnings

• The state of the prediction markets push

• Is there still an emerging moat?

• My investment decision

• Portfolio Update

Q1 2026 Earnings

Read more

Next three weeks: Interactive Brokers (quarterly update), Nu Holdings (full research report), Remitly Global (quarterly update)

“The budget from the United States Navy on UUVs is small today – mainly focused on research. Australia has been at the forefront of the industry, signing its recent deal with Anduril. You could sense the passive aggressive tone from Anduril in the press release telling the US Navy it needs to get its act together and start building up its UUV inventory.

An inflection may be coming. Budget proposals have called for increased spending on UUVs, and while we don’t need to bore readers with the back-and-forth of reconciliation bills, what is important for Kraken Robotics is the long-term trend going higher.”

This quote is from my initial Kraken Robotics research report, published in September 2025. My belief at the time was that Kraken’s role as the premier battery supplier for underwater drones offered it a path to significant revenue growth. A premium valuation kept it on the watchlist, but I remained intrigued.

Interim events have proven the need for new defense technologies if the United States wants to maintain its role as the guarantor of global trade (for the sake of the global economy and the tens of millions who could starve to death in Africa and South Asia, I hope they do). This should lead to a sense of urgency around underwater drone contracts, meaning Kraken customers must procure subsea battery supply, and quickly.

At the same time, Kraken’s stock is up 77% since my initial research report, and it just announced a merger to consolidate its position as the key technology provider for the subsea defense market. This makes now, the day after its Q4 2025 earnings release, a perfect time to update readers.

In this quarterly update, I will cover:

• Proven importance on the battlefield

• Going all in on subsea technology

• Q4 2025 earnings

• Is there still an emerging moat?

• My investment decision

Proven importance on the battlefield

Read more

Next Three weeks: Kraken Robotics (quarterly update), Interactive Brokers (quarterly update), Nu Holdings (Full Research Report)

“Yeah. I think you need to kind of take two lenses on that. Our referrals from LLMs are up substantially, you know, quarter-over-quarter, and that’s something we expect to see going forward. So that’s a positive trend. You know, on a macro lens, it doesn’t appear yet that that’s eating at Google at the moment. The issues we’re seeing are more so with Google itself, and as we noted, that November ranking rebound has not quite persisted. With Google, there’s two core challenges. One is offshore spam. This is particularly in international markets, this channelization issue due to kinda overly burdensome regulations. And two, negative SEO attacks, which is something we haven’t really discussed before. These are both unique to online gambling with search.” - Q4 2025 Conference Call

Catching falling knives requires buying knowing pain is to follow. It is close to impossible to time the bottom, meaning that, more likely than not, buying a stock that has fallen 50% will lead to another 20% drawdown. Expect this going in or else you will be disappointed. It can also make you look stupid for a short while (people hate looking stupid).

What is sacrificed in the first six months can be made up for over the next three years (or ten), as long as your thesis is correct on the business. Mr. Market is generally focused on the next few quarters, if not a shorter time horizon, giving individuals an edge even in the age of AI. This is why I like to fish in this pond and why I want to always invest on a multi-year time horizon.

The first few quarters after buying a falling knife are the most crucial, and the most risky. A stock does not fall 60% without reason. It is the investor’s job to determine whether this drawdown is due to a temporary disruption or a permanent impairment, meaning you might have to cut bait only a few months after buying in order to save yourself from a 50% loss. Never buy more until the stock starts working. I learned that the hard way.

We are at this moment for Gambling.com Group. The gambling marketer and data provider is down 27% over the last three months and 67% over the last twelve months. Brutal. Definitely a falling knife with a narrative taking hold that it will be an AI “loser” due to its reliance on Google Search results to feed its affiliate websites that make up the majority of revenue today.

As I will discuss behind the paywall, this narrative doesn’t tell the full story. My job is to determine whether the company can get back on the right footing and whether the stock looks attractive at a measly market cap of $137 million.

In this quarterly update, I will cover:

• AI headwinds, but different from what you think

• Subscription revenue opportunity

• Capital allocation priorities

• CEO transition

• Is there still an emerging moat?

• My investment decision

AI headwinds, but different from what you think

63% of Gambling.com Group revenue came from performance marketing in 2025:

Read more

Next three weeks: Gambling.com Group (quarterly update), Kraken Robotics (quarterly update), and Interactive Brokers (quarterly update).

Another MeracdoLibre report? Yes, another MercadoLibre report. While this is the first time I have written about the company in detail, there are approximately 8,000 newsletter write-ups on the “Amazon of Latin America,” circling around the internet.

My philosophy at Emerging Moats is to provide readers with value they cannot find elsewhere. If a stock is covered ad nauseam (Nvidia, for example), I generally do not want to cover it unless there is novel analysis to provide. There’s nothing unique for me to say about Alphabet. It is much easier to provide useful analysis for readers by looking at undercovered stocks like Kraken Robotics or Gambling.com Group.

MercadoLibre is an exception this week. One, I currently own the stock, and feel the need to write my full reasons why for subscribers. Second, MeracdoLibre is trading at its lowest earnings multiple in years (chart below). Three, I believe investors are overstating the heightened competitive intensity in Mexico and Brazil and, in fact, expect this to lead to a widening of MercadoLibre’s moat over the next five years. Four, I find that most reports on the stock just summarize its huge list of products/services, call it an Amazon clone, and hit publish (thank you, AI bots, for increasing this slop by 10x). Understanding the business from an emerging moats perspective should be viewed through a different lens, which I will try to articulate below.

This report may be slightly longer than usual, but I believe it will give any reader a full understanding of what matters to MercadoLibre’s business, my thoughts on management, and why I decided to allocate 9% of my long portfolio to it as of April 3rd, 2026.

Given each region’s idiosyncrasies, I will analyze MercadoLibre by country (Brazil, Mexico, Argentina, and Other) rather than by business segment. Then, we will put everything back together to fully understand the big picture.

Thank you to the writer of CapexAndChill for helping me with edits on this one.

I will cover:

• An evolving business model (history and overview)

• Brazil

• Mexico

• Argentina

• Other countries

• Advertising potential?

• Opinion on management

• Financial model and valuation

• Is there an emerging moat?

• My investment decision

An evolving business model

Read more

“There is no reason to panic sell because the stock plummeted. However, I am getting weary of management continuing to move the goalposts with their long-term goal of 10%+ revenue and adjusted EBITDA growth. If this keeps getting delayed, we will not see an inflection in free cash flow, and the stock price will go nowhere.

Interim delays have brought me tremendous opportunities (look at Sprouts Farmers Market’s stock chart) while also falling knives like (Match Group). I am willing to wait a few more quarters at the risk of holding a Match Group to make sure I do not miss another Sprouts Farmers Market.”

I wrote the above quotation as a conclusion to my quarterly update on Portillo’s back in August of 2025. This was written before the Emerging Moats paywall was enacted, so it remains free for anyone to read. Paywalled articles have more detailed analysis, for anyone wondering.

The stock was trading at around $7.25 at the time of publishing. Today, it trades at $5.40. Since then, there has been a strategic reset on unit expansion, an overhaul of the executive team, two more quarterly earnings, and initial guidance for 2026. So far, it is looking much more like a “Match Group” than a “Sprouts Farmers Market,” using my above analogy.

Almost everything surrounding Portillo’s is negative. I have been completely wrong about this stock, making it a big loser for me in 2025. But does that mean I am selling or doubling down on my thesis?

Subscribers to Emerging Moats already know my decision. Today, readers will get my full analysis of Portillo’s latest quarter and how I am analyzing the stock for 2026. Along with last week’s update on The Real Brokerage, this has been a time for covering some of the biggest drags in my portfolio. I am not going to be a newsletter that only discusses winners to grab empty-calorie subscribers. We all want to become better investors, and learning from our mistakes is the best way to do that.

In this article, I will be covering:

• Portillo’s Q4 earnings

• My thoughts on the rejuvenation plan

• New management and restaurant industry outlook

• Is there still an emerging moat?

• My investment decision

Portillo’s Q4 earnings

Read more

With an 85/15 revenue split on residential real estate transactions, capped at $12,000 annually, it is easy to see why The Real Brokerage can convince agents to switch to its cloud brokerage platform: they keep tens of thousands in sales that used to go to their old broker. Evidenced by Mr. Market’s continued pessimism (the stock is down 50% in the last six months alone), there are growing concerns about whether this model works for The Real Brokerage.

Management believes this pessimism is unwarranted, that its core brokerage business could be GAAP profitable today if they chose to be, and that gross margins will improve once its new business lines, like mortgage underwriting and title insurance, gain scale:

“It’s important to understand that for a company with our growth profile and capital efficiency, profitability is largely a strategic choice. Many of our peers are currently posting much steeper losses, as you’ve seen, despite having significantly larger agent bases, which we believe validates the superior efficiency of our model. To give some context, our largest segment, North American Brokerage, was nearly break-even in the full- year of 2025. The significant majority of our consolidated loss currently reflects our ancillary businesses, where we are deliberately choosing to invest today because we believe the long-term returns will be substantial.” - Founder Tamir Poleg, Q4 2025 Conference Call

If you agree with Poleg, then The Real Brokerage stock may be especially cheap right now.

In this quarterly update, paying subscribers for Emerging Moats will receive my latest analysis on The Real Brokerage, covering:

• Growth in a dead housing market

• What about ancillary services?

• Management uncertainties

• Is there still an emerging moat?

• My investment decision

Growing in a dead housing market

Let’s take a look at the macro picture for home sales in the United States:

Read more

A quick update on the portfolio. As always, reply to this email or DM me on Substack if you have any questions about my current thinking.

I added to the short portfolio this morning. No n…

Read more