Welcome | The Hermit's Protocol (Start Here)
The Home of Institutional Micro-Cap Research
Welcome to The Hermit: Institutional Research.
You haven’t just subscribed to a newsletter. You have gained access to the research engine of the previously hedge fund Equity Focus FIL, and now our permanent home for businesses, Hermit Ventures.
Whether you found us via a friend, an algorithm, or pure luck, you are here because you suspect that everyone else is looking in the wrong places.
And… You’re probably right.
Our Edge: The “Too Small” Advantage
We focus exclusively on extraordinary companies with a market cap under $2bn.
Why? Because big funds can’t 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, we’ve uncovered 2 to 5 purchasable companies per year, which doesn’t sound like much until you see how these have compounded for us at 21%+ over the last 8 years.
As you can probably imagine, when we find one, we don’t hesitate.
Every investment is the result of a 3+ month due diligence process:
📊 Financials: We rebuild the statements from scratch.
📑 Filings: We read every footnote.
🕵️ Scuttlebutt: We interview management, suppliers, and competitors.
📈 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 Inner Circle
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, don’t start with today’s 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 world’s 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
Computer Modelling Group: The dominant duopoly in reservoir simulation software for oil & gas with EBIT margins north of 40% since 1978.
The Compounders & Consolidators
Atlas Engineered Products: A structural winner in the Canadian building market. “Truss(t)” the process of consolidation
QXO: The “Brad Jacobs” 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. We have been doing the job successfully for over a decade, with independently audited returns since 2018.
We began as allocators in a family office in 2014.
We then set up and operated Equity Focus FIL, our regulated European hedge fund (no longer adding LPs).
While we continue buying listed stocks, we have expanded the team to acquire entire companies and operate them directly through Hermit Ventures.
Every action since June 2024 is published here. Feel free to verify.
Welcome to the community!
Alejandro Yela
Hermit Ventures
The transparency in your portfolio performance is what this industry desperately needs.
This is beautiful. Thank you for the detailed introduction!