Q4 2025 Letter

Dear partners,

Thank you for your continued trust and support; you are the best partners I could ask for. If you know anyone who would be a good fit for the fund, feel free to forward on this letter.

The fund is now firmly in its fourth year. Time has flown by and we are now starting to see the benefits of compounding. However, the real mind-bending math starts taking place after the 20 year mark so we certainly have a ways to go :) 

As with the typical format, we’ll talk about some holdings since it’s the end of the year.

Intellego

When I make mistakes, I want to be upfront about them. In that spirit, let’s discuss our Intellego investment. At one point, we owned ~1% of the company but as the stock went from 20 SEK to 210 SEK in just under two years, our position grew to be too large. On the way up, we cut about 60% of our shares but it was still our biggest position. Near the end of September, the stock sold off hard because of three short reports. Nothing came out that we were unaware of so we held our position despite the market clearly telling us we were wrong. Then, at the end of October, management made a disappointing decision. After the short reports hit the stock, management said they were going to do a buyback worth roughly 3% of shares outstanding. That sounded great. However, as the stock trended down, management diluted shareholders at a much lower stock price! The business was profitable with a net cash balance and management was telegraphing they thought the stock was cheap and then they turned around and did an equity financing. The only reason this made sense was to do an acquisition. And I thought the company’s systems and processes weren’t mature enough to handle a large acquisition. We had backed management for two years despite some very confusing communication, but this was the last straw. Raising money that could dilute shareholders up to 16% when the stock was depressed seemed like a poor, panic-driven decision. And the other thing was that the firm they raised from was a subsidiary of a leading market maker. These weren’t business operators. The last deal they did like this was for IonQ, an insanely valued quantum computing firm. After this news, we cut the remainder of our position by another 60%, leaving us with about 15% of our original position. We still wanted exposure as we thought the upside could be significant but we sold the remainder of our position upon the Q3 report where more things came to light that didn’t make sense. One customer who was announced at the end of the quarter accounted for 83% of the revenue and the revenue recognition for the order was astoundingly aggressive, to put it charitably. Further, we found out all of the cash flow from this year was based on factoring rather than paid receivables. This was important information as we were led to believe several times this was not the case. Since the cash was not robust, the main pillar of our investment thesis was in shambles. When the facts change, we need to change our mind. So that’s what we did. It was an unfortunate way to close out our position and even more upsetting was the toll it took on the Q4 performance. Then, on the morning of November 18th, news came out that the CEO was arrested for gross fraud. I made a grave error in my judgment of character and it was and is deeply humbling. I knew the accounting red flags but 4x EBIT for 100% growth was just too enticing. I don’t feel we were naive as we knew the bear case very well and our risk management process, while clearly in need of some improvement, allowed us to do well for LPs but it was still a mistake. A good outcome doesn’t mean that the investment decision was a good one.

I take full responsibility for not cutting the position size even more as things became murky. My bias towards not giving LPs a large tax bill has once again bitten us. With that said, as I mentioned last quarter, I recommend setting aside a good chunk (at least 5-10%) for this year’s K-1 as our top positions headed into the year have now been liquidated. Ok, now on to some current positions…

Nu Holdings

Nu is gradually becoming a super app before our eyes. Its traction in Mexico after receiving the full banking license is evidence the model is replicable in geographies outside of Brazil. I believe there is a decent chance this company could become one of the biggest banks in the world as its lean cost structure enables better rates, which leads to more customers and economies of scale Further, its success has come despite the terrible macro backdrop of Brazil over the past 15 years. Its battle-tested lending algorithms should withstand moving into more stable geographies over time.

Sanuwave

The company sells the UltraMist device, which has a razor and blades business model for treating diabetic foot ulcers, among other wounds. It had a slight growth hiccup in Q3 as they built out their sales organization and the industry is facing a shifting landscape but growth should resume. There just aren’t many profitable medtech companies growing faster than 30%. The CEO is very smart and he runs a healthcare hedge fund in parallel so you can be sure the capital allocation is practical. Sanuwave was also able to refinance its debt, saving several millions dollars per year. The stock now trades for around 18x my forward EBIT estimate which is reasonable for a high quality business with plenty of runway.

TransMedics

TransMedics has single-handedly changed the organ transplant process. In sticking with its mission to save lives, the company now owns 22 private jets and is doing roughly 30 organ transplants every single day. As density continues to grow, it becomes more difficult to compete with since the company’s cost per transplant decreases relative to competitors. The market size is the biggest risk here but if TransMedics continues to enable donor after circulatory death (DCD) transplants, it will grow the entire market as fewer organs will be wasted.

MercadoLibre

MercadoLibre will eventually encroach on Nu’s territory but there is so much whitespace in Mexico since much of the population is unbanked. This company’s management team is one of the few that actually thinks long-term. Lots of management teams give lip service to long-term decision making but this management team really does. They have outcompeted strong marketplaces like Amazon, Shopee, Temu and TikTokShop using vertical integration and fast delivery times. The e-commerce/payments flywheel is still spinning quite fast even at $25 billion in revenue.

Duolingo

To end, we’ll talk about a new holding. I have followed the company closely since the IPO since my wife was an avid user, not wanting to “break her streak” in learning Italian. I thought growth would drop off a cliff after COVID as happened with many other companies, and yet, quarter after quarter the company continued to execute. In fact, there are only four companies I can find that have grown revenues greater than 30% for at least the last 20 quarters in a row – MercadoLibre, Axon, Hims, and Duolingo. To have that growth endurance, you’ve got to be doing something right!

Well, the stock was down almost 70% after the valuation got far too rich and management made it very clear they were prioritizing learning over monetization for 2026. That is the right call in my opinion, considering what the core competency of the company is. Duolingo shouldn’t be thought of as a language learning app, it’s an engagement machine that happens to educate. In service of its mission to make education widely available, it built the data-driven muscle of engaging users. To learn anything, the most difficult part is motivation and that is what Duolingo is good at. In fact, almost 40% of monthly users log into the app every day. For context, Snapchat is at 50%! You’re telling me that an app that teaches you Spanish almost has the same level of engagement as the app where teens do all of their communication?

As the company broadens its education subjects like math, music, chess, and other areas, retention should increase even more. If you get bored of learning a language, you can hop over to play some chess. And AI will allow the company to create better content for their current subjects and accelerate the broadening of the platform. Paired with the engagement muscle, Duolingo very well could become a must-have app for learning all sorts of things. This vision will take time but it’s actually the exact vision of the CEO/founder.

The main bear cases are AI translation and that no one actually learns anything. On the latter, it’s up to the user. Duolingo can’t force you to learn anything. But yes, education apps typically have very high churn. The fact that Duolingo is able to increase paid subs at a rapid rate despite the leaky bucket is incredibly impressive. On the former, language learning isn’t all about practicality. For a large portion of users, they’re trying to learn English and they actually really want to understand the language rather than use AI translating glasses. And secondly, Duolingo includes a structure for habit formation. The company is already embedding AI into its content program with its Max Tier so as the models improve, so should Duolingo’s product. It’s easy to say that high engagement, alone, isn’t a moat and I’d agree but the company’s core competency is A/B testing and therefore, the product improves at a much higher rate than competitors as it scales.

We paid ~18x FCF, inclusive of stock-based comp. That’s not super cheap but for a company with an exceptional founder and growth endurance rivaling our long-time holdings, MercadoLibre and Axon, we decided to finally start a position.

Closing

I’m honored to have you as a partner. Thank you for your trust and support. It enables me to think long-term and will be our own competitive advantage. 

The stock market, like life, will have its ups and downs. All we can do is focus on what we can control and work hard to continually raise our standards. Our strategy is simple – hitch a ride to the world’s best entrepreneurs that are running the fastest-growing, highest-quality companies at the most attractive valuations we can find. Here’s to many more years of focusing on the inputs and letting the outputs take care of themselves. 

Sincerely, 

Ryan Reeves

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Performance Appendix

Annual Net Returns	Infuse Partners LP	S&P 500
2022*	-30.65%	-7.25%
2023	17.62%	26.27%
2024	89.63%	25.05%
2025	79.52%	17.89%
Since inception	177.65%	73.42%
CAGR	35.06%	17.59%

* launched August 8, 2022

Quarterly Net Returns	Infuse Partners LP	S&P 500
Q3 ‘22	-10.85%	-13.39%
Q4 ‘22	-22.21%	7.57%
Q1 ‘23	10.06%	7.49%
Q2 ‘23	0.40%	8.74%
Q3 ‘23	-8.52%	-3.28%
Q4 ‘23	16.35%	11.69%
Q1 ‘24	31.15%	10.56%
Q2 ‘24	21.86%	4.29%
Q3 ‘24	6.23%	5.90%
Q4 ‘24	11.69%	2.41%
Q1 ‘25	-4.87%	-4.27%
Q2 ‘25	52.67%	10.94%
Q3 ‘25	33.24%	8.12%
Q4 ‘25	-7.23%	2.66%
Since inception	177.65%	73.42%

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Disclosures

Infuse Asset Management LP (“Infuse”) is an investment management company to a fund that is in the business of buying and selling securities and other financial instruments. This information is provided for informational purposes only and does not constitute investment advice or an offer or solicitation to buy or sell an interest in a private fund or any other security. An offer or solicitation of an investment in a private fund will only be made to accredited investors pursuant to a private placement memorandum and associated documents. 

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The S&P 500 is a U.S. equity index. It is included for informational purposes only and may not be representative of the type of investments made by the fund. References made to this index are for comparative purposes only. Reference to an index does not imply that the funds will achieve returns, volatility, or other results similar to the index. The fund’s portfolios are less diversified than this index. Returns for the index are total returns which include dividends and do not reflect the deduction of any fees or expenses which would reduce returns. 

An investment in the fund is speculative and involves a high degree of risk. The portfolio is under the sole trading authority of the general partner. An investor should not make an investment unless the investor is prepared to lose all or a substantial portion of its investment. The fees and expenses charged in connection with this investment may be higher than the fees and expenses of other investment alternatives and may offset profits. 

The information in this material is only current as of the date indicated and may be superseded by subsequent market events or for other reasons. Statements concerning financial market trends are based on current market conditions, which will fluctuate. Any statements of opinion constitute only current opinions of Infuse which are subject to change and which Infuse does not undertake to update. Due to, among other things, the volatile nature of the markets, an investment in the fund/partnership may only be suitable for certain investors. Parties should independently investigate any investment strategy or manager, and should consult with qualified investment, legal and tax professionals before making any investment. 

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