Bought more Adobe after 20% rise for my Swedish compounders

I’ll admit it.

This week, I looked at Air France-KLM.

I’m super committed to my emerging Swedish serial acquirers.

But markets are at all-time highs, making it hard to find value.

And there’s a lot of bad press swirling around airlines, which usually means you can buy low.

So my eyes wandered a bit.

I can also admit that my buy of the week was Adobe.

Yes, my focus is on 10xing.

Yes, I know the best way to do that is in small caps.

And yes, I’m all-in on the serial acquirer model. It’s designed to compound.

But I invest a little each week.

I still have an irresistible instinct to buy low.

And a deep aversion to buying after a spike.

And a lot of things are spiking right now.

My largest holding — small-cap acquirer Karnell — is up 20% the past month.

The same is true for my second largest — Vitec Software.

Vitec recently offered a rare combo of acquirer growth and deep value.

But the market has noticed.

And even my unloved holdings like Novo Nordisk, Hemnet and Pandora have had a nice April.

So the outlier is Adobe.

They continue to wade around 10x forward PE.

The narrative remains pessimistic.

And they just announced an even bigger buyback program than before.

Which will see them retire a whopping 25% of shares over the next few years.

And which the market didn’t care about in the least.

So Adobe now feels even safer.

All this brings up a key dilemma in my mind.

The 10x vs mean-reversion dilemma.

Because which one is better:

• Investing in a smaller cap — like a Karnell or Vitec — even after a 20% rise, because it can 10x in a decade?

• Or investing in a high-quality giant like Adobe, which is at a low but shows every sign of snapping back to the mean when the narrative turns.

This is a tough one for me.

A part of me knows I should ignore the large-cap mean reversions.

I’m going for 10x (and more). Adobe’s chances of 10xing from this size are basically nil. And Karnell has a clear path.

But another part of me knows Adobe has a better chance to 2x in the next three years. Offering 20-30% average return. With almost no downside risk.

While Karnell could just as easily drop 50% as it could rise.

I’m torn.

This week, I went with Adobe.

I chose the large-cap mean reversion potential.

With that downside protection I love.

What I’m not torn about is Air France-KLM.

Sorry.

Despite the deep value, there’s not much there that feels safe.

Thanks for reading. Talk to you next week.

Click through at the bottom to see the latest Friday Fund figures.

Hi, I’m Joel Sherwood.

I invest each week and write about it here. Building a fund in public and sharing my analysis and performance.

Focused on the Nordics, where I live.

I’m a former financial journalist and current bank employee. I started the Sherwood Investment Letter in January 2025.

Purchases are not recommendations.