Permanent capital · est. 1987 · no fund, no redemptions

US$ 1.84 bn
Retained earnings to allocate, FY2025as of 31 Dec 2025 · audited

Our only product is judgement about where the next dollar goes.

We own durable, cash-generative businesses outright and for decades, and reallocate the cash they produce. This page is not a brochure about the firm. It is the ledger of that capital, descending.

Follow the dollar down ↓

01

The Discipline

OWNER’S MANUAL

Eight principles gate every allocation. They are not aspirations; they are the test a dollar must pass before it moves.

01
We buy businesses, not stocks.
A share is a fractional ownership of a real enterprise, not a ticker to be traded. We underwrite the business; the quote is noise.
02
We hold absent a reason to sell — not absent a reason to hold.
The default is to keep what we own. Activity is a cost, not a virtue. The median holding has been with us nineteen years.
03
Permanent capital means there is never a forced seller.
No redemptions, no fund life, no margin. We can be patient because nothing can make us impatient.
04
We measure ourselves in per-share intrinsic value, over decades.
Not assets under management, not fee income, not this quarter. Compensation is tied to per-share value, not size.
05
A wonderful business at a fair price beats a fair business at a wonderful price.
Quality compounds; cheapness decays. We pay up for durability and the freedom to do nothing afterward.
06
Cash that cannot be reinvested above our hurdle is returned.
We are allocators, not hoarders. If we cannot beat our owners’ own opportunity cost, the capital goes back to them.
07
We concentrate. Diversification is a confession of not knowing.
Six businesses we understand beat sixty we do not. We would rather be approximately right than precisely diversified.
08
We say what went wrong, in the year it went wrong.
Candor is cheaper than its absence. You will find our down years on this page, named.
02

The Holdings

THE LEDGER
Why we own it
Regional insurerProperty & casualty1991100%35 yrCash engineUnderwriting discipline; float that compounds patiently.
Industrial manufacturerFasteners & fixings1998100%28 yrCompounderMission-critical, trivial cost-in-use, deep switching moat.
Water utilityRegulated water200492%22 yrCash engineRegulated, multi-decade assets; we own the maintenance liability, not externalize it.
Specialty distributorLong-tail SKUs2010100%16 yrCompounderLocal density advantage; thousands of small SKUs no platform wants.
Commercial printerPrint (declining)2013100%13 yrCash engine (declining)Secular decline. Owned for its cash, run for the long tail, not for growth. We will not pretend otherwise.
Specialty chemicalsFormulation201680%10 yrOptionalityFormulation lock-in; small, technical, sticky.

Click a column to sort. Sort by “Held” to see the patience. The one business in red is in secular decline — owned for cash, not growth, and disclosed as such.

03

By the Numbers

THE RECORD, IN FIGURES
14.2%
Book value / share CAGR
20-yr trailing · net · down years incl.
19 yr
Median holding period
across current portfolio
38%
Insider ownership
comp tied to per-share value
US$ 2.1 bn
Look-through earnings
FY2025 · our share of holdings’ earnings
Book value per sharegrowth, % p.a. · the down years are shown, not smoothed
Capital deployed vs returnedUS$ bn per year · returned to owners when the hurdle isn’t met
’21’22’23’24’25

■ deployed　■ returned

04

The Record

HISTORY
1987
The house is founded
One permanent pool of capital. No outside fund, then or since.
1991
First business acquired
A regional insurer — its float becomes the engine.
1998
First compounder acquired
An industrial manufacturer of mission-critical parts.
2004
Into regulated assets
We begin owning regulated, multi-decade infrastructure.
2008
Held through the financial crisis
We sold nothing. We added to the insurer at the worst of it.
2010
Distribution added
2016
Specialty chemicals added
2020
Held through the pandemic
Again, no forced sale. We added to the compounder.
2022
A down year, named
Book value per share fell 6%. We reallocated toward the compounder and said so in the letter.
05

To the Owners

THE ANNUAL LETTER

Annual letter to owners · FY2025 · excerpt

To the owners of Meridian Compound:

This year your capital compounded at 11%, below our twenty-year average and below what we expect of ourselves. I would rather you read that in the first line than find it buried in a footnote. A good decade is built out of honest years, and not all of them are up.

We deployed US$ 2.6 billion and returned US$ 0.9 billion to you. The largest single decision was an unglamorous one: we added to our industrial manufacturer, a maker of bolts you will never think about, because mission-critical things sold at trivial cost are the most durable businesses we know. We reduced our commercial printer, which is in secular decline; we own it for its cash, not its future, and we will not dress that up.

Patience is not passivity. It is the refusal to act on a price when the business has not changed. The median company we own has been with us nineteen years. We intend to still own most of them when this letter is read by people not yet born.

What we will not do is grow for the sake of size, chase a quarter, or sell you a story. Our only product is judgement about where the next dollar goes. The rest of this page is that judgement, shown.

— R. Underdown

Chair, on behalf of the board

06

Stewardship

GOVERNANCE & ALIGNMENT

Governance

Board independence6 of 9 independent
Capital-allocation committee3 members · meets quarterly
AuditBig-four, rotated 2019
Insider ownership38% of shares
Comp basisPer-share intrinsic value, 5-yr
Redemption rightsNone — permanent capital

The people

R. Underdown
Chair · since 1987
Allocates the marginal dollar; writes the letter; owns no other job.
M. Sandoval
Chief executive · since 2009
Runs the holding company so the businesses can be left alone.
K. Ferreira
Head of capital allocation · since 2015
Says no to almost everything, which is the job.

We do not stage photography. A name, a role, a tenure and a philosophy are what an owner needs to judge us by.

07

The Long Term

PERMANENT OWNERSHIP

Permanent ownership changes the incentives.

No quarterly extraction
We do not strip maintenance capex to flatter a quarter we will still own in 2050.
Liabilities owned, not externalized
The regulated water utility carries multi-decade environmental obligations on our balance sheet, by design.
Real maintenance capex
Reinvested at 1.3× depreciation across the holdings, FY2025.
Succession as stewardship
Each business names a successor before we need one.
08

Newsroom

DATED FACTS
2026-02
FY2025 annual report published
PDF · audited financials and the full letter to owners.
2025-11
Added to the industrial manufacturer
Increased ownership; no change to control.
2025-06
Water-utility rate case concluded
Multi-year regulated return reaffirmed.
2025-01
Commercial-printer wind-down disclosed
Run-for-cash plan stated in full; no growth claims.
09

For Owners

THERE IS NO FUNDRAISE

There is no fundraise. We do not seek capital; we steward what we have. If you own a durable business and want a permanent home for it, we will listen — slowly.

Annual reports

FY2025 — annual report & letterPDF ↓FY2024 — annual report & letterPDF ↓FY2023 — annual report & letterPDF ↓AGM 2026 — notice & agendaPDF ↓
Speak with an owner

Not a sales form. A quiet line to the capital-allocation desk.

Received. We will be in touch shortly.

No funnel, no “get started”, no automated follow-up. Permanent capital does not convert; it stewards.