Dear compounders,
On July 13, I published my deep dive on Dino Polska. The stock is up 27% since. That is pleasant to see. My estimated 5-year CAGR was in the range of 11-26%, with a weighted average of 16-17%, so it seems like that estimate is, as of today, well on track.
Despite the recent rally, if you zoom out a little, over five years, the stock is still pretty much flat.
And of course, eleven weeks of price action could just as quickly reverse and tell me almost nothing about the intricacies of the business and the customer experience.
My research from a few weeks ago was also built from annual reports, store counts, demographic tables, expert interviews, and management commentary.
What it lacked was the view from inside the store. I have never stood at a Dino meat counter in a village of 2,000 people. I have never had to decide whether to walk to the nearest shop for a pack of butter or drive twenty minutes to a Lidl. My thesis leaned heavily on assumptions about how rural Poles shop, what they value and whether any of that is shifting, and I had no way of testing those assumptions from my desk in Düsseldorf.
For companies that operate in a region where you don’t live, that “understanding gap” is enormous. I have come to believe that understanding customers, what they need, what they appreciate and what slowly wears on their patience, should be a core pillar of every investment framework.
FICO is perhaps the freshest reminder. A business that looked like it had untouchable pricing power has lost almost three-quarters of its value, but it seems like it flexxed that pricing power muscle too much. Cracks in a thesis very often show up first among customers and the people (or regulators in this case) closest to a company’s products.
By the time they reach the income statement, the market has usually moved on.
Tiho Brkan shared a chart the other day on X, and privately, that has stuck with me and came to mind when writing this intro (see below).
His commentary on it is worth quoting in full:
“Fundamentals are forward-looking expectations. They project what might happen in the future, and the wisest of investors have several case scenarios (rookies anchor to one plausible future only). Here, it is all about the future, and when discussing fundamentals, we are reasoning with foresight. What is the key takeaway? Financials are what everyone gravitates to, as their difficulty is manageable. However, they have very little value and are often already discounted or baked into the price. Fundamentals are what everyone shies away from (or probably cannot even distinguish from financials), as they are extremely complex. However, that is where all of the value sits, as they are not discounted or baked into the price.”
Again, I bring up Tiho's take because it gets at why this follow-up arrived in your inbox today. In July I did the backward-looking work, and I also laid out where I think Dino is heading: the store rollout, the reinvestment runway, margin durability and the risks that could derail all of it. That is the foresight Tiho describes, the part of the chart where the value is. Foresight rests on assumptions, though, and mine were built from filings, industry data and demographic tables that I studied at my desk in Düsseldorf. They assume rural Poles will keep choosing proximity and a good meat counter over everything else, that the labor pool will hold up and that the competitive landscape looks the way the reports describe it. If any of those assumptions starts to crack, customers, employees and locals will notice long before it appears in a quarterly report, just as FICO's customers, lenders and regulators did. I wanted to hear from those people directly, to find out whether the future I sketched matches what they see on the ground.
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Thus, this brief follow-up to me deep dive is my attempt to understand Dino a little better, so I sent a list of questions to three people with boots on the ground or local roots or connections. Many of you will know:
Michael from our community, where he is one of the most active voices, and he also writes Personal Finance Without Borders on Substack. He passed my questions to his partner, who grew up in Kielce and still has family in the Polish countryside, so those answers come straight from someone who knows these villages firsthand.
Mathijs is one third of The Dutch Investors. He has owned Dino for two years and has visited five of its stores across two separate trips. I owe the connection to his fellow Dutch Investor Siem, who I joined on his podcast recently and was supposed to sit down with me again tomorrow, a conversation we had to push back because of the events I shared in my email yesterday.
Jakub (Marlowe on X) needs little introduction for regular readers. He is a Polish independent analyst who studied at Jagiellonian University, started investing in the middle of the 2006 construction bubble and still talks to Dino staff when he is back home. He was spot-on about InPost, and I will never forget that our bullish podcast episode on the company went live one day before the acquisition offer was announced. You can’t plan timing like that. If you don’t follow his work yet, you can find him on X (link above).
Their answers confirmed parts of my thesis, complicated others, and raised a few risks I hadn’t even thought to worry about. You will learn why every shopper seems to bring up the meat counter unprompted, why one employee described working at Dino as “hard, hard bread,” who Dino is actually taking market share from (hint: it’s mostly not Biedronka), and why a demographic detail about who leaves rural Poland might matter more than any store count.
This is also the first post in a format I plan to repeat. Whenever I publish a deep dive, I might go back to people with firsthand expertise and run a short follow-up interview that pressure-tests what I wrote. Feel free to message me if you think a follow-up interview would fit to one of my prior (or future) deep dives. The next one is already lined up with Joe from Goldman Won’t Cover This on Intuitive Surgical.
Let’s start with the people who actually shop there.
Disclaimer: As of the date of publication the author owns no shares in the company; but that may change. The interview guest may hold positions in the companies discussed. The analysis presented in this blog may be flawed and/or critical information may have been overlooked. The content provided should be considered an educational resource and should not be construed as individualized investment advice, nor as a recommendation to buy or sell specific securities. I may own some of the securities discussed. The stocks, funds, and assets discussed are examples only and may not be appropriate for your individual circumstances. It is the responsibility of the reader to do their own due diligence before investing in any index fund, ETF, asset, or stock mentioned or before making any sell decisions. Also double-check if the comments made are accurate. You should always consult with a financial advisor before purchasing a specific stock and making decisions regarding your portfolio.
Intro
Thanks for taking the time to share some of your thoughts on Dino Polska. Maybe we could start by you just giving a short introduction to who you are and your background that may give you a unique perspective on Dino Polska specifically.
Mathijs: My name is Mathijs, co-founder and analyst at The Dutch Investors. Generally, I’m looking for companies with a strong market position, that structurally outperform competition, that generate high returns on capital and where management’s incentives are well aligned with shareholders. Dino Polska has been on my radar for around two and a half years now and I took my first stake two years ago. In the past two years, I have visited five Dino Polska stores in two different time periods to do research for myself and as part of research for The Dutch Investors.
Michael: Responses from my partner who grew up in Kielce (eastern Poland)
Jakub: Thanks for having me, René. I’m an independent equity analyst and investor, and I’ve published research since 2021. I’m Polish, I studied at Jagiellonian University, and I’ve been based in the UK since 2014, so I know Poland from the inside, though I now follow it from a bit of a distance.
I started investing in 2006, right in the middle of the Polish construction bubble. I remember watching pizza companies turn into construction companies, which tells you everything about where that cycle was. I sold about half my portfolio in August 2007, then watched the rest fall, with some stocks down 90%. I bought again in early 2009 and doubled my money, helped a lot by how cheap the market was. After that I spent about five years running my own businesses rather than following the market.
I came back to investing properly in 2019 with a quality-focused approach: high returns on capital, low debt, owner-operators. Since then, I’ve kept refining the strategy and the analysis, and the InPost work is where it showed up most clearly.
That history shapes how I look at Dino. I’ve seen what a boom in Poland looks like when balance sheets are weak, and Dino is the opposite of that. And the timing is interesting. At around 35 PLN a share, Dino has a market cap of roughly 35 billion PLN, about where it was in 2020. Since then, the business has grown a lot in stores, revenue and earnings, and the market has paid essentially nothing for that growth. That gap is what I want to talk about.
On the actual shopping experience
When you or your family or your friends (or whoever has a preference for Dino) decide to shop at Dino versus Biedronka or Lidl, from your perspective, what’s the real reason you pick one over the other? Is it genuinely price, or is it something softer, like the meat counter, staff familiarity, the brand, or just habit?
Mathijs: So, I’m not from Poland myself. However, the company I work for does have a large production location in Poland, so I also spoke to some colleagues from there. The main reason is location, which probably connects to the habit reason you’re referring to. From what I heard and saw, consumers shop there for daily groceries. So yes, meat, vegetables. Need toilet paper on Tuesday? Rush to Dino. Of course, the location-reason only applies to people living in rural areas. In cities, you will find more Zabka’s and Biedronka’s.
Michael: The main reason for choosing one over another is most likely the proximity, and then how well stocked they are. But for the basic day-to-day shopping, you get to choose from Dino, Lidl, Biedronka, Kaufland, Auchan, Tesco. I think these are the main supermarkets, and then sometimes also Netto. But yeah, for day-to-day stuff, usually you would just go to the one that is the closest because honestly, the price differences are not so much on the day-to-day products. And then if you are doing a bigger shop, or you need something specific, then this is where you would go to any of the supermarkets that would have it. I think for some of the young people who are now into the healthy lifestyle and eating fit, high-protein diet, then this is where they may prioritize Lidl and Biedronka because these discount shops have a lot of products that are basically their brand. And they have, yeah, they are those fit products for a very good price.
Jakub: Honestly, the biggest single factor is proximity, not price. There are two different shopping modes going on in a small Polish town. There’s the actual weekly shop, where you take the car and load up at Lidl, Aldi, Biedronka, Kaufland or Dino, and there’s the top-up trip: you ran out of cigarettes, or beer, or cream, or your kid wants crisps, and you just walk to whichever shop is closest. A lot of small local chains, the Globi’s, Zabka’s and Groszek’s of this world, live almost entirely off that second kind of trip. I’ve done it myself, popped into a Globi for pierogi because Dino was too far from where I was staying, even though I’d normally choose Dino given the option.
Is there a difference in perceived quality between Dino and its competitors, or does it feel interchangeable with any other discount grocer?
Mathijs: I don’t think so. If I had to choose, I would think Lidl and Biedronka offer more perceived quality of their products. Shops look nicer and are more modern.
Michael: Dino is known for having high-quality meat counter items. But everything else are products that are available in other shops.
Jakub: Where Dino does win on something other than proximity is the meat and dairy counter. Every person I’ve spoken to who shops there volunteers the same thing unprompted: the meat is good, it’s Polish, and the cheeses are good. That’s not marketing language, it’s what people actually say. And it’s backed by something real: Dino carries around 5,000 SKUs per store, roughly double what Biedronka or Lidl carry. So it doesn’t feel like a discounter to shoppers, it feels like a proper one-stop supermarket that happens to be priced competitively. That’s a real structural difference from the hard-discount model, not just a perception thing.
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