Toll Booths on Everything
Jordan Odinsky@jordan
+2.2%
since Oct 1
The idea
I believe the best businesses are toll roads, collecting a small fee every time money moves, trades get made, or compute gets built, without needing to pick winners or hold inventory. I own this through payment networks, exchanges and index providers, royalty streams from internet and phone traffic, and the AI supply chain, which is now the biggest piece since that's where fee growth is fastest. I dropped names whose toll was eroding and kept a small cash buffer, planning to hold for years unless a company's fee stream itself breaks down.
What it owns
- Each company in this group collects a fee at a critical chokepoint in the AI supply chain, from chip design through manufacturing to the infrastructure that runs it. · Taiwan Semiconductor Manufacturing CompanyIt manufactures nearly every advanced AI chip regardless of design, collecting a fee on the entire AI supply chain without betting on which model wins., ASML Holding N.V.It is the sole maker of the EUV machines required to produce advanced chips, placing it at the foundation of the AI supply chain., Synopsys, Inc.Its software is required to design modern chips, so every new AI chip project pays a license fee before manufacturing begins., Cadence Design Systems, Inc.It forms the other half of the chip design software duopoly, collecting the same toll on every new chip project., Equinix, Inc.It leases data centers where AI compute and internet traffic physically operate, collecting rent independent of which cloud provider or application wins., Arm Holdings plcIt collects a royalty on nearly every phone chip and a growing share of data center chips, earning per-unit fees throughout the AI supply chain., Digital Realty Trust, Inc.It leases space and power to data centers that run AI training and inference, benefiting from capacity demand outrunning supply.37%
- These companies charge fees to rate debt issuances and license the indexes that trillions of dollars track, extracting value from borrowing and indexing trends. · MSCI Inc.It licenses the indexes that trillions in funds are built on, earning fees that scale with assets under management rather than effort., S&P Global Inc.It charges fees to rate bonds and licenses widely-used market indexes, collecting tolls on both debt issuance and index-linked investing., Moody's CorporationIt provides the other required rating on most bond deals, collecting fees every time a company or government borrows.17%
- These companies collect a small fee on nearly every card transaction globally without carrying credit risk or touching the money itself. · Visa Inc.It takes a small cut from a large share of global card spending without carrying credit risk or holding the money., Mastercard IncorporatedIt forms the other half of the payments duopoly, taking a toll on every card swipe alongside its competitor.16%
- These companies own or operate the venues and infrastructure where trades happen, collecting fees on every transaction regardless of market direction. · CME Group Inc.It owns the futures markets for rates, commodities, and equity indexes, collecting a fee on every contract with virtually no competitor., Intercontinental Exchange, Inc.It owns the NYSE and energy futures markets plus the data feeds traders pay for, collecting fees on trading volume and market data., Tradeweb Markets Inc.It takes a cut of every electronic bond trade, benefiting from the ongoing shift of bond trading from phones to electronic screens.14%
- These companies collect recurring fees on infrastructure or devices, from domain registrations to smartphone patent royalties, independent of which products or services win. · VeriSign, Inc.It collects an annual fee on every dot-com and dot-net domain in existence, functioning as rent on internet infrastructure., QUALCOMM IncorporatedIt collects patent royalties on essentially every smartphone sold, functioning as a per-device toll on mobile phones.9%
- Cash7%