Co-owners,

We've spun the wheel for the Developed Asia-Pacific bucket. For the first time in this newsletter's run, the ticker has landed in Hong Kong, on a company whose brands are probably sitting in your shed, your garage, or the cupboard under your stairs right now. The parent's name is on none of them.

Before we dive in, a reminder of what the index itself has delivered over time.

Every week, we pull one company at random from the FTSE All-World with ~4,200 companies representing 90% of global stock market wealth. We share the index's long-term returns since inception in 1986 as a reminder of why we're here: the long game. New to the newsletter? Start here.

Founded in 1985 in Hong Kong. Listed on the Hong Kong Stock Exchange since December 1990 (SEHK: 0669).

Picture the last time you reached for a power tool. Red and heavy and built for a job site? Probably a Milwaukee. Bright green, bought at a weekend for the garden or a shelf that needed hanging? Almost certainly a Ryobi. The vacuum that ran over your carpet this week, if it was a Hoover, a name so familiar the British turned it into a verb, came from the same place.

One company owns all of them. It is called Techtronic Industries, almost nobody outside the trade has heard of it, and if you hold a world equity index fund, you own a slice of it.

A few key facts:

We'll come back to that seventeen-year run, because it is the strangest number in this whole story.

Techtronic's founder didn't set out to build a power-tool empire. In 1971, a German named Horst Julius Pudwill moved to Hong Kong to run the local Volkswagen office. He liked it and never left.

In 1985 he teamed up with a Hong Kong businessman, Roy Chi Ping Chung, and started a small factory doing the least glamorous work in electronics: making rechargeable battery packs and cheap cordless tools for other companies to badge as their own. 

Then Pudwill stopped building other people's brands and started buying his own. In 2000, he bought the Ryobi power-tool business for North America and walked it straight into an exclusive deal with Home Depot, putting green Ryobi tools on the shelves of the biggest home-improvement chain in America. In 2005 came Milwaukee, a hundred-year-old American professional name, bought from Sweden's Atlas Copco. Then the floorcare brands: Hoover, Vax, Dirt Devil, Oreck. The invisible manufacturer had become the owner of some of the most recognised names in the aisle.

Pudwill is still executive chairman, forty years on. His son Stephan is vice chairman, the family remains the largest shareholder, and a former Milwaukee boss, Steven Richman, runs the company day to day.

Here is the part most people miss. Techtronic isn't really in the drill business. It is in the battery business, and the drill is how it sells you one.

Every serious cordless brand now runs a closed battery platform. Buy a Milwaukee drill and it comes with an M18 battery and charger. The moment you own those, the maths of your next purchase changes: the impact driver, the circular saw, the work light, the leaf blower are all cheaper bought as bare tools that click onto the battery you already have. So you buy them from Milwaukee. Every time.

The numbers are almost comic. Milwaukee's M18 system spans more than 275 tools, all running off the same battery. Ryobi's ONE+ has kept the same 18V battery interface since 1996, so a pack you buy today clicks into a Ryobi tool from nearly thirty years ago, and more than 280 tools share it. Leaving means throwing away every battery and charger you own and starting again from zero.

It is a razor-and-blade model turned inside out. The battery is the razor. Every tool after it is a blade that fits only your razor.

And Techtronic runs the trick twice, on purpose. Milwaukee (professional) and Ryobi (consumer) deliberately do not share batteries, and never will. That way the electrician on the job site and the homeowner building flat-pack furniture each lock into a separate walled garden, and neither cannibalises the other. Two moats for the price of one.

Now, that seventeen-year run.

Power tools are a cyclical, competitive, low-glamour business. Steel prices move, shipping costs spike, tariffs land, and housing markets rise and fall and take DIY spending with them. Margins are supposed to wobble.

Techtronic's don't. Its gross margin has risen every single year for seventeen years running, from the depths of the 2008 financial crisis to 41.2% in 2025. Not held steady. Risen. Through a pandemic, a supply-chain crisis and a trade war.

The company's explanation: it bet early and heavily on cordless while rivals still sold corded tools, it keeps steering sales toward its highest-margin brand (Milwaukee), and it ploughs roughly 5% of revenue, US$757 million last year, into research and new products.

Not everyone believed it. In February 2023, an anonymous short-seller called Jehoshaphat Research published a sixty-page report arguing that a margin line this smooth, in a business this cyclical, simply could not be real. It alleged a decade of accounting games and forecast the shares would fall 60 to 80%. The stock dropped nearly a fifth in a day, wiping out around US$4 billion, before trading was halted.

Techtronic denied everything, analysts including JP Morgan defended the margins as the genuine payoff of that early cordless bet, and the shares recovered. It later emerged in US court filings that the report had been financed by Carson Block's Muddy Waters, and Techtronic took the matter to court. Three years on, the company has kept posting record results, including the ones we're reading now.

We're not the referee on whether a company's accounting is aggressive or clean. What we can tell you is that the smooth line the short-seller pointed at is still climbing, and the business behind it kept growing while the argument raged.

This is a genuinely excellent business. It also has some real risks, and the biggest is hiding in plain sight.

One customer buys nearly half of everything. Techtronic's single largest customer accounts for around 45% of total revenue, its five biggest for about 53%. That dominant buyer is almost certainly Home Depot, the chain Pudwill walked Ryobi into a quarter of a century ago. A magnificent partnership, and a concentration most companies would lose sleep over. If it ever soured, close to half the business would be exposed at once.

It rides the American wallet. Demand rises and falls with US housing, construction, and whether homeowners fancy spending a Saturday improving something. When houses stop changing hands, DIY cools.

Tariffs and China. Techtronic built its manufacturing muscle in China, so years of US-China trade tension land directly on a company that makes physical goods and sells most of them in America. It has been shifting production to Vietnam, Mexico and new US plants, and in 2025 it deliberately suspended some Milwaukee promotions in the second half rather than sell products caught in the worst of the tariffs. The picture still shifts month to month.

Not everything is winning. The floorcare division, the Hoover and Dirt Devil end of the house, shrank almost 10% last year, and the company is quietly retiring weaker lines, walking away entirely from a consumer brand called HART worth US$156 million in sales, judging it not worth the margin.

One last thread, because it connects to companies we've met before. A few editions back we covered Schneider Electric and WEG, the firms wiring up the electrical guts of the world's AI data centres. Techtronic sits quietly in the same story. A meaningful chunk of Milwaukee's sales now comes from data-centre and large-scale infrastructure construction, and the company has even built a battery-powered conduit bender aimed at the electricians wiring these enormous buildings. The boom that needs Schneider's switchgear and WEG's transformers also needs an army of tradespeople, and those tradespeople are holding Milwaukee tools.

Most weeks we introduce you to a company doing something invisible. Techtronic is rarer: a company that is invisible while its products are everywhere. The drill on the job site, the mower in the garden, the vacuum in the hall, the tools your builder swears by, all roll up to one Hong Kong parent, run by the family of a Volkswagen executive who came to Hong Kong in 1971 and stayed for good.

You already own it. And through it, the quiet genius of the whole model: the battery that costs them little, locks you in for years, and sells you a lifetime of tools that fit only the one you bought first.

Data and images sourced from the Techtronic Industries Annual Report 2025 and Techtronic Industries 2026 Interim Results. Share price and market cap as of writing.

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Next week, we'll be looking at a company from Emerging Markets.