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As the peloton snaked through France’s mountains, it was not just athletic grit on display. Precision engineering maximised every pedal stroke – and more often than not, that means Shimano.
Most of the pro teams trust its drivetrain systems, disc brakes and other components, making Shimano’s performance as integral to the race as the riders themselves.
While the winning cyclists bask in yellow-jersey glory, Shimano’s quiet consistency reflects something else entirely: the kind of enduring quality we have designed our long-term, bottom-up investment approach to uncover.
As one of our portfolio’s many holdings, Shimano exemplifies the underappreciated value we seek: durable franchises built to perform quietly and consistently over time.
Shimano’s quiet dominance
Most spectators see the rider – the jersey, the team colours, the branded frame – but the true enabler of performance lies deeper in the machine. Shimano is the silent force synchronising it all, connecting power to precision, effort to outcome. It is emblematic of Japan’s role in global industry: not the headline act, but the indispensable foundation, built on function, not flash.
Whether it’s Jonas Vingegaard with the Visma–Lease a Bike team, Tadej Pogačar at UAE Team Emirates, or indeed any rider from 18 of the 23 teams, you would have been watching Shimano in action. Its 80 per cent usage rate among WorldTour teams mirrors the firm’s global dominance in the high-end components market. In elite sport, such technical standardisation is vanishingly rare – take Nike in the US National Football League (NFL) or Titleist’s grip on golf. No other brand benefits from the same level of dominance as Shimano.
Shimano makes bicycle components for all skill levels, from casual cyclists to professional athletes
This dominance is the result of decades of deliberate innovation and brand trust. Shimano has transformed cycling from the 1980s onward:
- in 1984, it launched indexed shifting, which effectively took the guesswork out of changing gears
- in 1990, it integrated braking and gear shifting into one lever, so you don’t have to take your hands off the handlebars to shift gears
- in 2009, it set the standard for electronic shifting (Di2), letting riders activate the process with just the flick of a switch
- in 2014, it entered the e-bike era with Shimano STEPS, now one of the globe’s most widely adopted electric bike platforms
This evolution – from component supplier to full-system architect – allows Shimano to control the drivetrain, brakes, pedals and cockpit in a seamlessly integrated platform. That integration deepens its alignment with frame manufacturers, improves margins and strengthens rider loyalty, giving Shimano a moat that few global sports brands can match.
Appealing beyond the peloton
The Tour de France is more than a race. It’s a window into global cycling trends, and Shimano is at the heart of them all. From sprinters to climbers to versatile all-rounders, Shimano powers the full range of teams and tactics in the race, illustrating its broader application beyond the road.
Shimano dominates in the mountains and is gaining ground in cities with its e-bike range, a segment already twice the size of road and mountain bikes combined. As electrification accelerates, especially in Europe and China, Shimano is perfectly placed to scale. Its ‘good, better, best’ product ladder also means it wins across price points, from £20 chains to its £8,000 high-spec groupsets, making Shimano an appealing option from entry level to elite.
The Tour de France began as a survival strategy – a bold move by L’Auto, a struggling newspaper, to boost readership in 1903. That bet paid off: the race became a cultural cornerstone. It now generates €150m+ in revenue and distributes over €2.3m in prize money annually. It’s a reminder that endurance institutions are often born of necessity and thrive through reinvention.
Shimano is no different. It has powered through cycles, from post-bike-sharing China to Covid-era inventory whiplash, and emerged with its fundamentals intact. With no net debt, ¥530bn in cash (about 30 per cent of its market capitalisation value), and long-standing profit margins in the mid-20s per cent range, the company is positioned to invest, adapt and compound.
Yet the market currently values the company well below its long-term average, treating Shimano like it’s stuck in a low gear.
As long-term, bottom-up investors, we see this as a classic case of misjudged momentum. Shimano is one of several portfolio companies where a temporary mispricing has created a rare chance to buy on the descent before the next climb.
Identifying these moments, when others overlook quality franchises despite their enduring fundamentals, is central to our investment philosophy. It’s not just about backing great businesses but doing so when others aren’t.
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