Which Aussie software stocks are ready to rebound with Jared Pohl

Everything you're about to hear is for education and entertainment purposes only. Whilst we are licensed we're not aware of your personal financial circumstances. Any advice is general advice. EquityMates operates under Australian Financial Services License 540-697. The software selloff continues and there are plenty of questions to ask. Have the quality of these companies changed or is it just a market overreaction? Welcome to EquityMates of Podcast where we explore what's possible in the world of investing. If you've just joined us for the very first time, a huge welcome to our community. My name is Bryce and as always I'm joined by my Equity buddy Ren. How are you going? I'm very good Bryce, very excited for this episode. One of the biggest questions in markets in 2026 is what is happening with this continued AI boom and the software selloff that has come on the back of it. As you said, have these high quality names changed or is the market overreacting? Today we're joined by an expert. He and his team have just written a big three part report on software companies so we're going to dig into it and get his answer. You may have just heard him there. Jared Poll, co-founder and portfolio manager of ACP asset management. Welcome to EquityMates. Thanks for having me again. It seems like every time I come performance gets worse. I don't know if it's there. If you guys have been going to go off the bus to the Eccrete. But no, no, no, Jackson side, yeah, it's definitely been a tough, tough market. So, hopefully we can sort of explain what we're thinking and people can start buying software stocks again, we need the retail community to give us a hand I think. Yeah, I appreciate it. I appreciate you being forward with sort of where the performances are and talking about it, like often people come in and they're just cheerleaders. So this would be a good conversation I think to sort of get your view on. Yeah, I mean, honestly, you've just got to own it. You've got to own the wins and the losses, right? It's not fair either way and I think that's the irony of markets as they very much, you're true, just get tested a lot. And you need to be willing to sort of change your view. I mean, we haven't yet changed the view. I don't think we panic sold anything, particularly in the sell-off, but we've spent a lot of time thinking about what's actually changed and where things go. But it doesn't, it hasn't made it any easier, you know? That's for sure. Well, that's where we wanted to start. Once you came on the show last and not just necessarily related to software, but just generally, what is one thing that you've changed your view on? Has our fundamental philosophy changed? I think we were sort of talking before the started on this core idea, but we fundamentally believe in growth as a way to invest. And that leads you to certain kind of areas of the market, companies that are growing their economic footprint, software tends to be pretty scalable, so that's why we've ended up there a lot of the time. Is that changing, you know? And it's like a real existential crisis for as a fund manager or an investor. You have these sort of core ideas about what makes a good investment, and we fundamentally believe that earnings will drive that, and then it comes down to, well, you know, in the software space, says, "Hey, I changed that whole thing or not." So you've got to go and test that consistently. And, you know, we've done that. We haven't had any sort of major changes to answer your question directly. Nothing yet. Like, there hasn't been enough evidence to suggest that that kind of core premise of investment has broken, has volatility increased? Yes. There's momentum increased. Yes. What does that mean for us? Like, okay, there's going to be more volatility in returns, but you'd expect that with someone like us, which has a very high tracking error. So, you know, we're not doing anything different, but it does mean there's a little bit more hang on to the seat of your pants. But no, we haven't made any fundamental changes, but there's definitely been a lot of soul searching going on. So let's contextualize this conversation for people who maybe aren't as familiar with the software sell-off. I guess give us just the overview of how deep the software sell-off has gone and maybe some key names that have really come down. Yeah. Well, it's been across the board. But I think if you want to contextualize it, maybe 20, like the rate shift in 21, like that was quite a material change. You know, when we went from basically Zerp to 6% rates, like that's a material change. We're like, let's just go 1% to 6% rate change. You know, your discount rates change by like 600%. That has a material impact to PE multiples or valuation multiples because your discount rates are much higher. So yeah, $1 today is way more than $1 six years time, 10 years time. And that number changes materially depending on that rate. So to put that in context, to get the same level of fall which we've had, you have to assume that margins of like halved or every single one of these companies are in negative terminal growth and none of these are very probable. And I'm talking in aggregate, you know, or some combination. And there's definitely a bunch of names out there that that's true for, but it's not everything. That's essential with the market saying. Now I can understand how generally speaking people say the range of outcomes is widened. Therefore, our valuation, we need to de-risk or whatever. But it's not been selective. And I think it should be pretty clear to people now that it's not going to kill. The one data point I'll leave people with is anthropic is hiring sales force people. Yeah, yeah, yeah. If the company that is solving productivity is hiring people like that, we're not going to vibe code our own CRM. You guys aren't. It's possible. But you know, there's a lot more complexity to it than just the software. And that was the sort of the core thesis of what we were writing about. Well, let's build on that. Like what are the elements in the report? Yeah. I guess, underpin the thesis. Yeah. So I guess the key thing, people have always felt that software was the most in any investment type of thesis, I guess. And we've never thought that. Like we have a framework where we think about what drives competitive advantage. And technology has never been a sustainable version of that. Because you know, all of these companies are very well-resourced. There's a lot of venture capital money out there and that always has been. Our view is that software has never been the most. And we wrote specifically about Wystech. But there's plenty of other companies we can talk about today with that illustrate that it's not the software piece. Even the portals, you know, like RIA cars, I'll seek, these are more easily to understand businesses. Their mode is not software. There's never been. Software's just now free. And that doesn't just mean as perfect software that gets written. There's a lot of stuff. Slop that gets written too. And it doesn't make it any easier. There's just more of it to wade through. But you can do things quicker. As competitive advantage drivers, it might be an internal culture. It might be, you know, a network effect. It might be a scarce resource of some description. Software's not going to eliminate that. And in the Wystech case, it's like connectivity with customs agencies. And, you know, like 80% of global trip freight traffic, you know, runs through that platform. That's very hard to replicate in it just with an agent. I mean, there's a company called, or not even a company, a guy launched it on Twitter, OpenMocado. And that was like a competitor, an agent competitor. And Wystech sold off massively on the announcement. But haven't had any meaningful impact. And it's for those reasons. You know, a government's got to approve you to connect to the customs. You know, like there's just so much complexity in the world that software doesn't deal with. And you can't just go to Claude or any of these agents and say, build me that. It'll go, yeah, sure. And some statistical representation of the best idea of that would be there. But it's not dealing with edge cases and nuance and payroll tax. And like whatever it is, like there's all these sort of things you need to be aware of that you build up over decades. And then the core assumption is that none of the businesses that are actually there and a leader in that field are able to respond to this. Like yes, they are. They've all got the same tools. They can all do the same thing. They've got the industry knowledge. They've got the decades of understanding about what a CRM does. You know, it's not as simple as software's did. Yeah. Yeah. I particularly enjoyed that part of the report, Software as the Easy Part. And I think you've illustrated some of the differences between software platform and a software business, you know, like the network effect of an RIA group or the regulatory approvals of a Ysetech or a Prometheus or like the switching costs of a sales force. Maybe to really draw it out, you said some software companies are more ripe for disruption than others. Maybe to like illustrate that point of difference. So some of those names are ones where they've got like a sustainable competitive advantage beyond their software platform. Are there companies on the other hand where you look at them and you're like, "Mmm, you might be ripe for disruption?" Well, one that's been part of the like FinTwit community, you know, we all sit on Twitter and read these stuff. You know, it's a lot of really insightful analysis that happens in that space. But the one that everyone loved was Constellation Software. You may be aware of that. Now, that business buys vertical market software, which is basically like, "I have a mechanic business and I need to run some software to manage my workflows." That thing is as cheap as it's been in a very long time. On the one hand, you can say, "Okay, like that's very ripe for disruption." Like there's plenty of mechanics, I'm sure, who've written software using Clawed to help them do stuff. You know, there's no competitive advantage in that. It's like, you know, Bob has a business and he just wants to do some things to make it a little bit more easy to run his processes and he'll do that. And you can see that sort of showing up in the Constellation share price. So those types of software, it's very clear that there's a problem. But it's very niche products, it's like an app or something like that. Some of the institutional grade businesses out there that are enterprise sales or like portals. I mean, this is really a good use case because C is, I think, the cheapest has ever been on a P URL ever. Now, there's a lot more at play there. But really, these things are solving a problem of search. You know, I need to find a job or I need to find a car or I need to find a house. And that discovery mechanism has been solved by them. You know, like they give you every house, I really give you every house in Australia. It gives you really deep detail on what that house is. Maybe worth or, you know, but the last sales. price wise or agent contact information. There's just a million things that they do. If you run the thought experiment on something like that, they're just going to keep enriching the data sets. But can an agent do that? I'm sure an agent can go and crawl every real estate agent's website and say, "Here's all the houses for sale." But all you end up doing is you just get a lot more noise. In a world that you have all these agents talking to agents and jobs can't illustrate this probably better than the real estate example. But if you just have agents looking for all the jobs out there and agents looking for all the candidates out there, you've got this manning to many problems. But you don't have any intent signals like, "Are they a good candidate? How do we filter this down?" That's what the marketplaces do and that's that search problem. First order thinking, "Yes, agents can build all this stuff, but it's not great." You won't really know that it's not great until you start getting into the weeds. There are differences. Systems of record are definitely not a, there's no issue with those. Companies like SAMSARA, for example, or Ysetech. Ysetech and Ysetech are the global offspoken about them before. There are listed U.S. company that does. It's like the service now for infrastructure. What about zero? Yeah, I was about to ask the following question. I'm going to get A-Tech out and we'll let's go through the top 10 and you say, "That risk or not." So if it contacts Bryce and I have disagreed about zero, I have kind of had a view that like switching costs to high, companies, buyers on there. Bryce has a view that you could just have all your invoices saved on your computer and the agent could do the rest. I think it could do the rest. I think you both can be right. And I think that's the thing with this stuff is that it's not mutually exclusive. Like agents just don't kill software. Zero is not dead. It isn't. The general ledger is a very complicated thing to build and there's a lot of competitors to zero that are AI native general ledger type situations. But there's a lot of work that goes into building that, the local tax law, etc., etc., the connections with government to file your taxes to, you know, the bookkeeping part is probably the easy part. The question will be, is can zero implement something like that? And they've already got an AI tool. Can they make your life easier? Pretty much everybody's coming to Australia. There's on like at least small businesses on zero. So they've got a lot more information than the next guy. And they can use that information to increase the velocity of product development. It's kind of like a ready free anyway. I mean, it's 60 bucks or something a month for me. I pay that for my personal stuff. A lot of the times that the accountant might actually even absorb that cost to win the business or whatever. So a free alternative with an AI agent, like you kind of, there's not really a benefit to switching, particularly when there's that history. But it's really going to depend on what do they do with the tools available now. Yeah. And I'm going to bring up one example, which is like a canonical example of something that should have been disrupted, intercom. You know, you go to a website and there's that little intercom down the bottom, that chat tool. Like, welcome. Can we help you? And, you know, yeah. It's so annoying. Like, that should have been disrupted by agents. 100%. It's now one of the fastest growing SaaS companies globally, private or public. But basically, they knew that that sort of service type business was totally disruptable by agents. They kind of restructured the board completely, doubled down on their agentic version of it. And they're like 400 more ARR, I think, from memory. But they were negative growth and this acceleration has been massive. And so, like, that's a really good thing to look at because it just shows, yeah, we can use these tools to build product and we can give people what they want. And we can solve all of the edge cases that we are aware of. That people rather pay us to do it, then do it themselves because people forget that the software is free, but then you've got to maintain it. You've got to host it. You've got all the infrastructure behind it. You've got all the regulatory requirements. If you start to get, like, it just starts to get really complicated. But there's no way you're going to pay someone for something small, like the mechanic job anymore. Just build something. But as a company, are we going to build, even on our end, are we going to build an sales force thing that's integrated with a whole bunch of systems in the ecosystem and stuff? So it's complicated, right? Like, yeah. A lot of these businesses were trading on pretty wild multiples before all of this kicked off. Is this really just the market though now just resetting future expectations that there is going to be more competition, they're not going to be able to charge as much? Or is it, no, these businesses are going to collapse? I mean, software on a peak, like a peak ratio is like super cheap. And people forget to the asshole growing pretty quickly, like at the reporting season, like, we had one of our best reporting seasons ever, but we still had a performance. Like, all the other performance was in the first, like, before we even reported a result. And then all the companies were expanding, exceeding expectations and doing really well. Like, Megaport had its best result in the history of the company and it's been like sold off. And this is not a company that's being disrupted by AI. There is a rebasing of valuations. And I think at the moment, it's more like, okay, like energy and commodities and stuff like that because of what's happening geopolitically. But you're getting a lot of really fundamental growth at mail, man, not accelerate, but it's still very strong. And at some point, people will have to look back. There's a theoretical number that these things will sit on. And we always bake that into our terminal valuations. Like, what is that number trade on? I don't know what the market will trade on it today. But we've got a sense of what it is theoretically. And in our, like, IRRs are expected to return. We always bake in that, well, generally, there's a peak compression. It's kind of like flat now. So, in a conservative way, we're basically saying, like, look, it's flat and you're not going to get any multiple expansion. But, you know, I don't think that that's true. Maybe not for a while. But it doesn't matter because our expected returns are still driven by like 30% earnings growth compound. So even if multiples don't expand, we still should be. If markets are efficient in trading, based on what the earnings are doing, we should get some pretty decent return from here. And if we get a multiple expansion, then you get a benefit too. But if it goes the other way, then you're still fighting ahead wind. It could go cheaper. It could. I mean, it could. Like, the reality is that it could. We just don't know. Yeah, the thing for me is, like, it feels like at any moment, all you need is Claude or Gemini or someone to just come up with another announcement that they've, you know, made the next wise tech or whatever it is. Security. It's like, how do you find where? Okay, it's all out. Yeah. It's never all out. No, I know. That's the thing. It's always an approach. No, it's always an approach. Yeah. Yeah. Well, have you seen that not releasing their new model until all the cybersecurity companies have a chance to understand? To understand that. Yeah. Because it was finding too many security vulnerabilities. I have a, yeah. Yeah. Yeah. They've had to make a task force with like Crowdstrike and stuff. Yeah. Yeah. Yeah. Mythos it's called. So, yeah. It's like a Linux distribution super hard and they found vulnerabilities in that. You know, there's a lot of stuff that they found. They've actually just found it now in using GPG 5.4. So it's also as good. Oh, they're, they're, they're, they're going the same test and they can sort of see it. So, you know, does Crowdstrike go to zero? Probably not. They just probably start implementing these tools to try and help them. Or, you know, you would think that like the Linux kernel group patches this stuff in the same way. So, you know, the volatility is definitely there. But I guess the point that I'll make is that like, you know, anthropic and all these guys, they're solving a productivity problem. It's a, it's not free. I mean, the, the real cost of tokens is actually quite high. Yeah. And you can see, Claude and these guys are now restricting. You can't use sort of different coding harnesses to use, um, Claude. You have to use Claude code. So they're starting to restrict the way people are using it. And then at some point, they're going to start making your pay. There's a harness that we use of internally. We do a lot of system development and one of them's called AMP and they actually pass on the full cost of tokens. And it's about $100 a day. Roughly, you know, that's what we've been seeing in terms of internal cost. Cheap than an engineer though. Maybe a little bit, but all maybe on par. Yeah, but like, when there's no stock base comp involved and stuff like that, yeah, it's a bit, you've got to, you've got to do that. But it's, so it is more expensive than people think. Um, and that's one of the things that I've been thinking about a lot is like, what happens to stock base compensation? What is the real cost of tokens if they do start charging that? I mean, I'm sure a lot of the engineering firms are aware of this. But everyone's not on a Claude Max plan. You know, that's just not the reality of it. There will be a real cost. And these guys don't want to own the end customer either. They don't want the liability of travel booking. You know, they don't want to live any of that stuff. They're going to, there will be people doing this. They'll just plug in their productivity tools. Let's stay on productivity because if the first half of this conversation has been quite negative, trying to talk about, you know, has it, has it been oversold? Where are the companies that are going to survive through this moment? The final part of your report ends on a positive tone, which is that these software companies best days are ahead of it. And a lot of it is around productivity. So give us the hopeful case as we look through this moment and where in particular are you seeing those pockets of hope and opportunity? In the software case, you've got companies now that can build and launch more software than they ever have. And so they start to unlock a lot more use cases. Like car sales have just gone and rebuilt, autogate as an example. It's like a huge project in like human hours would take you forever. But using AI, you can get through this stuff very quickly. And so you can refresh your value proposition very fast. You can also make your developers like 10x more productive. It's like a flame underneath that. If you've got a bad engineer, it'll make it worse by the same amount. But if you've got good engineers, it'll make it better by the same amount. People sort of focus on like these businesses are going to disappear, but they're not worried about, or they're not really thinking about how do these businesses use the tools available to them to respond to what's going on in the market. You will definitely see a consolidation of market share to those that can start to develop this stuff. And there's probably a lid on pricing power, or you're just going to get a lot more value for your money. And I think that's part of the equation there. Sam Sara mentioned before, oh, no, Megaport. This is a great example, right? So just for the listeners benefit, Megaport is a networking as a service provider. Traditionally, that's how it started out. It's how it's going to be. in the world that's like an infrastructure play. They've added compute to the mix now with that latitude acquisition that they did in the last year. And they will launch storage. So they've got the three pillars there to become a full private cloud networking piece like a cloud flare or an Amazon AWS essentially. Okay, it's more capital intensive now than it used to be in a, that's all given. But they've effectively got the largest networking as a service provider globally with compute on network and they will have storage on network. And then the cost to launch any of these products like security, DDoS scrubbing, all of the stuff that goes like Z-scaler or all of these security companies are doing, they can launch it in the network. They can launch it essentially to zero marginal cost and for an average price that is much higher than the current alpha. So they've just got heaps of optionality now. Like Michael's done a lot of really good things strategically, here's the CEO to put the stuff, like you need the storage and the compute and the networking together to start launching all these other products. But they can just launch a million things. They could launch like a VPN if they wanted to. That might be like a million bucks a month or so. I mean, it's nothing, but still, like they could launch it if they wanted to. And if it works great, well, what did it cost them? Nothing really. Like maybe a hundred thousand sort of token cost or something. The incremental margins for that business are so high on products that they launch net revenue retention should grow through upsell. And the change should reduce. That business is now all of a sudden on a theoretical basis, much more valuable. But it's at $7 or $6 again. And six months ago was at like 15. So it's actually in a much better strategic position. That's what we're looking at. There is a future here where companies are much better. The smaller companies may not survive. Maybe they become bigger companies, but it really comes down to those drivers of competitive advantage again. What is driving a competitive advantage? It's not just software. Is it a cultural sting? Do you have something that's valuable, something that's rare, that's hard to copy and not substitutable, yeah, sure. Then you invest behind it. I just know in our business, the amount of things that we've automated as well, and are continuing to automate. And there's a lot of really low value add tasks that just need to get done, like reports that need to be written or data that needs to be collected or board papers that need to be done. And that takes away, it's a thief of your time to doing the stuff you love. And already we've freed up a lot of time to keep thinking about like, where's our value add in investment? Like that future state thinking or those sorts of things we spend more time on. Because it's like general data collection about what does company A do. You can put a dossier together very quickly. But it doesn't mean that that replaces your research. No, it might do the first bit that takes you a couple months and speed that up to maybe like a week. So I do feel like the productivity, you get a lot more free time back, but you can deploy that into really high value add things. And that's ultimately going to be a better outcome. The flip side of the productivity conversation is some companies are redeploying that into more productive use. Other companies are taking the opportunity to cut heads. We saw block. Do it. Atlassian have cut heads. I also saw a research report this morning on zero and they had looked at zero on LinkedIn over the last six months and they haven't hired any more engineers. And so they wanted to ask them in their earnings call about that. So obviously like not hiring or cutting heads is the other way that this productivity is showing up. Unless it is AI washing, which is like some of the criticism that's come through, particularly around block that they were just bloated. And this is a convenient excuse. Where do you land on the real productivity versus AI washing conversation? Block in itself, there's three businesses effectively in that that they're trying to kind of harmonize. And so was there fat in the business maybe? And it's a good thing, you know, that if they're coming in and making changes there, it's not good for the people who lose their jobs, of course. But those people are smart people. They're redeploy into other areas. You know, there's a lot of people hiring in whether it's anthropic or XAI or, you know, there's a lot of other industries that are popping up now. And things that weren't necessarily that possible before people could have a go at as well. So there will be a reorganization of capital. There are companies that probably don't have an engineering competency that we'll talk about. And that's clearly very clearly like AI washing. But when it's someone like block, it's less likely to be the case. I think they are genuine. I mean, if you look at Jack Dorsey, like personally, he launches a lot of products himself using this stuff. So he's like a very productive guy in that sense. You know, Toby, look from Shopify is the same. Like these guys are prolific in terms of what they're building outside. And so they understand what's possible with these tools, where the pitfalls are and what you need to kind of manage. And they're definitely implementing that at a top down basis. So, you know, there's probably a bit of that. But, you know, the reality is is that as investors, like pretty rare that an investor has an engineering mindset and really understands exactly what goes into this stuff. And so it's very easy to sit on the sidelines and say, well, you know, we'll look at revenue per head, counters, a proxy and block actually scales quite good on that. But a lot of these companies are very high margin anyway. You know, so there might be additional cost in tokens, like RIA, car sales, that's been sort of some of the issues that people have been talking about. But if you look at the last half, they haven't really spent any more on AI. They've just kind of reorganized their current R&D spend and they've still launched a whole bunch of new products. And that was pretty consistent, everyone that we spoke into. All the companies are saying, like, look, we're not accelerating our R&D budget. We're just reallocating costs. Block needed something to move their share price and, you know, it moved pretty hard on the back of that announcement. But they've still got a lot of work to do. That thesis needs to play out by really scaling the kind of financial services business, you know, cross selling. That still has to happen regardless of the people in the back end. You know, that's what's going to drive earnings growth. That's what's going to drive revenue growth. That's what's going to drive the thesis anyway. So Jared, I've got the top 10 companies from the Australian Technology Index. - Okay. - I want to do a quick fire game. - Putting you on the spot. - Yeah, quick fire game. Are they at risk? - Yes. - Or do they have competitive advantage? - Jays, okay. - Okay. - Ready? - Yeah. - Top holding, computer share. - All right. Well, the mode for them is not technology. That's just like regular regulatory complexity. So, you know, can you go and rebuild this thing? Pretty quickly, probably. Like, automics come out and done a really good job of this stuff. They're probably more, like, it's not an at risk the business is going to go down, but their valuation should compress. - Yeah, nice. - Okay. That's good answer. Number two, zero we've spoken about. - We think that the markets are wrong on that. - Yeah. - Car sales? - Okay, so I'll do car sales, RIA and Seek at the same time. - Nice. They're only top 10. - Yeah. And the markets are wrong on that. - Okay. - So, as we were talking about before, it's a search problem. They're already solving the search problem in a way that's very effective. And just to sort of back this up with, this isn't just me thinking about it. We've run surveys, so we've paid for these. And traffic to these companies via LLAM is about 1%. And it's sort of decreasing because the consumer experience is pretty poor. People get what they need very quickly. But if you wanted to force rank them, jobs would be the first to go, then cars then real estate. And that's just the view of the consumers we've surveyed. Like they'd be more comfortable searching for a job with an AI agent, than a car or a. - Which is interesting, because the job of the three is like the most impactful on your life. - Yeah, it's very frustrating property. - Yeah, sorry. I have a different view on Sake, just outside of AI, which is that we've done a bunch of hiring recently. And Sake has been not useful at all. Like LinkedIn jobs is coming through. Like there are other platforms that are better. Like from just a pure like product market fit competitive set point of view. - Yeah, I kind of think there's a question mark over them. - Yeah. - Okay. So we knocked those off, technology won. We bought it at 2017. - Nice. - So we clearly think it's not solid. - Well, yeah. - You bought it at 2017. - Yeah, as in $20.70. - $20.17, very specific. - Yeah, nice. - I remember it, because I think it was a bottom tick. I don't know where it's trading now. - So it's a bit over 27. - Okay, nice. - We'll be mad for money. - We'll be on that one. Yeah, yeah. - Next D.C. - Okay, no, that's fine. It's data center. It's gonna run that way. But we don't own it. We never have. And the issue that we have with this is just the solution in the return, like to equity holders all the time. They constantly raising money. - Yeah, yeah, yeah. - And it's not to say the data centers are about investment, but I think the asset owners are better off than the equity owners, because you just keep funding the growth. And that's why we own something like MegaPort. It's a much more capital-like version and much more scalable, particularly in a world where you've got cloud compute and and and, like the network density sits there. And they can benefit from all of the people in the data centers, 'cause they connected to them. They just don't have to pay for the bricks and mortar and all of that stuff. - Okay, um, Wystech? - It's not at risk. - Nice. Two more, Prometicus. - It's not at risk. - You would do. - But, um, the value-action still makes sense. - Value-action is crazy, but relative to previous value-action. - It's like 150 times. - Yeah, yeah. - Yeah, yeah. - I mean, it's on that one, we really like it. And you can see they've just renewed contracts and still winning contracts. It's just been a funny one with respect to the way that the market structures played out. Like that multiple was just, I mean, the reality was, there were certain things that we've never owned Prometicus because of the valuation. We never own life 360. There are a lot of these sort of growth companies that we just can't own because we have valuation sensitive. People don't think growth managers are, but we are. And can Prometicas get cheaper? Probably, you know, it's still on a quite a significant multiple compared to the rest of the market. - Big mode. - Yeah. - Um, and I think we've spoken about it before, but Harrison AI, we have an investment in the, that's an AI native radiology provider. But that market's changing now. There's a lot of structural changes happening. There's like the kind of providers, like Prometicas that are acquiring AI models and so forth because, you know, there's more fundamental risks there from AI, but it's not gonna go away. People still need visaged, you know, the radiologists on native. the view, like they need the view, as they need the stuff to do their jobs, there's not going to go away. And this is very deep technical stuff. There are regulatory clearances that are required. There's a moat there, and that's why we invested in Harrison AI. It's like you actually need physical FDA clearance to sell your models. It's not just to buy and code this stuff. But there will be a market structure change. That valuations, we've got an IRR now. It's not big. We'd love to own it. Yeah. Better the right price. And then finally, number 10 is codeon. I'm going to hadn't heard of they do communications and metal detection solutions. Yeah. You know the guys that run around on the beach with looking for metal? No, that's not. Yeah. So I mean, I don't think that's at risk. It's just not something we've ever looked at. There you go. So I guess the takeaway there is like of that top 10, the majority of them are not at risk. It's more nuanced than this thing's going to go away or not. Like, you know, the portal's like, what are they actually really worth? Is the question? Yeah. Is their margin going to go to 20% or 30%? I don't think so. But it really fundamentally comes down to like, how much is someone willing to pay for an ad to sell their home? Can RIA provide the real estate agents that they work with more value? Can they provide them better leads? Can they do all of that stuff? And, you know, the engineering talent there, the money that they have to invest, you've got to think that the odds of them succeeding in that are higher. And the velocity of what they can spend is higher. And the products that they can push out is it's going to be a quick of velocity. So, you know, the optimist in me says, yeah, there's a lot of positive things that are going to come from them. But from a market perspective, it's what is a trade on? And that's sort of the unsolved question. What really should these things be worth? It's not whether they, the business is going to zero. I just don't, you know, like, there is a world, yes, where like an agent can do everything. Is that happening in the next couple years? No. A lot's got to change. Like, there's just so much interconnectivity between agents and portals and consumers. Like, there's a whole stuff that like the real world constraints that is shifting. And there's a lot that needs to play out. And then the general idea that these companies are not responsive to the changes in the market place is also something that people overlook. They just assume that this is just a set of cash flows that never changes, right? And that determines evaluation. But they will respond. They will hire people. They will change their products. They will, you know, acquire or doves. There's a lot of things that if the management on top of it, they will continue. And that's the part of the stuff we look at. You know, other companies are investing in doing things to change. You know, mega port. They're really building out structural. Making decisions about the future, buying compute, adding storage, because they know that that's going to put them in a better position in the long run. The software stuff's not really relevant. They'll build products, launch products, and sell them. And they're going to be successful there or not. And that's going to come down to strategy and a bunch of other things. This has been a hard moment for a lot of retail investors. It's certainly been a hard moment for me looking at my software exposure and my portfolio. But I think conversations like this give me confidence that it's like over the long term, you find companies that will survive and thrive through these periods of disruption. And you buy more of them at times like this. Yeah. And it's no different to COVID, right? I remember we were all there. We all had the same experience. We're sitting at home and we were never going to travel again. And we were never going to go to the office again. Yeah. And we're here today. And the problem is, is that the world sort of assumes that the snapshot in time is the story. But that changes, you know, like from COVID, you know, look where we are. We're all hugging again and surfing and, you know, out in our clubs, you know, doing all of the stuff that we're never ever going to do. That's the same with this. There's no different. There's obviously a big shift in a different regime. How does that look? We're still figuring that out. But it doesn't mean everything is dead. And that's unfortunately with markets these days. It's sort of shoot first, ask questions later. And so the guys who sold might be able to buy back now and make some money. We just fundamentally believe that these businesses are great. The challenge for us is like, was our position sizing appropriate? And it's quite hard when you're exposure or your style is like quality growth, which we are. I mean, I think that's the cheapest that's ever been like ever. It's in like the lower percentiles of where it's traded in terms of risk premium. So we've really been hurt because of what we believe in. We were basically a value manager now, because it's so cheap. But you know, fundamentally these businesses are doing the same thing. And our challenge, as I said, is like, how much do we position size now? What are our big positions? Where do we think that the biggest unlocks will come in terms of valuation? And it's hard because like everything's cheap. It's hard to have like 10% position, 10%. It's like everything's like, we're becoming almost like equally weighted in our allocations because everything's cheap. And there's an equal probability that they all start to kind of work. We only have like 25 names in the portfolio. So it's not like very broad and it's not all software either. There's a lot of healthcare and stuff like that. So yeah, that's the tricky part for us. Love it. Well, look, we could keep talking about this all day, but we would always like to finish with the same final three questions. So let's get to them. Forget valuation and what a company is trading out just purely on its fundamentals as a business. What's the best business you've ever seen? Yeah, I've got to say something like Costco is probably a phenomenal business. What they do really well is they invest in their customer and they've just kept reinvesting in the value that they give to their customers, you know, and that has led to significant growth in that business, like that business model. That's why we only think it's like wise because they're doing similar stuff. They're reinvesting in making the cost, the cost for their customer to go down. There's that shared customer economics kind of idea, but Costco are really the guys who pioneered that, but there are others that do that. You know, you've got a, there's a company here. It's a private company called Mable. They're doing the same thing in healthcare for like home care, sorry, and NDIS. That's a very inefficient system and they keep reinvesting to try and deliver those services cheaper. And so I'm fundamentally for that. Like that's what business should do and very well run. And I think everyone thought, you know, Costco and Walmart and all these guys were dead in the face of Amazon, but they've continued to grow. What's the best investing resource, books, podcasts, YouTube, whatever it is that you've enjoyed recently? I've got to say that for any budding investor, get on something like X, there's like a really solid community there of people who are very insightful. You've got to wade through a bit of the negativity, but there are very insightful people there that are just doing things that they love doing. And that's a great place to be. And they might have a substect that you can read, but that's a really great jumping board in. You really got to find all works for you and, you know, find your community and people that are supportive of what you're doing. And then final question for all young and new investors out there listening. What advice would you leave them with? Invest and document your journey. So write down why you bought CBA shares and review that in some time. And then how do you improve your decision making process? Like did it go right for the reasons you thought or did it go right for some other reason? And does that kind of referral mechanism is really important? And you'll start to develop a framework of thinking and you'll learn that way. And I think there's no substitute for doing. A lot of people have read every book under the sun about investing, but I've never actually invested any money. And it's the same thing. I don't know. Like I guess now I could ask, "Chachy, BT your Claude, how do I cut hair?" And then say, "All right. Like, you know, like, you wouldn't want to do it because you're, you know, I haven't developed that skill into it. I haven't internalized that skill." And that's what investing is. That's a trade. It's a skill. But if you really love it, you'll do it. Or just give your money to someone else who's passionate about it. If you want to invest and you don't have the passion to kind of read and your reports and read, you know, consistently the news and think about these things like, you know, maybe you better off giving it to someone else who is passionate about it. Well, Jared, thank you so much. Thanks, guys. Thanks for that. Interesting times in markets at the moment, but sort of trying to see through all the noise and find those opportunities. Yeah, well, thanks for having me on. And hopefully next time I see you, your performance would have turned, yeah. Yeah, yeah, yeah. We'll all be celebrating now. So we look forward to that day. Thanks, guys. Thanks, guys. Thanks a lot. You've been listening to an equity-made media production. This podcast is intended for education and entertainment purposes. Any advice is general advice only and has not taken into account your personal financial circumstances, needs or objectives. Before acting on general advice, you should consider if it is relevant to your needs and read the relevant product disclosure statement. If you're unsure, please speak to a financial professional. The host of this podcast and their guests may have positions in the companies mentioned. Equity-made media operates under Australian Financial Services' license 540-697.