| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Mike Loeb expresses bullish views on AI's transformative potential for white collar work but warns of supply/demand mismatches in the current AI capex boom, drawing parallels to historical infrastructure buildouts that destroyed capital despite societal benefits. The portfolio has been frustratingly devoid of AI beneficiaries, with recent purchases feeling like catching falling knives. During the quarter, Loeb trimmed winners like Allient, Wayfair, and Celsius on valuation while exiting positions impacted by AI disruption or macro headwinds including Endava, homebuilders HOV and DFH, and GoDaddy. New additions include Topicus.com (a Constellation Software spinoff focused on European M&A), FirstService Corp (dominant HOA manager with consolidation opportunity), CDW Corp (IT reseller trading at attractive valuation), Floor & Decor (specialty retailer with long-term market share gains potential), Capital One Financial (benefiting from Discover merger creating closed-loop network advantages), and Pool Corporation (dominant pool distributor at historically low valuations). Loeb acknowledges being out of step with market trends but remains focused on long-term value creation, drawing parallels to successful contrarian investors of the late 1990s.
Focus on long-term value creation through selective stock picking while avoiding overvalued AI beneficiaries, emphasizing companies with sustainable competitive advantages and reasonable valuations despite being out of step with current market enthusiasm.
Manager remains cautious about AI valuations while acknowledging potential for missing generational wealth creation opportunities. Working hard to make right long-term investment decisions even if out of step with current market trends, drawing parallels to great investors being out of step in late 1990s.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| May 18 2026 | 2026 Q1 | ALNT, CDW, CELH, COF, DAVA, DFH, FMX, FND, FSV, GDDY, HOV, KOF, POOL, TOITF, W | AI, Financial Services, Homebuilders, M&A, software, technology, value |
TOITF FSV CDW FND COF POOL |
Loeb warns of AI capex boom creating unsustainable earnings while trimming overvalued winners and adding undervalued quality companies. Portfolio reshaping included exiting AI-disrupted businesses and homebuilders, while adding European software consolidator Topicus, dominant service businesses FirstService and Pool Corp, and Capital One benefiting from Discover merger. Contrarian positioning despite missing current AI rally. |
| Mar 6 2026 | 2025 Q4 | DAVA, EPAM, FND, HD, LLY, LOW, NVO | AI, Cyclical, Pharmaceuticals, retail, software, value | - | Loeb navigates AI-driven market chaos by focusing on undervalued companies with defensible positions less susceptible to immediate AI displacement. Sold NVO for competitive reasons, added to DAVA as undervalued versus peers, initiated FND as long-term value play on margin recovery. Remains open-minded about AI paths while seeking opportunities in current disruption. |
| Oct 30 2025 | 2025 Q3 | DAVA, DFH, FERG, HOV, NVDA, NVO, POST, W | AI, Consumer Staples, Credit Stress, GLP1, Homebuilders, technology, value |
POST DAVA NVO DFH POST DAVA NVO DFH |
Value-focused manager trims homebuilding exposure and exits underperforming Post Holdings while adding Endava at trough valuations and Novo Nordisk for GLP-1 upside. Uses Tricolor lending collapse to illustrate credit deterioration risks. Guardedly optimistic on markets, seeing AI infrastructure ahead of use cases but finding opportunities in overlooked sectors like life science tools. |
| Aug 23 2025 | 2025 Q2 | DAVA, DFH, FERG, HOV, LLY, NVDA, NVO, POST, W | AI, Capital Allocation, Credit Stress, GLP1, Homebuilders, Portfolio Management, value |
POST DAVA NVO |
Argosy Investors takes a cautious value approach, selling underperforming Post Holdings and trimming homebuilding exposure while adding Endava at trough valuation and Novo Nordisk for GLP-1 growth. The manager highlights credit market instability and questions AI commercialization timelines, focusing on overlooked opportunities in sectors like life science tools despite temporary headwinds. |
| May 30 2025 | 2025 Q1 | CELH, FMX, HOV, TRRSF, W | Beverages, Debt, E-Commerce, Fiscal, Homebuilders, inflation, tariffs, value |
W HOV CELH FMX |
Argosy Investors warns of unprecedented US fiscal risks while making selective value investments in Wayfair, Hovnanian, Celsius, and Femsa. Manager maintains defensive positioning against mounting debt service costs and policy uncertainty, focusing on undervalued companies with strong fundamentals. Trimmed Trisura for portfolio management. Expects more challenging environment ahead requiring continued conservatism. |
| Mar 11 2025 | 2024 Q4 | ALNT, CDW, CSWI, DAVA, MSFT, NVDA, TOITF | AI, Buybacks, Data centers, small caps, technology, Utilities, value |
ALNT CDW |
Conservative value manager maintains cautious stance despite underperformance in NVIDIA-driven market. Added Allient at 15%+ FCF yield expecting post-COVID recovery. Trimmed high-valuation CSWI/TOITF and AI-threatened Endava. New position CDW offers dominant SMB IT distribution franchise at attractive 21x cash flow multiple with double-digit EPS growth potential. |
| Jun 25 2024 | 2024 Q1 | DAVA, DEO, NVDA, TBBB | AI, Cash, Discount Retail, IT Services, Mexico, Valuations, value |
DAVA TBBB DEO |
Argosy maintains 46% cash amid elevated valuations, adding selectively to IT services (Endava), Mexican retail (Tiendas BBB), and spirits (Diageo). Manager views current 28x S&P multiple as historically high versus similar rate environments. Strategy focuses on patient capital deployment, building watchlist for future opportunities while avoiding momentum-driven market participation. |
| Mar 29 2024 | 2023 Q4 | ANGL, DFH, MLAB, ZROZ | Cash, Defensive, Homebuilders, Patience, selectivity, value | MLAB | Argosy Investors holds 51.8% cash, reflecting extreme caution after 15 years without a bear market. Added Mesa Labs at attractive valuation following temporary setbacks. Manager emphasizes patience and discipline, screening opportunities but waiting for more favorable conditions to deploy capital aggressively. |
| Nov 18 2023 | 2023 Q3 | BURL, LESL, POST, TRRSF | Buybacks, Cash, rates, retail, value |
LESL TRRSF POST BURL |
Argosy holds 38.6% cash while selectively adding value positions in Leslie's pool services, Trisura insurance, Post Holdings food, and Burlington off-price retail. The manager expects multi-year economic headwinds from interest rate refinancing pressures and remains defensively positioned to capitalize on future market dislocations despite current attractive individual opportunities. |
| Jul 23 2023 | 2023 Q2 | DAVA, GDYN, OLLI, TWKS, ZROZ | Cash, Defensive, interest rates, IT Services, risk management |
ARGX BB|DAVA|DDOG|GLOB|ILMN|LOAR|MELI|NET|NU|NVDA|TSM ZROZ |
Argosy maintains extreme defensiveness with 52% cash, expecting delayed interest rate pain to pressure corporate profits and market multiples. Consolidated IT outsourcing exposure in higher-quality Endava while adding ZROZ bonds as recession hedge. Strategy prioritizes risk control over deployment, positioning to invest aggressively when market stress creates better opportunities. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
AIManager is bullish on AI's uses in financial research and white collar work but concerned about the AI capex boom creating supply/demand mismatches. Compares current AI buildout to historical infrastructure booms that led to capital destruction despite transformative societal impact. Worries about elevated earnings in AI beneficiaries that may not be sustainable when supply catches up. |
Artificial Intelligence Capex Technology Infrastructure |
HomebuildersManager sold homebuilding positions HOV and DFH due to worsening macro backdrop. However, added to Floor & Decor despite housing headwinds, believing the company will continue taking market share and can achieve significant long-term growth in sales and earnings. |
Housing Construction Retail Market Share | |
SoftwareManager acknowledges AI disruption to software companies but added to Topicus.com, a Constellation Software spinoff focused on European M&A. Believes European exposure and commitment to acquisitions during disruption period provides path to long-term value creation despite potential AI pressure. |
Enterprise Software M&A Europe Disruption | |
| 2025 Q4 |
AIAI developments from major companies are causing rapid market changes and stock price declines for quality businesses. The manager sees AI creating potential headwinds for software companies through reduced seat counts, lower pricing power, and increased competition from AI-first upstarts. However, believes many software solutions cannot be easily replaced and is reviewing opportunities in the wreckage. |
Software Disruption Valuation Competition Technology |
SoftwareSoftware companies are experiencing significant declines as the market reassesses AI impacts. The manager identifies three vectors negatively affecting valuations: fewer seats due to efficiency gains, lower pricing power from AI competition, and reduced new customer bookings. Despite headwinds, believes there are software solutions that won't be easily replaced by AI. |
SaaS Pricing Competition Efficiency Disruption | |
Home ImprovementFloor & Decor represents an attractive long-term opportunity following the Home Depot disruption model in flooring. The company has depressed margins due to post-COVID hangover and higher interest rates affecting home sales. Manager expects significant margin expansion as sales per store recover and the company builds out its store base. |
Retail Margins Expansion Cyclical Recovery | |
| 2025 Q3 |
Credit StressDetailed analysis of subprime auto lender Tricolor's collapse due to fraudulent collateral pledging practices. Discussion of how post-2008 lending standards deteriorated in auto loans with higher LTVs, longer terms, and weaker underwriting. Highlights how stability breeds instability per Minsky's theory. |
Auto Lending Subprime Collateral Underwriting Default |
HomebuildersManager trimmed homebuilding exposure including Dream Finders Homes while maintaining Hovnanian as cheaper option. Neutral view on housing undersupply narrative, noting countervailing forces like potential existing home supply increase with lower rates that could offset new construction demand. |
Housing Construction Interest Rates Supply Valuation | |
AIGuarded optimism on AI spending through Nvidia chips and data centers, but notes real-world use cases haven't kept pace with infrastructure buildout. Sees this as potentially healthy long-term similar to prior technology infrastructure cycles with gaps between buildout and profitable commercialization. |
Infrastructure Data Centers Nvidia Commercialization Buildout | |
GLP1Purchased Novo Nordisk despite execution missteps in North America that allowed Eli Lilly to take the lead. Believes current mid-teens P/E doesn't reflect long-term growth potential given massive underutilization of GLP-1s relative to addressable population. |
Diabetes Obesity Pharmaceuticals Wegovy Pricing | |
| 2025 Q2 |
Credit StressDetailed analysis of Tricolor subprime auto lender collapse and widespread fraud, highlighting how stability breeds instability in credit markets. Auto lending has deteriorated significantly since 2008 with higher LTVs, longer terms, and weaker underwriting standards. |
Auto Lending Subprime Credit Fraud Underwriting |
HomebuildersTrimmed exposure to homebuilding through DFH, FERG, and W sales due to new construction exposure concerns. Maintains neutral view on housing, noting countervailing forces including interest rate impacts on existing home supply and demand dynamics. |
Housing Construction Interest Rates Supply Demand | |
GLP1Purchased Novo Nordisk despite execution missteps in North America that allowed Eli Lilly to take the lead. Believes current mid-teens P/E doesn't reflect long-term growth potential as GLP-1s are still underutilized relative to addressable population. |
Diabetes Weight Loss Pharmaceuticals Growth Valuation | |
AIExpresses caution about AI spending versus real-world use cases, noting concerning circular financing among largest AI-exposed businesses. Sees massive infrastructure spending on chips, data centers, and power supply but questions commercialization timeline. |
Infrastructure Data Centers Chips Commercialization Valuation | |
| 2025 Q1 |
HomebuildersManager purchased Hovnanian Enterprises at 3.2x earnings, believing it could trade at 10x through-the-cycle earnings. The company has reduced debt from $2.2B to $0.9B since the financial crisis, with opportunity for further balance sheet improvement worth $2 per share. |
Homebuilders Balance Sheet Debt Reduction Valuation Recovery |
E-commerceWayfair was purchased despite trading at 50x earnings because it's a dominant online furniture retailer continuing to take market share. Using long-term margin assumptions, it trades at 70% of fair value with potential for 10% annual revenue growth through the cycle. |
E-commerce Furniture Market Share Margins Growth | |
BeveragesCelsius Holdings was purchased below $30 after falling from $90, following inventory issues with Pepsi distribution. The acquisition of Alani Nu consolidates their position in better-for-you energy drinks, purchased at 21x 2026 consensus estimates. |
Energy Drinks Distribution Acquisition Growth Valuation | |
| 2024 Q4 |
AIManager discusses cooling enthusiasm around AI following DeepSeek release and draws parallels to late 1990s telecom buildout. Notes AI's potential to reduce coding and marketing labor, which could impact companies like Endava. |
Data Centers DeepSeek Automation Labor Displacement |
Data CentersSignificant discussion of data center capacity expansion driven by AI demand. Manager notes Microsoft restarting nuclear plants and utility companies announcing capacity expansions to meet power demand growth. |
Power Demand Nuclear Utilities Infrastructure | |
BuybacksManager highlights CSWI's capital allocation skills, noting they raised equity at attractive levels and are now pursuing stock buybacks at more attractive prices after stock retreat. |
Capital Allocation Valuation Share Repurchases | |
| 2024 Q1 |
IT ServicesManager discusses extensive research in IT services dating back to 2017, highlighting the evolution from low-skilled infrastructure monitoring to customer-facing application development. The sector earns extremely high returns on capital and historically augments organic growth with acquisitions. Current investment in Endava represents exposure to this new generation of IT services focused on custom application development. |
Software Technology Services Applications Development |
Discount RetailInvestment in Tiendas BBB represents exposure to the hard discounter model similar to Aldi or Lidl. The model thrives on limited SKUs (2,000-3,000 vs competitors' tens of thousands), enabling better supplier negotiations, negative working capital, and self-funded growth. TBBB operates over 2,200 stores in Mexico with visibility to 12,000 stores long-term. |
Retail Mexico Expansion Margins Scale | |
AIManager views artificial intelligence as more opportunity than threat for IT services companies like Endava. While some question the value IT services can provide if companies adopt AI, the manager argues that many companies without full-time software engineering talent will need companies like Endava to help them adopt AI technologies. |
Technology Adoption Services Implementation Opportunity | |
| 2023 Q4 |
ValueManager focuses on finding businesses trading at attractive valuations, specifically mentioning Mesa Labs trading at low-double-digit multiples of cash flows after temporary challenges. The approach emphasizes patience and discipline in finding undervalued securities. |
Valuation Cash flows Multiples Undervalued Discipline |
| 2023 Q3 |
Off Price RetailBurlington Stores participates in the off-price retail category competing against TJ Maxx and Ross Stores. Despite current inventory overhang and same-store sales slowdown, the company has capacity to double stores and margins while expanding same-store sales growth. |
Burlington Discount Inventory Margins Expansion |
FoodPost Holdings is creating a reincarnation of Ralston-Purina through disciplined acquisitions including a large pet food platform. The company demonstrates improved efficiency, consistent share buybacks, and strategic divestitures while trading at attractive valuations. |
Post Acquisitions Pet Food Efficiency Buybacks | |
| 2023 Q2 |
Risk AppetiteManager maintains extremely defensive positioning with 52% cash, emphasizing risk control over aggressive deployment. Believes current environment warrants heightened caution due to interest rate impacts that haven't fully materialized in the economy yet. |
Cash Risk Management Defensive Interest Rates |
RatesHigher interest rates are viewed as a significant threat that will eventually impact corporate profits and market multiples. Manager expects delayed pain as companies face refinancing challenges, though timing remains uncertain. |
Interest Rates Corporate Debt Refinancing Fed Policy | |
IT ServicesTech sector employment slowdown is impacting IT outsourcing projects. Manager consolidated positions by selling Thoughtworks and Grid Dynamics while adding Endava, viewing it as better-managed among peers. |
Outsourcing Tech Employment IT Projects |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| May 18, 2026 | Fund Letters | Argosy Investors | POOL | Pool Corporation | Industrial Distribution | Distributors | Bull | NASDAQ | COVID Recovery, high-ROIC, Home Depot Competition, market leader, Outdoor Living, Pool Distribution, Wholesale Distribution | Login |
| May 18, 2026 | Fund Letters | Argosy Investors | TOITF | Topicus.com Inc. | Software - Infrastructure | Systems Software | Bull | Toronto Stock Exchange | acquisition strategy, Constellation Software Spinoff, European, M&A, Software, technology, vertical market software | Login |
| May 18, 2026 | Fund Letters | Argosy Investors | FSV | FirstService Corporation | Real Estate Services | Real Estate Services | Bull | NASDAQ | consolidation, HOA, market leader, Mid-Teens Growth, partnership model, property management, Real Estate Services | Login |
| May 18, 2026 | Fund Letters | Argosy Investors | CDW | CDW Corporation | Information Technology Services | Technology Distributors | Bull | NASDAQ | capital return, Education, Government, Hardware, IT Reseller, share repurchases, Software, Value-Added Reseller | Login |
| May 18, 2026 | Fund Letters | Argosy Investors | FND | Floor & Decor Holdings, Inc. | Home Improvement Retail | Home Improvement Retail | Bull | New York Stock Exchange | COVID Recovery, Flooring retail, home improvement, market share gains, share repurchases, Specialty retail, store expansion | Login |
| May 18, 2026 | Fund Letters | Argosy Investors | COF | Capital One Financial Corporation | Credit Services | Consumer Finance | Bull | New York Stock Exchange | Closed-loop Network, credit cards, Discover Merger, financial services, Margin Improvement, Network Economics, valuation discount | Login |
| Oct 30, 2025 | Fund Letters | Mike Loeb | POST | Post Holdings, Inc. | Consumer Staples | Food Products | Bear | NYSE | buybacks, capital allocation, Category headwinds, Free Cash Flow, leverage | Login |
| Oct 30, 2025 | Fund Letters | Mike Loeb | DFH | Dream Finders Homes, Inc. | Consumer Discretionary | Homebuilding | Bear | NYSE | asset-light, backlog, deleveraging, housing cycle, Incentives | Login |
| Oct 30, 2025 | Fund Letters | Argosy Investors | NVO | Novo Nordisk A/S | Health Care | Pharmaceuticals | Bull | NYSE | Diabetes, GLP-1, market penetration, Metabolic Diseases, Obesity, pharmaceuticals, secular growth, Wegovy | Login |
| Oct 30, 2025 | Fund Letters | Argosy Investors | POST | Post Holdings Inc | Consumer Staples | Packaged Foods | Bear | NYSE | brand loyalty, capital allocation, Cereal, consumer staples, LBO Model, Leveraged Structure, Packaged Foods, secular decline | Login |
| Oct 30, 2025 | Fund Letters | Mike Loeb | DAVA | Endava plc | Information Technology | IT Consulting & Other Services | Bull | NYSE | Digital transformation, M&A optionality, Margin recovery, Multiple re-rating, Utilization | Login |
| Oct 30, 2025 | Fund Letters | Mike Loeb | NVO | Novo Nordisk A/S | Health Care | Pharmaceuticals | Bull | NYSE | Capacity, GLP-1, Obesity, pipeline, Reimbursement | Login |
| Oct 30, 2025 | Fund Letters | Mike Loeb | DFH | Dream Finders Homes, Inc. | Consumer Discretionary | Homebuilding | Bear | NYSE | asset-light, backlog, deleveraging, housing cycle, Incentives | Login |
| Oct 30, 2025 | Fund Letters | Argosy Investors | DAVA | Endava plc | Information Technology | IT Services | Bull | NYSE | AI disruption, contrarian, IT services, Mean Reversion, operating margins, Self-Help Story, Technology Consulting, Trough Valuation | Login |
| Oct 30, 2025 | Fund Letters | Mike Loeb | POST | Post Holdings, Inc. | Consumer Staples | Food Products | Bear | NYSE | buybacks, capital allocation, Category headwinds, Free Cash Flow, leverage | Login |
| Oct 30, 2025 | Fund Letters | Mike Loeb | DAVA | Endava plc | Information Technology | IT Consulting & Other Services | Bull | NYSE | Digital transformation, M&A optionality, Margin recovery, Multiple re-rating, Utilization | Login |
| Oct 30, 2025 | Fund Letters | Mike Loeb | NVO | Novo Nordisk A/S | Health Care | Pharmaceuticals | Bull | NYSE | Capacity, GLP-1, Obesity, pipeline, Reimbursement | Login |
| May 30, 2025 | Fund Letters | Argosy Investors | FMX | Fomento Economico Mexicano SAB de CV | Consumer Staples | Food Distributors | Bull | NYSE | Coca-Cola, conglomerate, convenience stores, Latin America, Store growth, synergies, Value | Login |
| May 30, 2025 | Fund Letters | Argosy Investors | W | Wayfair Inc. | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NYSE | Cyclical, e-commerce, furniture, growth, market share, online retail, valuation | Login |
| May 30, 2025 | Fund Letters | Argosy Investors | CELH | Celsius Holdings Inc. | Consumer Staples | Soft Drinks | Bull | NASDAQ | acquisition, Better-for-You, Brand Consolidation, Distribution, Energy drinks, GARP, growth, Pepsi Partnership | Login |
| May 30, 2025 | Fund Letters | Argosy Investors | HOV | Hovnanian Enterprises Inc. | Consumer Discretionary | Homebuilding | Bull | NYSE | balance sheet, debt reduction, homebuilder, multiple expansion, Refinancing, turnaround, Value | Login |
| Mar 22, 2025 | Fund Letters | Argosy Investors | ALNT | Allient Inc | Industrials | Aerospace & Defense | Bull | NASDAQ | Acquisitions, Aerospace, Defense, Industrial automation, medical equipment, Plant Consolidation, post-COVID recovery, specialty chemicals, turnaround, Value | Login |
| Mar 22, 2025 | Fund Letters | Argosy Investors | CDW | CDW Corporation | Information Technology | Technology Distributors | Bull | NASDAQ | Acquisitions, growth, IT distribution, market leader, Share Buybacks, small business, SMB, software distribution, technology | Login |
| Jun 10, 2024 | Fund Letters | Argosy Investors | DEO | Diageo plc | Consumer Staples | Beverages | Bull | NYSE | defensive, dividend yield, Global Brands, premium brands, risk management, Spirits, Stable Earnings, Value Investment | Login |
| Jun 10, 2024 | Fund Letters | Argosy Investors | DAVA | Endava plc | Information Technology | IT Consulting & Other Services | Bull | NYSE | Artificial Intelligence, Custom Application Development, Cyclical Recovery, Digital transformation, High Returns on Capital, IT services, post-COVID recovery, Project-Based, Time-and-Materials | Login |
| Jun 10, 2024 | Fund Letters | Argosy Investors | TBBB | Tiendas BBB | Consumer Staples | Food & Staples Retailing | Bull | BMV | Emerging markets, Hard Discount Retail, High Inventory Turnover, Limited SKUs, Mexico, negative working capital, Private-label, Self-Funding Growth, store expansion | Login |
| Mar 29, 2024 | Fund Letters | Argosy Investors | MLAB | Mesa Labs | Health Care Equipment & Services | Health Care Equipment | Bull | NASDAQ | contrarian, COVID impact, Cyclical Recovery, Health Care Equipment, life sciences, M&A Integration, Quality Control Instruments, Value | Login |
| Nov 18, 2023 | Fund Letters | Argosy Investors | POST | Post Holdings Inc | Consumer Staples | Packaged Foods & Meats | Bull | NYSE | capital allocation, conglomerate, operational efficiency, Pet Food, portfolio optimization, share repurchases, strategic acquisitions, value creation | Login |
| Nov 18, 2023 | Fund Letters | Argosy Investors | TRRSF | Trisura Group Ltd | Financials | Property & Casualty Insurance | Bull | TSX | Balance sheet strengthening, Crisis Recovery, financial services, growth, P/E multiple, Reinsurance, specialty insurance | Login |
| Nov 18, 2023 | Fund Letters | Argosy Investors | BURL | Burlington Stores Inc | Consumer Discretionary | Apparel Retail | Bull | NYSE | Apparel Retail, Inventory Overhang, margin normalization, Off-price retail, operating leverage, same-store sales, store expansion, turnaround | Login |
| Nov 18, 2023 | Fund Letters | Argosy Investors | LESL | Leslie's Inc | Consumer Discretionary | Specialty Retail | Bull | NASDAQ | capital allocation, debt reduction, essential services, Free Cash Flow, Pool Services, Specialty retail, value creation | Login |
| Jul 23, 2023 | Fund Letters | Argosy Investors | ARGX BB|DAVA|DDOG|GLOB|ILMN|LOAR|MELI|NET|NU|NVDA|TSM | Endava plc | Information Technology | IT Consulting & Other Services | Bull | NYSE | Digital transformation, IT Outsourcing, Quality Management, Sector Consolidation, Technology Services, value opportunity | Login |
| Jul 23, 2023 | Fund Letters | Argosy Investors | ZROZ | PIMCO 25+ Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund | Financials | Asset Management & Custody Banks | Bull | NYSE Arca | Duration risk, interest rate sensitivity, Long duration bonds, Macro hedge, Portfolio Hedge, Treasury securities, Zero Coupon | Login |
| TICKER | COMMENTARY |
|---|---|
| ALNT | I trimmed Allient (AI NT) as a function of the stock running significantly from a purchase price below $20 in late 2024 to a price in the $50's. As the price has continued to run into the mid-$70's per share after quarter-end, I have continued to trim. |
| W | I trimmed Wayfair (W) and Celsius Holdings (CELH) both on a valuation basis after significant returns in approximately one year. I still like these businesses and subsequent price declines after these trims makes them candidates for adding back to the position. |
| CELH | I trimmed Wayfair (W) and Celsius Holdings (CELH) both on a valuation basis after significant returns in approximately one year. I still like these businesses and subsequent price declines after these trims makes them candidates for adding back to the position. |
| DAVA | I exited Endava (DAVA) during the quarter. As noted in my last letter, the position was among my most fluid. I have "seen the light" on AI, and I need to step back and re-assess this position for longer than a quarter. There are significant disruptions happening to this business and I have to acknowledge that my visibility into their prospects 2-3 years from now is very fuzzy. |
| HOV | I sold Hovnanian Enterprises (HOV) and Dream Finders Homes (DFH) during the quarter. While I like the direction HOV and DFH are headed in terms of asset-light homebuilding, the macro backdrop for these companies has only gotten worse in the last several months, and I prefer to assess these businesses for a better re-entry point from the sidelines. |
| DFH | I sold Hovnanian Enterprises (HOV) and Dream Finders Homes (DFH) during the quarter. While I like the direction HOV and DFH are headed in terms of asset-light homebuilding, the macro backdrop for these companies has only gotten worse in the last several months, and I prefer to assess these businesses for a better re-entry point from the sidelines. |
| GDDY | I exited GoDaddy (GDDY), which was only a small position in a few accounts I've managed for a long time. The business is clearly being impacted by AI and the ability to generate websites very easily. It was a small position and I want to concentrate capital into my best ideas. |
| KOF | I sold Coca-Cola FEMSA (KOF) in the accounts where it was held to shift funds into its corporate cousin, FEMSA (FMX). I purchased FMX a little while ago with a plan to sell KOF in the income-oriented accounts where I owned it, but wanted to wait until after year-end to realize the capital gains. |
| TOITF | I significantly added to Topicus.com (TOITF), which is now a top-10 holding. The company is a Constellation Software spinoff, long considered one of the better M&A-based investments of all time. While I am very cognizant of the impacts that AI is having on software companies, and I could see some pressure on Topicus's business over time, I think Topicus' European exposure, which is historically sleepier and more balkanized, plus its commitment to M&A to lean in during this period of disruption, give me confidence in their path to value creation long-term. |
| FSV | I also added meaningfully to FirstService Corp (FSV). I have a great deal of respect for Jay Hennick, the largest shareholder and founder of FirstService. FirstService manages ~6% of the HOA/managed units in the US, and is the largest player in this space by a significant margin. There is a multi-decade consolidation opportunity in this market, and I believe Hennick's partnership-based compensation model for acquired businesses is unique and likely to drive outsized performance of the base and acquired businesses over a long arc of time. The company was historically valued as a high-flyer justified by mid-teens growth, and now the valuation is approximately 20x FCF. I think the current price offers a very good entry point for long-term mid-teens returns. |
| CDW | I added to CDW Corp (CDW). CDW is the best-in-class value-added reseller of IT products, and recent product mix shifts towards more hardware (because of demand for AI) has driven margins lower and has highlighted potential for reduced software spend over time, where margins are much higher. CDW has a reputation for serving all sizes of customers as well as education and government customers, all constituencies which are slow to adopt new technology. I think at 11x FCF CDW is well-positioned to generate significant current return through a 2.5% dividend yield and significant share repurchases that could reduce shares outstanding by 20% in only a few years. |
| FND | Finally, I added to Floor & Decor (FND). FND is really interesting to me because it's been a stock market darling during COVID where it was assumed that they would get to their mature footprint of 500 stores (up from 270 at YE 2025) sooner than expected and achieve better store-level sales and profit margins sooner as well. Of course, the high home sales activity during COVID has receded significantly, many of the company's new stores appear ill-advised based on early sales results, and the achievability of the company's long-term sales and EBIT margins seem in doubt. I could not disagree more. The company still continues to take share from legacy flooring providers and while the Home Depots and Lowe's of the world have made competitive responses in flooring, they will never come close to the breadth and selection FND provides. I think it's entirely possible the company generates $14B in sales a decade from now (up from $4.7B in 2025) and $1.4B net income (up from $209MM today). |
| COF | Capital One Financial (COF) recently executed a transformative transaction, merging with Discover Financial Services. For those unfamiliar with the credit card industry, most credit card transaction have 4 parties (merchant, merchant's processor, credit card user, and the card user's bank), known as the open-loop model. American Express and Discover historically were the only closed-loop credit card networks, which consolidates the merchant processor and card user's bank, thus a three party model. This enables additional quality to eliminate fraud, provide better benefits, and more. Capital One has historically been viewed as a subprime lender in credit cards and auto loans, but this transaction has the ability to structurally improve Capital One's historical margins as they transition away from Visa/Mastercard and increasingly move to the legacy Discover network. Starting from a 9x P/E multiple, and potentially a 8x multiple on 2027 margins vs. American Express at 17x, I am confident COF can perform very well over time. |
| POOL | Pool Corporation (POOL) is the dominant wholesale distributor of swimming pool and related outdoor living products, with 35-40% market share and 456 branches nationwide; the next closest competitor has 8-10% share, but was recently acquired by Home Depot as part of the SRS Distribution transaction. The company has been in a long-term slump post-COVID due to the unwind of shortage-driven chlorine pricing and the surge in pool building during the pandemic. 60% of the company's sales are non-discretionary service-based purchases, and the company has historically generated ROICs in the 25-30% range, very strong relative to almost any physical product-based business. The company now sells for 15.5x forward earnings, which seems entirely too low for a high quality market leader with strong ROICs and normally mid-single digit organic growth and future consolidation optionality. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
