| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | 8.2% | - |
Seeking Winners Fund delivered 8.20% net returns in Q2 2025, underperforming the S&P 500's 10.94% return. The fund maintained a concentrated approach without new purchases or sales, focusing on position sizing optimization and recurring revenue business models. Key holdings include AppFolio, which demonstrated strong competitive positioning through technical sophistication and multi-vector growth strategy, and established names like Constellation Software, HEICO, and Gartner that provide predictable cash flows. The fund's largest mistake was oversizing Computer Modelling Group at 6% allocation due to insufficient conviction on customer stickiness and execution uncertainty. Looking forward, the fund sees significant opportunity in Vertical AI applications that complement rather than compete with existing software solutions. The manager emphasizes that exceptional position sizing can add meaningful outperformance, while poor sizing decisions can destroy value. The fund requires approximately 25% price declines in many studied businesses to achieve target 15-20% annual returns, necessitating continued patience in capital deployment.
The fund focuses on high-conviction investments in recurring revenue business models, particularly vertical market software companies, that generate predictable free cash flows and enable confident position sizing for superior long-term returns.
The fund expresses confidence in portfolio positioning entering the latter half of 2025, believing their measured approach to capital allocation will serve them well in potentially volatile market conditions. They continue to study new businesses but require significant price declines to achieve target returns, emphasizing the need for patience in deployment.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 6 2025 | 2025 Q2 | APPF, BRO, CMG.TO, CPRT, CSU.TO, HEI, IT, TOI.TO | AI, cash flow, conviction, Portfolio Management, Position Sizing, Recurring Revenue, software |
APPF CMG.TO |
Seeking Winners Fund returned 8.20% in Q2 2025, focusing on recurring revenue software businesses while learning from position sizing mistakes, particularly Computer Modelling Group. The fund sees Vertical AI as strengthening rather than threatening existing software companies, with AppFolio demonstrating strong competitive positioning. Patient capital deployment continues as target businesses require significant price declines to meet return thresholds. |
| Apr 6 2025 | 2025 Q1 | APPF, BRO, CMG.TO, CPRT, CSU.TO, HEI, IT, LMN.V, TOI.V | Acquisitions, aerospace, cash flow, insurance, Quality, software | - | Seeking Winners outperformed the S&P 500 in Q1 2025 with minimal portfolio changes, maintaining concentration in serial acquirers of small businesses. The strategy focuses on cash flow generators with skilled capital allocators and owner-operators. The manager believes this approach targeting private SME acquisition will outperform mega-cap tech stocks facing valuation and capital intensity headwinds. |
| Jan 11 2025 | 2024 Q4 | APPF, BRK-B, CMG.TO, CRM, CSGP, CSU.TO, HEI, IT, LMN.TO, NVDA, TOI.TO, TWLO | Capital Allocation, cash flow, Concentration, Quality, Research, software, technology | IT | Seeking Winners outperformed with 26.56% annual returns by focusing on high-quality cash flow generators. Major portfolio change involved exiting Berkshire Hathaway for Gartner, a dominant technology research company with 20%+ expected growth. The concentrated strategy prioritizes business fundamentals over valuation metrics while avoiding AI momentum plays despite their transformative potential. |
| Oct 3 2024 | 2024 Q3 | APPF, ATD, CMG.TO, CSU.TO, EVO.ST, LMN.TO, ODFL, TOI.TO | Capital Allocation, growth, Quality, small caps, software |
CMG.TO APPF |
Seeking Winners pivoted from traditional businesses to high-quality software companies, acquiring Computer Modelling Group and AppFolio while selling freight, convenience store, and gaming positions. Both new holdings operate in niche markets with strong recurring revenue, aligned management incentives, and significant growth potential. The strategic shift prioritizes software economics over capital-intensive industries for superior long-term returns. |
| Jul 7 2024 | 2024 Q2 | AMZN, ATD.TO, BRK-B, EVVTY, MSFT, NVDA, ODFL | Buybacks, cash flow, Concentration, growth, Quality, technology, value |
EVVTY ATD.TO ODFL |
Seeking Winners underperformed in Q2 by avoiding overvalued tech stocks, selling Microsoft and Amazon to buy Evolution AB, Couche-Tard, and Old Dominion. The manager warns of dangerous AI bubble conditions with tech concentration at 40% of S&P 500, prioritizing capital preservation and quality businesses with strong cash flows over momentum plays. |
| Apr 3 2024 | 2024 Q1 | AMZN, CSU.TO, EVO.ST, GOOGL, HEI, LMN.TO, META, MSFT, NVDA, TOI.TO | AI, Capital Allocation, Concentration, long-term, semiconductors, software, value |
CSU.TO TOI.TO |
Concentrated value investor delivered 14.48% Q1 returns, outperforming S&P 500 by 4%. Sold Alphabet over AI search disruption concerns, redeployed into Lumine, Topicus, and HEICO. Maintains largest position in Constellation Software. Warns against AI/semiconductor speculation and momentum trading. Focuses on cash-generative businesses with superior capital allocation and owner-operators. |
| Jan 1 2024 | 2023 Q4 | AMZN, GOOGL, LMN.TO, MSFT, NVDA, SNOW, TOI.TO | Concentration, growth, Long Term, software, technology, value | - | Seeking Winners delivered 43.99% returns in 2023 through concentrated investing in 10 high-quality businesses with durable advantages. The manager emphasizes valuation discipline, avoiding hyped stocks like Nvidia despite strong fundamentals. He remains focused on companies with exceptional management and reinvestment opportunities, confident in long-term outperformance despite macro uncertainties and passive investing headwinds. |
| Oct 26 2023 | 2023 Q3 | AMZN, BRK-B, CPRT, CSGP, CSU.TO, GOOGL, HEI, LMN.TO, MSFT, TOI.TO | Long Term, Quality, software, technology, value | - | Seeking Winners outperformed in Q3 despite negative returns, maintaining a concentrated 10-position portfolio of quality businesses. Rising rates pressured growth names but the manager remains committed to the strategy, viewing potential recession as a buying opportunity. Strong year-to-date performance of 31% reflects the fund's focus on enduring quality companies. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q2 |
Vertical SoftwareThe fund emphasizes vertical market software companies as core holdings, believing they create enduring competitive advantages through embedded business processes. The emergence of Vertical AI represents an even grander market opportunity than legacy Vertical SaaS, with LLM-native companies achieving strong growth and margins while complementing rather than competing with existing solutions. |
SaaS AI Enterprise Software Recurring Revenue Moats |
AIAI is viewed as strengthening rather than undermining the best vertical market software businesses. Vertical AI applications are uniquely positioned to address high-cost, repetitive tasks in specialized sectors like legal, healthcare, and finance that were largely untouched by traditional vertical software. |
Vertical AI LLM Automation Enterprise Integration | |
Recurring RevenueThe fund structures its portfolio around recurring revenue business models, which enables confident forecasting of future free cash flow growth. This predictability allows for higher conviction position sizing in companies like Constellation Software, HEICO, and Gartner that generate resilient, recurring revenue streams. |
Subscription Predictability Cash Flow Resilience Visibility | |
| 2025 Q1 |
SoftwareThe portfolio is heavily concentrated in software companies, particularly those that acquire and develop smaller software businesses. The Constellation family operates as a highly efficient reinvestment engine leveraging VMS acquisitions with a decentralized M&A framework. Computer Modelling Group is positioned to benefit from the oil and gas industry's shift towards software solutions and is expanding into carbon capture and storage software markets. |
VMS Acquisitions Decentralized Simulation CCS |
AcquisitionsApproximately 75% of the portfolio consists of serial acquirers that purchase and develop small and medium enterprises. These companies use acquisition strategies to drive growth, with Brown & Brown completing 10 acquisitions in Q4 2024 adding $137M in annual revenue. The strategy focuses on acquiring smaller businesses that can be integrated and scaled effectively. |
Serial Acquirers SME Integration Roll-up M&A | |
InsuranceBrown & Brown operates as a diversified insurance agency and wholesale brokerage with strong fundamentals driven by recurring premiums and the essential nature of insurance. The insurance brokerage sector provides stability across economic cycles with ongoing technological advancements and regulatory changes fueling demand for distribution platforms and tech solutions. |
Brokerage Premiums Distribution Regulatory Technology | |
AerospaceHEICO stands out as one of the world's largest independent suppliers of FAA-approved engine and component parts, benefiting from increasing adoption of PMA parts driven by stricter FAA regulations and growing need for diversified parts sourcing for aging aircraft. The company reinvests operating cash flow into acquisitions with low capital expenditures as the key growth driver. |
PMA FAA Components Aging Aircraft Cash Flow | |
| 2024 Q4 |
AIThe manager acknowledges AI will fundamentally revolutionize numerous industries but maintains a cautious perspective on current AI-focused investments. They note the overwhelming market momentum concentrated in select AI stocks like Nvidia and express skepticism about long-term terminal values of AI ecosystem companies despite significant stock price appreciation. |
Artificial Intelligence Nvidia Semiconductors Technology Revolution |
Enterprise SoftwareGartner represents the core new holding as a dominant technology research and advisory company. The manager views enterprise software businesses favorably for their sticky recurring revenue, high margins, and recession-resistant characteristics. Gartner generates $5.1 billion in research revenue with 76% recurring. |
SaaS Recurring Revenue Technology Research Advisory Subscription | |
QualityThe investment philosophy centers on identifying high-quality businesses with consistent free cash flow generation, strong balance sheets, and aligned management. The manager prioritizes cash flow durability over valuation metrics and seeks companies with proven capital allocation expertise. |
Free Cash Flow Balance Sheet Management Durability Capital Allocation | |
| 2024 Q3 |
SoftwareThe fund acquired two software companies - Computer Modelling Group (CMG) and AppFolio - representing a strategic shift toward high-quality software businesses. CMG operates in a near-monopoly position in reservoir simulation software with 71% recurring revenue, while AppFolio dominates property management software with strong unit economics and margin expansion potential. |
SaaS Vertical Software Property Management Simulation Recurring Revenue |
Carbon CaptureCMG's expansion into carbon capture represents 22% of its business, positioned to benefit from global efforts to reduce carbon emissions. With 46 operational facilities and up to 500 in development, the carbon capture market is projected to reach nearly $10 billion by 2023. |
Energy Transition Environmental Services Climate Technology | |
Capital AllocationThe manager emphasizes investing alongside management teams who excel at capital allocation, particularly highlighting CMG's adoption of Constellation Software-style incentive packages tied to return on invested capital and growth. This alignment ensures management focuses on shareholder value creation. |
Management Incentives Return on Capital Shareholder Alignment | |
| 2024 Q2 |
AIThe manager views the current AI hype as reminiscent of the tech bubble, with companies trading at unsustainable valuations of 40 times sales. He criticizes the disconnect between inflated AI valuations and real-world performance, noting that insiders are selling while retail investors pile in at peak prices. |
Artificial Intelligence Valuations Bubble Tech Stocks Hype |
Convenience StoresThe convenience store industry demonstrates remarkable stability with 17 consecutive years of 4.4% annual sales growth pre-2019. The industry is highly fragmented with single-store operators dominating 60% of the market, leaving significant room for consolidation and growth for leaders like Couche-Tard. |
Retail Fragmentation Consolidation Stability Growth | |
GamblingEvolution AB dominates the global live casino market with superior user experience and operational efficiency. Despite regulatory concerns creating selling pressure from ESG funds, the company trades at attractive valuations with 15-20% organic growth and 70%+ EBIT margins. |
iGaming Live Casino Regulation ESG Margins | |
LogisticsOld Dominion Freight Line capitalizes on the rising trend of LTL shipping driven by e-commerce growth. The company's strategic advantages include an extensive hub-and-spoke network, customer-centric focus, and direct operational control that differentiates it from cost-cutting competitors. |
LTL E-commerce Network Transportation Efficiency | |
| 2024 Q1 |
AIManager expresses caution about AI hype, noting expensive development costs and unclear path to profitability outside of established players like Microsoft, Nvidia, and Amazon. Discusses concerns about speculative trading around AI and semiconductor stocks, with particular skepticism about Nvidia's revenue growth potentially being inflated through closed-loop investments in AI startups. |
Artificial Intelligence Semiconductors Speculation Nvidia Hype |
Capital MarketsDiscusses speculative trading behavior returning to markets in 2024, with traders crowding around Bitcoin and semiconductor stocks. Notes casino-like market behavior and warns against momentum trading strategies that require constant capital redeployment. |
Speculation Trading Momentum Casino Bitcoin | |
CryptoExpresses bewilderment at Bitcoin's 65% Q1 2024 gain despite Sam Bankman-Fried's conviction for stealing customer funds from FTX. Questions continued speculation in cryptocurrencies following high-profile fraud cases. |
Bitcoin FTX Fraud Speculation | |
| 2023 Q4 |
AIThe manager discusses Nvidia as the current hype stock in AI, acknowledging its real cash generation and expanding moat through unmatched GPU and Cuda software combination. However, he avoids the stock due to valuation concerns at 27x sales multiple, despite recognizing the company's strong fundamentals and growth prospects. |
Nvidia GPU Cuda Growth |
Passive InvestingThe manager notes passive investing continued strong performance in 2023 with increasing inflows due to active fund underperformance. He acknowledges the concentration risk in index returns driven by the Magnificent Seven but remains confident in his ability to outperform indexes over the long term through concentrated active management. |
ETFs Index Outperformance Active | |
ValuationThe letter emphasizes that price paid matters, citing the 86% decline in electric vehicle stocks and hyped software companies from peak valuations. The manager stresses avoiding ridiculous valuations while acknowledging some portfolio holdings may appear optically expensive, focusing on future cash flow generation relative to current price. |
Multiples Cash Flow Returns Risk | |
| 2023 Q3 |
QualityThe manager emphasizes owning enduring quality businesses and expresses satisfaction with the portfolio companies' quality. The strategy focuses on fractional ownership of great businesses, particularly when available at attractive valuations during potential recessions. |
Quality Enduring Great Businesses |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 6, 2025 | Fund Letters | Seeking Winners | CMG.TO | Computer Modelling Group Ltd | Software & Services | Application Software | Neutral | TSX | Carbon Capture Storage, cyclical industry, energy transition, M&A strategy, Oil and Gas Software, Position Sizing, Reservoir simulation, vertical software | Login |
| Jul 6, 2025 | Fund Letters | Seeking Winners | APPF | AppFolio Inc | Software & Services | Application Software | Bull | NASDAQ | AI integration, market consolidation, Property Management Software, real estate technology, recurring revenue, SaaS, value-added services, vertical software | Login |
| Jan 11, 2025 | Fund Letters | Seeking Winners | IT | Gartner, Inc. | Commercial & Professional Services | Research & Consulting Services | Bull | NYSE | Advisory, B2B Services, Digital transformation, Enterprise software, It consulting, Monopoly, recurring revenue, research, SaaS, technology | Login |
| Oct 3, 2024 | Fund Letters | Seeking Winners | CMG.TO | Computer Modelling Group Ltd. | Information Technology | Application Software | Bull | Toronto Stock Exchange | Canada, carbon capture, duopoly, energy technology, growth, Oil and Gas Software, recurring revenue, Reservoir simulation, SaaS | Login |
| Oct 3, 2024 | Fund Letters | Seeking Winners | APPF | AppFolio, Inc. | Information Technology | Application Software | Bull | NASDAQ | Fintech, growth, market share, property management, Real Estate Software, recurring revenue, SaaS, US, value-added services | Login |
| Jul 7, 2024 | Fund Letters | Seeking Winners | ATD.TO | Alimentation Couche-Tard Inc | Consumer Staples | Food & Staples Retailing | Bull | TSX | Circle K, convenience stores, Decentralized operations, Defensive growth, EV Resilient, Fragmented Industry, High ROCE, market consolidation, TSX Listed, Value | Login |
| Jul 7, 2024 | Fund Letters | Seeking Winners | ODFL | Old Dominion Freight Line Inc | Industrials | Road & Rail | Bull | NASDAQ | Customer service, Direct Control, double-digit growth, E-commerce Growth, Hub-and-Spoke Network, Ltl-Shipping, market share gains, operational excellence, Premium Operator, Technology investment | Login |
| Jul 7, 2024 | Fund Letters | Seeking Winners | EVVTY | Evolution AB | Communication Services | Interactive Media & Services | Bull | NASDAQ | B2B software, contrarian, ESG Selling, Gaming Technology, high margins, insider ownership, live casino, market leader, net cash, online gambling | Login |
| Apr 3, 2024 | Fund Letters | Seeking Winners | CSU.TO | Constellation Software Inc. | Information Technology | Systems Software | Bull | Toronto Stock Exchange | Acquisitions, Canada, cash flow, growth, organic growth, Software, technology, vertical market software | Login |
| Apr 3, 2024 | Fund Letters | Seeking Winners | TOI.TO | Topicus.com Inc. | Information Technology | Systems Software | Bull | Toronto Stock Exchange | Acquisitions, capital allocation, cash flow, Europe, Software, Special dividend, technology, vertical market software | Login |
| TICKER | COMMENTARY |
|---|---|
| CPRT | Currently, three companies in our portfolio, Copart, Gartner, and Computer Modelling Group, are undergoing significant stock price pullbacks. Despite these drawdowns, we decided against increasing our stakes in all three. We're content with our current investment levels in Copart and Gartner and believe they are well-positioned for the second half of 2025. |
| IT | Gartner's business model is a paragon of recurring revenue and financial stability. Its subscription structure, featuring multi-year contracts and upfront annual payments, provides exceptional revenue visibility. We believe Gartner is arguably the best public services business within the high-quality business services sector and is currently not getting enough attention due to government contract headwinds. |
| CMG.TO | Computer Modelling Group, a holding in the Fund that has been our largest performance detractor since acquisition. In hindsight, holding CMG at a 6% allocation was a mistake, primarily due to insufficient conviction on customer stickiness and uncertainty around inorganic growth pace. We should have waited to observe the new strategy's execution more fully before committing such a significant amount of capital. |
| BRO | The major news across our portfolio companies was the acquisition of Accession by Brown & Brown. |
| APPF | AppFolio's significant growth and market capture can be attributed to a disciplined multi-vector growth strategy expanding across asset types, company sizes, and wallet share. Their technical sophistication is considered multiples better than competitors, stemming from a product-led approach with significant R&D investment. At about 26x 2026 FCF, we think the setup is solid here for AppFolio moving forward. |
| HEI | HEICO operates in what we believe might be the second most attractive industry we've ever studied. They sell critical components to airlines with limited alternatives and extremely high switching costs. Once their products are on an airplane, HEICO benefits from selling recurring components for 25-30 years at very high margins, generating substantial cash flow. |
| CSU.TO | Consider excellent examples like Constellation Software, Topicus, HEICO & Gartner. As Joseph Shaposhnik highlighted, you have one of the greatest capital allocators of all time, still allocating capital to one of the attractive industries you can allocate capital to, which is software. These businesses generate a significant portion of their revenues from highly resilient, recurring streams. |
| TOI.TO | Consider excellent examples like Constellation Software, Topicus, HEICO & Gartner. These businesses generate a significant portion of their revenues from highly resilient, recurring streams. This resilience, even in uncertain economic environments, allows us to confidently predict future free cash flow growth, which, in turn, supports higher portfolio weightings. |
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