6/26/2026
The $6 Trillion Target: Masayoshi Son’s Unbelievable "Super AI" Promise
Happy Friday!
In this week’s letters,
– Baumann Capital on AI, meeting the company CEO and Aerospace
– Auxier Asset Management on defense spending, private equity, and AI
– Aoris International Fund on opportunities related to AI
– Elevator pitches for JDG LN, HTHT, and FTDR
Quarter in progress: 747 fund letters of 2026 Q1 are live on our database!
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Q1 2026 INVESTOR LETTER SUMMARIES
- Another nugget on AI: All of a sudden, terminal value risks matter again. Finally. I look forward to markets increasingly appreciating the AI durability of our businesses. Maybe one day, their likelihood of long-term survival will earn a premium multiple over riskier businesses. Hang tight, everyone. We should be well underway with our boring infrastructure names.
- A frequent question is: how do I get companies to talk to me? It is time to address it. Arguably, I lack the size of Fidelity, and IR teams may occasionally question the relevance of my fund building a position around their stock. That is, at least, until some IR teams read my letters, notice that I have done a little work, and start asking for readership numbers.
- Aerospace is a great place to compound. The aerospace opportunity sits somewhere else: in companies that manufacture jet engines, components, and systems, and then service everything forever. These businesses are mission-critical, deeply embedded, technically demanding, slow to change, and protected by barriers that will not be overcome by VCs, no matter how enthusiastic the colours in their pitch decks may be.
- Defense spending is on the rise. Geopolitical uncertainties over the last several years have led to steadily increasing defense budgets, particularly in the United States, where spending rose from $715 billion in 2020 to just under $850 billion in 2025.
- Risk is also growing in private equity and private capital. Private equity and private credit markets have expanded rapidly over the last decade and are now among the fastest-growing alternative asset classes. S&P Global estimated that private market assets under management totaled $15 trillion in 2024, up from $10.89 trillion in 2022.
- AI disruption fears have hit software companies hard. The Software as a Service industry was one of the hardest-hit areas of the market during the first quarter, as investors became increasingly uncertain about AI’s potential to disrupt and commoditize the industry while compressing profit margins.
- Depth is defence. In this context, AI is a source of opportunity. AI can add significant value to companies whose software and solutions are based on proprietary data and deep industry expertise. By contrast, businesses based on publicly available data or generic content are at risk.
- Great value creates happy customers who are not actively looking for cheaper alternatives. Businesses that have a history of aggressive price increases place themselves at a significant disadvantage when it comes to technological change. They often have unhappy customers who are desperate for an alternative.
- The advent of AI will damage and displace some existing software, data, and services businesses. The most vulnerable companies are those that are already competitively weak, have been slow to adapt to new technology and the changing needs of their customers, offer narrow and thin products, and provide poor value to their customers. We believe Microsoft, SAP, Experian, RELX, and Accenture all have strong competitive foundations today.
ELEVATOR PITCHES BY FUNDS
Judges Scientific (by Plural Investing)
- Judges Scientific is another great business that is recovering from a temporary slowdown. The company is a serial acquirer of niche scientific instrument businesses in the UK and has delivered 20% returns on incremental capital and similar shareholder returns for two decades.
- The stock trades at an optically high 25x EV/FCF as a result, but we believe that translates to just 13x underlying earnings power. We think Judges will continue making acquisitions at 20% returns, which when combined with an earnings rebound leads to an IRR well above 20%.
- We believe the rebound is now beginning and that Judges continues to have a long runway ahead of it.
H World (by Stewart Investors)
- H World is the second largest hotel chain in China. The company has emerged as a dominant force in China’s hotel industry, with a strong brand portfolio and deep operational expertise.
- These investments have helped it become a cost leader in the sector, while its membership programme has emerged as a key driver of organic traffic and customer retention. We believe H World has a long runway of growth as it taps into China’s rising domestic travel demand, urbanisation and upgraded consumer preferences.
- H World’s significantly larger economies of scale – and its pricing premium over the hotels in similar locations – should drive outsize drop off in the long run.
Frontdoor (by Curreen Capital)
- Frontdoor sells home service plans to homeowners. The company contracts with HVAC and other contractors and dispatches them when customers have problems with one of their major home appliances and systems (furnace, air conditioning, refrigerator, electrical system, etc)
- The company serves only 2% of U.S. homes, which suggests substantial runway for organic growth in a large addressable market.
- Frontdoor spun out of ServiceMaster in October 2018. Frontdoor serves about 2% of U.S. homes, and uses its free cash flow to grow organically, pay down debt, repurchase shares, and acquire complementary businesses.
HIGHLIGHT OF THIS WEEK
MEDIA APPEARANCES BY BSDs
Billionaire Philippe Laffont shares the one type of tech stock he’s loading up on
- Philippe Laffont isn’t too concerned about AI jitters percolating in the market recently, but he says he’s primarily focused on one specific area of the trade that offers best exposure at a better value.
- The billionaire founder of Coatue Management, a technology focused hedge fund, recently shared his take on the AI market with CNBC. Laffont revealed that he sees the most opportunity in the semi-cap corner of the tech sector, pointing to firms that provide critical components to chip fabrication plants.
SoftBank’s Son Sets Bold Net Asset Value Target on Promise of ‘Super AI’
- SoftBank Group founder Masayoshi Son wants to bring the tech conglomerate’s net asset value to $6.189 trillion over the next decade or so, setting a bold target built on the promise of artificial “superintelligence.”
- Speaking at an annual shareholder meeting in Tokyo on Wednesday, Son acknowledged the ambition of the 1,000 trillion yen goal but said SoftBank has consistently proven its ability to create value.
Citadel: the hedge fund that became an energy giant
- Although Citadel is mostly known for its huge bond market bets, skilled stock pickers and cunning arbitrage trades, its commodities business has become the hedge fund’s crown jewel over the past decade.
- And as Haynesville’s landscape of rigs shows, it has evolved from a primarily financial actor — buying and selling derivatives contracts on oil, gas, corn, gold or soyabeans — into a player in physical commodities and America’s vast energy market.
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