Happy Friday!
In this week’s letters,
– Vision Capital on software apocalypse and vibe coding
– White Falcon Capital Management on software that would survive the AI
– Zeno on Valuations, Brazil, and Argentina
– Elevator pitches for GM, TDW, and AMP
Quarter in progress: 736 fund letters of 2026 Q1 are live on our database!
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Q1 2026 INVESTOR LETTER SUMMARIES
- The market is pricing in a software apocalypse. We disagree. The SaaS selloff has been indiscriminate, driven by fears that AI will disrupt, displace, and ultimately replace software wholesale. The reality is far more nuanced. SaaS is heterogeneous, not homogeneous.
- The more important distinction is between deterministic and probabilistic systems. Precision-critical software, where “close enough” is simply unacceptable, will prove far more resilient. Vibe coding can ship prototypes, but it does not ship proven enterprise infrastructure.
- The kite is the stock price. The string is the fundamental. The wind is market sentiment. The child does not cut the string when the kite surges, and he does not yank it down either. He holds it with the quiet confidence of someone who understands that height without wind is not permanent.
White Falcon Capital Management
- At its core, software is simply a business process written into code. The real work begins after the product is built. A software company must convince a customer to trust it with an essential function. Once that trust is established, the customer must implement the system, tailor it to its specific needs, and train employees to use it effectively.
- Enterprise leaders tend to be inherently risk averse. A Chief Technology Officer’s mandate is first and foremost to ensure operational continuity. If existing software already works “well enough,” the upside of replacing it is small compared to the downside of breaking something mission critical.
- Because of these factors, the industry has trended toward a “winner takes most” structure, despite the existence of a plethora of competing products. Salesforce wins in CRM. Intuit wins in accounting and tax. Oracle and SAP dominate ERP systems, and so on. We do not believe that “more software,” whether from vibe coding or increased developer productivity, will meaningfully change this dynamic.
- Valuations across the continent had reached very low levels. Currencies had depreciated significantly, and the region had been lost in the fog of the AI frenzy, Liberation Day, geopolitical tensions, and local politics. There had also been clear capitulation by local investors after years of poor stock market performance and very high interest rates.
- It was against this backdrop that a select group of high-quality Brazilian companies, which we have known and invested in for many years, started to draw our attention. We also began spending more time on Argentina, where the reforms implemented by the newly elected government reminded us of what happened in Brazil in the early 1990s. Back then, Brazil transitioned from hyperinflation to a more normal economic environment while also liberalizing its economy.
- If Argentina succeeds in following a similar path, the process could create a very attractive setup for the country’s best companies and operators to thrive.
ELEVATOR PITCHES BY FUNDS
General Motors (by Ashva Capital)
- We like companies that repurchase shares when their stock trades below intrinsic value.
- General Motors (GM) is a good example. While investors have often focused on cyclical concerns around autos, EV uncertainty, and broader macro risks, GM has continued to generate substantial free cash flow and has used that cash flow to aggressively reduce its share coun
- t at what we believe are attractive valuations. When a company buys back stock below intrinsic value, remaining shareholders own a larger percentage of the business without having to invest an additional dollar. That is not financial engineering. That is disciplined capital allocation.
- Tidewater used its offshore supply vessel industry-leading balance sheet to make three acquisitions of assets from distressed and/or motivated sellers at deep discounts to replacement costs during a years-long industry depression, upgrading their fleet and footprint while generating synergies in the process.
- Tidewater has also been a leading performer during its multi-year holding period, despite oil having some years that were good (2022, 2026), some bad (2019-2020), and some in between.
- Tidewater’s strengthened competitive position and improved asset base position it well to benefit from increased offshore drilling activity as energy security becomes a higher priority globally.
Ameriprise Financial (by Gator Capital)
- Ameriprise Financial combines an independent advisory and brokerage platform with a captive asset manager and insurance/annuity operations.
- The company serves over 2 million individual, business, and institutional clients and, at year-end, had $1.7 trillion in assets on its platform.
- It is currently undervalued versus peers despite having one of the most compelling best-in-class growth stories in the wealth management space and a demonstrated commitment to returning capital to shareholders.
- Ameriprise has a history of strong free cash flow generation and has regularly returned over 80% of operating earnings to shareholders.
HIGHLIGHT OF THIS WEEK
MEDIA APPEARANCES BY BSDs
The Buffett Rule Investors Can Apply To The Next Wave Of Mega‑IPOs
- Retail investors are bracing for a wave of blockbuster IPOs — from SpaceX to OpenAI to Anthropic — with private‑market valuations stretching toward a trillion dollars. But Warren Buffett would tell them the same thing he’s said for decades: the moment of peak excitement is usually the worst time to buy.
- Buffett’s point wasn’t that every IPO is a bad investment. His concern was that IPOs tend to arrive when enthusiasm is at its highest and valuation discipline at its lowest — a dynamic that feels especially relevant today.
Ken Griffin’s talent machine is getting bigger
- Ken Griffin’s companies are making their biggest bet yet on entry-level talent, as Citadel interns kick off their program with an offsite in Palm Beach on Monday.
- They’re among the more than 350 interns at the company and its sister firm, market maker Citadel Securities, and comprise the biggest global class to date.
Workspace to raise rents as it seeks to fend off Boaz Weinstein
- Flexible office landlord Workspace will refurbish its buildings and raise rents as part of a plan to boost profits and fend off an activist campaign from Boaz Weinstein.
- The FTSE 250 company wants to achieve £125mn of trading profit before interest in the medium term, it said on Wednesday, a move that its chief executive said would rely on it being able to charge higher prices for its offices.
