If you're invested in a mature SAS

company trading in north of seven times

EV to sales, I think there's just a lot

of vulnerability there. And what we've

seen so far really is just multiple

compression, I don't think we've seen

disruption risk really priced in SAS

yet. If you're investing in a SAS

company that isn't somehow using AI to

make the product better,

uh I I would rethink the company

strategy. Buying SAS for us has been

part of a broader kind of barbell

strategy which is really pairing what we

think are AI winners with AI losers

quote unquote that are mislabeled as AI

losers.

>> Welcome to Monetary Matters. Today I'm

speaking with one of the best performing

independent equity research providers

and not just measured by a paper

portfolio or a few big calls but by an

audited real money portfolio. Paris

Research has compounded capital at over

30% since they began tracking their

portfolio in 2017. They're coming off

another great year in 2025, up over 52%.

I'm joined today by co-founder Dea

Paris. Thank you so much for joining me

today.

>> Very happy to be here. Thank you for the

introduction and I'm looking forward to

a good conversation.

>> Dea, one of the things I I like about

your research is the way you approach it

like a portfolio manager and that

includes writing quarterly letters. So,

you just released your Q4 2025 letter

and one of my favorite parts was the

section where you posed 10 questions for

2025. Some of them are big picture

questions, others are more idiosyncratic

relating to, you know, very specific

sectors and positions, but I want to

start off with one of the ones that I

think is is the biggest and super timely

for what's happening in the market right

now. and that's will businesses continue

to allocate the same percentage of spend

to software. Why do you think this is

such a key question for the market in

general but also for the companies that

that you guys are invested in and

researching?

>> Yeah. So, uh we did list those

questions. They were meant to be

provocative. Uh there there's you know

there's a good amount of uncertainty no

matter how uh concrete your

understanding is of each and that the

software question is one of them. You

know are businesses going to continue to

spend the same roughly the same

percentage of their budget on software

and you've seen a significant amount of

market movement. There's been the SAS

apocalypse dubbed the SAS apocalypse. I

think that's a bit dramatic given the

movement so far. most SAS SAS type

companies are down about 10 to 50% year

to date. Um but there are a lot of

questions for software investors that

they haven't had to ask before like it

used to be the case you know analyzing

SAS business is one of the easiest

businesses you can analyze. You find a

company uh it's led by you know led by

founder product visionary uh you

understand the product you understand

the total addressable market uh yeah

there's some calculations around uh CAC

and LTV uh but after that you kind of

you you kind of have it all mapped out

you understand how they're going to grow

it's a capital light business model and

there's the the rule of 40 where a

company's growing a certain percentage

and if they have the margins to match it

you're kind kind of done. You can go to

the beach and watch this thing compound

for a while. Uh but now uh SAS investors

are having to start ask new questions

about you know disruption and um claude

and this year especially uh uh clog

which is anthropics coding AI at least

perception wise has seen a huge step

function improvement and the marginal

cost of producing software is rapidly

decreasing. It used to be that to build

a good SAS uh product, it took about

seven years, seven, eight years or so.

And if that time has been reduced to 6

months or less, then you start to have I

mean there's a whole a bunch of

questions about potential entrance and

how do SAS companies perform in an AI

native world and the market doesn't seem

to be doing a lot of discerning. We like

um

we like areas where it seems like the

market's confused. Uh it's not really

discerning enterprise SAS from uh

mid-market SAS from consumer SAS,

horizontal from vertical. There's

there's no sense of discernment at all.

It's just, you know, everything's

selling off. And that's the type of uh

environment that we think uh at least

for an active uh equity

uh analyst like ourselves, you can

develop a differentiated perspective and

um and if your differentiated

perspective is correct, there's that

opportunity to produce uh alpha and we

you know we can get on all the issues in

some of the software space but just

broad picture that's why we think it's

interesting. But this is a case where

you have a sector that has been sold off

tremendously. I mean we could go through

some of the battleground names out there

like Salesforce, HubSpot, like these are

the types of companies that are you know

off I think many of them over 50% from

their highs and there are people out

there who are just kind of buying

blindly betting on this mean reversion.

How do you you know specifically because

I know you guys are are are long in your

portfolio. How do you make sure you're

not just being a mean reversionist and

you're you're really trying to get into

the questions around does this company

have advantage in distribution? Does

this company what is sticky about this?

This is why we think there's going to be

uh uh sizable opportunities in the

software space because I don't think uh

the market is nuanced in oh like is

enterprise SAS just as disruptable as

some sort of consumer SAS and we don't

think so. We think for many of the

reasons you've said I mean enterprise

SAS uh um there's a lot more bells and

whistles to it. You know, companies care

about uh compliance, companies care

about securities, companies care about,

you know, workflows across departments.

Uh and u enterprise needs the confidence

of having a big time a big team behind

some of the key uh software that they

utilize. But that doesn't also mean that

the pricing isn't going to change. Uh

SAS, enterprise SAS typically works on a

per seat model. um you could see that

transitioning to a usagebased or

contract negotiation start to look

slightly different which is al which

could also disrupt growth. So even if

you're confident about the product you

know you got to think about the pricing

a little bit. Uh you talked about mean

reversion and uh yeah in our letter we

did critique kind of lazy type of value

investing. We we call it mechanical

value investing where uh you're looking

at companies that have just sold off low

PE and you're saying you know there's

usually some sort of uh problems. Um and

you're saying that well look you know

when the company turns around a lot of

this pessimism is extrapolated and

definitely going forward. Uh the market

tends to be overly pessimistic when

there's bad news and when there's when

the company starts to turn and there's a

little bit of good news we'll get a

reperic and uh we'll enjoy some alpha

that way. I mean that type of mean

version could work in certain

environments that are relatively

stationary.

Um but when you have environments like

the one that we believe we're in today

that there's uh there's a lot of

structural change um in many different

areas that we can get into, you have to

be very very careful about thinking that

things are going to go back to the way

they were. Um or we can just bet that

this temporary problem this company's

experiencing is going to be fixed. uh

that lazy type analysis doesn't work and

you have to have concrete justifications

why problems are going to be fixed or

problems are temporary uh and you really

have to anticipate what the future

contours of that business are going to

look like. So it so our whole investment

philosophy is about leaning into

prediction. Um and obviously you have to

understand the historical financials and

u you know just how the psych you know

is it a cycl type business ecosystem and

so on but you have to put everything

together in a forward-looking view. It's

not enough to just look at past trends

and expect them continue or expect them

to reverse there. that lazy type of

thinking uh is completely decimated and

you have to really be concrete in how

you're thinking about the future. So

when you look at, you know, the hundreds

of SAS names that are out there that are

that are down tremendously, what are

some of the the larger companies that

you look at and you say, "Yeah, I think

the market has this right. This business

is in trouble." Uh whether it's its

pricing as you said or the actual

product itself is is going to fall out

of favor as new entrance either pop up

or already have. If you look at the SAS

complex right now, it's still in in my

opinion and we tend to be more price

sensitive than others. Uh it's still

very overpriced. If you look at

companies like Salesforce, Adobe,

Autodesk, Service Now, and you just look

at median valuations as a whole, EV to

forward sales are still six to seven

times, which is expensive. We start

getting interested in SAS companies when

they're trading below five times EV to

sales. So despite the underperformance

of SAS last year, despite uh SAS

companies being down 10 to 15% this

year, we still think they're overvalued

and uh there's another I mean I mean if

you're invested in mature SAS company

trading at north of seven times EB

sales, I think there's just a lot of

vulnerability there and what we've seen

so far really is just multiple

compression. I don't think we've seen

disruption risk really priced in SAS

yet. So when you're saying multiple

compression that enterprise value to

sales, you're saying enterprise values

have come down. We haven't even really

seen the sales the denominator really

get hit. Have the concerns that people

have been talking about with disruption

to sales shown up in in that denominator

really at all in the industry.

>> You've seen some sales slow down

slightly with some, you know, horizontal

type SAS. uh it it appears that

companies are just a bit more cautious

about uh about SAS spend. So if it comes

to maybe a new SAS product or something

like that, it's like okay, how many

people do we actually need using this

product? Uh does a SAS pricing model

make sense? Um let's just be a little

bit more cautious. And that is that that

has translated in the sales figures of

some companies. So you've seen a slight

slowdown in kind of sales growth. Um, so

a lot of some of those companies have

come down as a result of that sales

growth, but given the disruption risk

that I'm referring to we haven't really

seen that much of that yet. So I think

that the um most of the complex is still

trading too rich and we're going to see

it uh generally start to come down. What

are the parts of the complex that you do

like that you believe we are going to

see the same allocation of spend to um

or or even growth in spend?

>> We think that uh more vertical type

software uh that really understands

their niche is probably better protect

protected than something that's more

horizontal. We think enterprise SAS is

more protected.

um you know so but apart from that just

very broad uh just those very broad

guidelines it's very very nuanced and if

you're investing in a SAS company that

isn't somehow using AI to make the

product better

uh I I would rethink the company

strategy almost most companies we look

at are either trying to move up to

enterprise if uh because it you know

it's stickier there's been some softness

in uh kind of small medium business

space and they're using AI somehow to

make their product better or at least

they're trying. Uh a lot of them are

going to fail at it, but there it does

certainly appear to be that sense of

urgency in that in the SAS world.

>> Okay. And the way you construct your

portfolio is you have your core

positions which are about 5 to 15% each.

You have starter positions in the 3%

range and then you have your more

speculative trades in the 1% range. Have

any SAS names made it into any of those

buckets that we could talk about today?

>> Buying SAS for us has been part of a

broader kind of barbell strategy which

is really pairing what we think are AI

winners with uh

AI losers quote uh quote unquote that

are that are mislabeled as AI losers. So

they're not really AI losers, but the

market the perception seems to think so.

Sam Rush is a company we invested in

about four months ago. They originally

were known uh as an SEO provider for uh

small medium businesses and they

expanded that product suite uh and they

moved up in enterprise and they started

solving problem for enterprise customers

which is uh hey how am I showing up in

different LLMs? It wasn't just about

keywords anymore. If I'm if I'm ranked

high if somebody searches some keyword

am I ranked high in that list? It's more

about hey are what are customers asking

in LLM's and and how what are what are

LLM saying which is which is becoming a

more and more important topic. So they

were making uh large investments in this

area and it was about 10 to 15% of

revenues and that that part of their

business was growing uh about 30 to 40%

or so. So they had an AI solution, they

had traction,

they have a very large installed base of

enterprise customers which are going to

continue to penetrate. So the story for

us was that oh the market seems to think

that this company is an AI loser because

maybe companies are going to start

spending less on SEO and more on uh more

on LLM type commercial searches. But it

was very very clear to us that this

company's moving in the right direction

and they end up getting acquired by

Adobe to bolster their AI solutions. So

that that was a great example of a

company that was mislabeled as an AI

loser. So that's what we're one of our

prime areas of focus is trying to find

those types of companies.

>> So you mentioned in this mean version

section that there are structural

changes underfoot. I mean, we've talked

about one of them, which is AI and the

way that that companies are looking for

AI solutions and and changing, you know,

with the SEO as an example. Um, changing

what they're focused on. What are the

other structural changes that you are

really focused on that you think if

investors are not paying attention to,

they're going to have a really hard time

in 2026?

just general consumer behavior uh

enterprise behavior around AI, how are

enterprises using AI, how is that going

to change, uh their uh relationship to

labor moving forward and which areas of

uh which areas of labor are more

affected than others. Uh right now it

seems to be that white collar slowed,

entry level positions that can be

automated away are uh seeing trouble. um

consumers uh how are consumers going to

uh shop for things? How is that going to

change? I mean, the big question on

everybody's mind right now is commercial

intent and LLM. Exactly how that's going

to move over. Uh there's been a lot of

chatter about, oh, oh, OpenAI is going

to start putting uh you know, these buy

now buttons on these searches, but then

it's like, well, wait a minute. know, is

it true that consumers just want to type

a question in and have one product show

up and then purchase it? Or do they

still want the whole uh carousel of

choice that they, you know, or images

they can scroll through from something

like Google search uh to make purchasing

decisions. And if that's true, then

maybe we're back to the same kind of

Google search interface. So, uh I think

there's just a lot of questions about

how uh you know, how consumers going to

shop online. I think there's a lot of

questions about how their consumers are

going to uh consume entertainment

in an uh in an AI world like what what

the entertainment consumption is going

to look like social media how businesses

are paying for ads h how uh just how

many iterations can you know if you're

paying for an ad on meta and um just how

good those ads iterations are given

they're AI driven given that uh the

content generation can be so quick and

the iterations uh you know continue to

just in real time improve uh improve the

level of engagement.

>> There's a big regulatory component to

that too. I don't know if you saw that

study from I think it was NYU where they

said AI generated ads were you know

obviously more effective than both AI

plus human and human only generated ads.

But then all of that outperformance went

away and it actually went negative if

they had to disclose that the ad was

generated by AI. Okay, great. We have

all these AI ads. They're more

effective, but you have to put a little

sticker in the bottom that says this is

AI. Like it really affects the the

person's perception. So it's it's not

just does the technology work. It's are

the regulators going to let these

companies run wild or are there going to

be more guard rails

>> which I assume is going to follow its

regular pattern of being significantly

late. uh the space is just moving so

fast. I think the regulators are are

going to be so behind. I mean, we're

still talking about crypto regulation

today. Uh so um yeah, I agree there's

that perception of it. And then what

exactly is uh something created by AI?

What if there's a human element plus an

AI? Does that constitute is AI

generated? But yeah, I agree. There's

this perception of if it's AI created,

then it's kind of slop and well then,

you know, I don't I don't want to see

something that's totally commoditized.

Uh but then again if they don't have to

disclose that then you know the the uh

consumer is not going to be able to tell

the difference. Again the space is

evolving very fast. We have we don't

know exactly how this is going to

develop but these all these thought

experiments are interesting because at

least it keeps you uh flexible as the

you know as things continue to evolve.

>> What are some of the thought experiments

where you do have a house view at this

point? You've looked at this question,

you've asked it, and you think at this

point, obviously facts can change,

anything can change in a in a second,

but you do have a view for how this

question is going to to shape up over

the next year.

>> SEO like marketing a business spending

its marketing dollars on SEO, we think

that's going to be challenged for a

number of reasons. Uh primarily the

commercial search intent moving over to

LLM. Uh right now Open AI handles about

uh a trillion uh prompts a year versus

uh Google's 5 trillion or so. So it just

goes to show you just how

uh just the level of engagement and

attention uh that uh consumers are

investing in in LLM.

>> A first order thinking I would hear less

spend on SEO and I would think that's

going to hurt Google's ad business. But

at the same time, they're one of the

leaders in AI and they're making they

have their own um the TPUs, not the not

the GPUs.

>> So how does a view like that translate

into portfolio decisions?

>> You have to get down to the nuance a

little bit. You have to understand that

yes there is this trend that okay a lot

of consumers are on uh uh LLM's and what

exact like is the nature of what they're

searching on LLM structurally different

from what you know uh from Google

searches for instance and the answer

turns to be turns out to be yes

commercial search intent is still the

domain of Google usually if somebody has

a commercial search intent they're going

to Google first if they're if they're

looking for something more instructional

or more knowledgebased they're going to

lo And hence Google has uh has adapted

right you've seen anytime anybody

searches something Google they see the a

AI powered search answer uh and that but

that if you're an advertiser that maybe

that was part of your keyword well all

of a sudden that reduces clickthrough

rates because people as soon as they see

that AI answer they don't go through and

click through links which is bad for you

as a potential advertiser for that

keyword. So it turns out uh that in

certain areas it has greatly affected

traffic for some businesses and certain

areas not so much. So really

understanding that what types of

businesses uh are still uh going to be

able to advertise and see an ROI from

that and which types of businesses are

going to have to think of another

strategy because for for most businesses

they could just spend money on Google

ads and then just go away. It didn't

really have to be much very

sophisticated beyond that. But now

you're starting they're starting to have

to get more nuanced. Uh social is more

and more uh uh going to absorb some of

that spend. That's why we think the

penetration rate of social as far as the

overall ad spend is going to continue to

increase and that's something that we

think is concrete and is uh you know is

backed up by the way the data is moving

just more of the ad spend pie is going

to go towards social. Uh so that's kind

of a a trend that we would be a we would

be willing to bet on. So we our

prediction in some sense is that is that

uh social the the amount of spend going

social is going to increase and

companies that are situated within that

should see a tailwind benefit. Uh and

that's when we think about prediction

that's kind of our our flavor of

prediction. That's how we do it. It's

grounded in evidence. It's grounded in

not only anecdotal but you're marrying

the anecdotal with quantitative. you

have conviction in a trend and then

you're looking for companies that can

benefit from that.

>> What about the the types of products or

services that are not going to be or are

not currently being disrupted as much?

Um, is it high-end goods? Is it low-end

goods? Are these things where people are

searching for brand names and not a

product type? Like what are the types of

businesses that are not seeing that

click-through hurt as much?

businesses that I think that have spent

just more time uh and energy on their uh

keywords that have more of uh more of a

a PR presence as well. So given whatever

somebody searches on uh on Google,

they're they seem to be coming up a lot

more in the blue links. So, it's

companies that are larger that have

invested a lot of money and spend in

building out this uh SEO infrastructure.

Uh I think smaller companies are the

ones that are hurt from a lot of this

because they don't have the

sophistication or the spending dollars

to consistently rank with all these

keywords.

>> That's interesting to me because and I

you have small companies in your

portfolio, you have large companies in

your portfolio. In your latest research

email, you had, you know, a a massive

massive company and a couple of

subbillion dollar companies, but you did

have a really interesting appendix in

your letter talking about the number of

multibaggers in 2025 and just how big a

year it was for small companies. So,

it's interesting to me that you think

these small companies are going to be

hurt, but I see them in your portfolio

and clearly that's one of the things

that worked a lot last year. How do you

square this concern for the smaller

businesses with the fact that that's

what's working in the market?

>> For most of the small companies that we

invested in that we've seen outsized

returns in, those have not been product

oriented. It's been a result of uh large

uh data center type spends, companies

that are almost small industrials that

have pivoted uh you know smaller

companies by their nature are there's

just less you know inertia there. So

they they're able to pivot quicker than

larger companies to take advantage of

certain opportunities. Uh so it's been

company, you know, smaller type

industrial companies that have pivoted

towards these large trends and seeing an

influx uh in demand. Uh and Capstone is

one of these one of these companies that

we invested in last year. Uh they're a

maker of microturbans

and they're one of the dominant

manufacturer of uh gas power natural gas

powered microtur.

And this is a company that merged from

the industry last year. uh had new

management. They're really just like a

kind of a large assembler and they have

about a couple thousand vendors and they

went through every single vendor

relationship and try to you know

rationalize spend uh along with

rationalizing their pricing and that

went a long way to achieving their kind

of first quarter of uh profitability.

And it turns out they have a a perfect

type of product for data centers that

are looking for off-grid solutions.

Everybody knows about the strain power

grid. Everybody understands that data

center uh energy uh usage is going to

continue to increase. It's continue to

make a a bigger percentage of that

energy consumption and a lot of the

alternative energy providers are going

to benefit from that because the grid

isn't going to be able to do it itself.

So off-grid solutions like microurbons

uh can pivot towards this vertical and

enjoy uh you know enhanced revenue

growth. So that that was something. So

that that's really a just hey find the

right company and get there early type

story.

>> It's relatively small still even after

the tremendous year it had in uh 2025.

So what is your process like for

uncovering these smaller companies

>> you're already looking for the

companies. So uh it's like hey uh the

the over the overarching thesis is quite

clear. Hey, off-grid solutions are going

to become more and more important.

Alternative energy providers.

Find ones that are pivoting that have

the right leadership and cost structure

and so on where the pivot makes sense

and they're or ideally they're already

getting some sort of traction. We don't

like to uh like turnarounds or even

companies that have pivoted where they

have not seen traction yet. It's a it's

still a bit too nebulous for us. we like

to see some sort of traction before uh

we enter a position and we start getting

really excited about something when

we're the first ones to be talking about

it or thinking about it. Uh and if

you're first, there's going to be a

turning over. If you're correct about

your thesis, there's going to be a

turning over investor base. There's

there's going to be a very long rerating

cycle. And there's no better feeling

than being at the at the very beginning

of that wave. Uh it's it's unbelievable.

>> What does the beginning of the wave look

like? You talk about traction. What are

the types of things you like to see in a

company? It does it have to show up in

earnings or can it be press releases

about deals being signed that you know

are not going to show up in the

financials until quarters down the line?

>> It goes back to something that we think

about uh like what it's what we call

motor investing. We're looking for

companies where the motor of the company

is getting stronger. And what that means

is it's kind of like uh the potential

energy is getting stronger but but it

hasn't yet translated to kinetic energy.

It's almost like if you envision the

pulling back of a bow so to speak. It's

like there's more and more and more

potential but there it hasn't really

like it's it hasn't the income statement

yet or hasn't hit the revenue growth

yet. And that's what we really really

like to see.

>> Okay. Well, sometimes the bow snaps. How

how do you uh how do you manage risk?

How do you deal with hey there's a lot

of potential energy building here and

you know what somebody else took it all

they are the big winner this isn't the

winner

>> the most important part is having a

belief system that is dynamic and that

updates on the face of information and

you have to be very uh you know

attracted to disisconfirming evidence

and you continually be testing your

thesis and if new information emerges

that contradicts that you better pay

attention to it and ask

So, uh it's really about like you have a

belief, it's updated, it's it's fluid

based on new information and you have to

you have to rely on your own ability to

kind of update your uh your evolving

conceptualization of where you think

this business is headed for the like you

said, yeah, things go ary uh let's say

Capstone. If this is a company that's

already been bit up quite a bit for a

lot of fundamental reasons, uh they've

achieved profitability.

They've uh they've rationalized pricing.

So revenue growth has uh proceeded in

line there. The valuation right now is

starting to get a little rich if they

don't sign some uh uh some of these

larger customers that we're talking

about. So if it's you're also looking at

valuations too, right? So if let's say

valuations keep going up and up and up

and then uh they haven't really made any

more headway to the uh to adopting some

of these data center customers. Well

then that's a position we're going to be

looking to trim or to get out of or uh

or whatnot. We we don't think that's

going to we do think they are going to

uh those plans are going to come to

fruition. But yeah, it's a calculus.

You're balancing uh updating beliefs

with valuation

uh and and you're combining that all

together. uh to make real-time

decisions.

>> And I can tell from reading your letter,

it's definitely not 100% price based.

Like there some investors who say

position pulls back this amount like

we're done with it. You know, there was

a name uh that you wrote about in your

letter that, you know, has maintained

its its position in the portfolio coming

into 2026 despite, you know, a pretty

sizable draw down. So, you know, I think

everybody has had a stock that they were

confident on pull back in a way that

they weren't expecting, especially when

you love the fundamental thesis and the

market just doesn't agree. How do you

decide between being wrong and and

sticking with your guns um in in a name

that that pulls back a considerable

amount?

>> Remittly is a good example of this

because it's been our biggest position.

Well, it's alternated one and two for

quite some time and it's been a position

where we're probably a little early in

the name around 2023

when it was trading north of five times

sales and the whole thesis was quite

simple. Uh, remitt is a crossber

remittance provider. So, uh, you know,

think of migrants uh, you know, for

example, come to United States who send

money uh, back home. So, it it provides

a digital solution. It's a best-in-class

digital solution. It's a founder

company, Capital Light. Uh its main

competitors are dinosaurs like Western

Union and Moneygram. So, they're very

quickly taking share uh from these

players along with a very broad and this

goes back to kind of prediction uh what

we're talking about like really

understanding these broad-based trends

and having a lot of conviction on them.

The the other part of the the trend is

that okay well uh there's going to be a

lot of cash moving to digital. Um so in

the past when migrants would send cash

home to friends and family now they're

using a digital means send money home

like mobile. So clearly the you know the

best-in-class mobile player is going to

be a beneficiary of that. Add to that

the uh the developed world is aging

quite rapidly. Um birth rates are not

keeping up with replacement. If you look

at places like Italy, places like

Germany, uh Japan, uh those the median

ages are getting close to 50. Uh the

median age of those uh countries. The

US, I think the median age is something

like 39. Uh which is still uh you know,

which is still getting up there. US is

one of the few developed nations that is

keeping up birth rates are keeping up

the replacement. But you're having you

have the situation where the developed

world regardless of the national

populist rheto rhetoric uh that is going

around the globe right now they're going

to need migrants to plug those uh

population gaps

and because of that that is a trend that

is going to continue and again if you're

a crossber remittance provider you have

the best supplies digital solution you

are going to benefit from that trend.

Um, so what happened with remitt is we

ended up being completely right on the

fundamentals since we've invested in the

company. They've grown revenue at 30%

plus the entire time. The stock

unfortunately has just continued to sell

off stock and we're down uh as last year

down quite considerably on the name. Uh

currently we think it's trading at an

unbelievably attractive valuation. We

believe that the company's going to be

multibagger. uh you just this is a

situation where the price is moving one

way and the fundamentals are agreeing

with you and you just have to you have

to just keep adding unless you see

something some disisconfirming evidence

that it's going to prevent you from

doing so but you just have to keep

adding to the position. Uh again like

you have to be paranoid you have to

retest your thesis. Uh you know am I

wrong? Could I could I miss something?

Is there a potential terminal value risk

that I'm not thinking of with stable

coins or something like that or

whatever? And then you retest that

thesis and then after you think about it

in an objective way, then you go back

and you say, "No, I don't think that's

true. I'm I'm going to continue adding."

Um,

>> are they utilizing stable coins at all?

>> Uh, they're util utiliz they're uh

talking about utilizing stable coins in

a treasury function. Uh, not to help

directly with consumer transfers. Um so

yeah in a treasury function only stable

coin right now it's it's mainly a crypto

phenomenon. We uh we are very convicted

against stable coin kind of disruption

disrupting the normal kind of flows of

money given that uh you know people in

their local economies spend money in

fiat unless that changes unless uh

somebody in their local economy is going

down to the vendor and playing with in

some sort of crypto uh it's very

unlikely for us to see uh you know

stable coins as a disruptor of normal

commerce.

>> What about remittance? I mean it's one

of the main if you talk to any crypto

bullet it's far and away like one of the

main success stories that they like to

talk about because people always say

like what is the real world use case of

crypto and and that's probably the

number one that I have seen cited is is

remittance payments crossber transfers

is that actually showing up is it taking

share and you know we we talked about

wanting to see yes maybe these companies

are AI losers but they're making shifts

to address that in inside of their

companies and and I kind of see stable

coins in a in a similar in a similar

vein. Why aren't you concerned about

stable coins with remitt?

>> So that phenomena that you're describing

is completely non-existent as in in very

in very specific situations where you

have uh like maybe some African

countries where you have a total banking

system collapse. uh they're sending

money through uh cryptos, but the

they're uh it's these are definitely

exceptional cases. So the idea that uh

stablecoin is going to and I get why

people think that it's like oh you send

stable coin it's going to be a lot

cheaper than remittance or whatever but

turns out remittances are already uh

have come down uh you know like from

maybe about 10 years ago 80 90% as far

as cost goes. Uh so remittances uh you

know it's one two percent to send money

across borders. Um so the you just

haven't seen that in the data at all. Um

and and again going back to the main

uh explanation why I don't think you'll

see that is because when somebody's

sending money back home to their friends

and family, you know, a migrant is

sending money back home to friends and

family. They're sending them money that

they're going to need to use for to

purchase food, rent, utilities, what

have you. And that food run utilities is

spent. They're paying for that in their

local currency. So they want local

currency and they're going to use that

to spend local currency. And as long as

it's being done in a very very efficient

way, lightning fast, and the cost is uh

very very low, uh I don't see how stable

coins is going to be disruptor of that.

again

like um you know we're big on

you know our industry is funny because

uh you know clearly you have to kind of

sound like you you know you're confident

about your ideas and so on and you've

done your work in um and we are but that

is not without us always maintaining

some small reservoir of doubt in all our

decision making I mean uh it's just part

of being a good thinker is you have to

you have to maintain a bit of doubt with

everything especially since we're

talking about the future right uh so if

I see evidence contradicting that view

which currently there's absolutely none

uh then yeah I'll you know we'll revisit

figure out well why is this happening in

this area and maybe uh stable coins are

going to increase penetration overall

remittances and uh the thesis is broken

uh but you know that's certainly not

something we're seeing

>> and the other side is the person

receiving the remittance payment is

usually an older person

>> yes

>> so it's going to somebody who is maybe

not as familiar with crypto. And so

you're going to have to see some

improvement in the in the UX and the

infrastructure for these consumer-based

crypto apps if you want uh I I used to

have to travel to Puerto Rico a lot for

work and I like to call it a island uh

because it's it's interesting being a US

territory and that there's free

migration between the mainland United

States and Puerto Rico. So, anybody who

wants to come here, if they can afford

uh a plane ticket and they can afford

rent and find a place to live, can come

here. And so, you're talking about

median age being about 39. I know in

Puerto Rico it's about 45. Every time I

would be on the plane, I'd be sitting

next to either somebody, it was an old

person who was visiting their younger

family who had moved to the US or it was

a younger person who was coming back to

visit their older family who had

remained on the island. And um you know

you know these are people who are flying

many times for the first time in their

lives. Like I can't imagine them like

opening a crypto app to uh convert their

stable coins into dollars. And you know

there's not the local currency problem

because again it's Puerto Rico. It's

it's a US uh US territory and so they

they use dollars there. But um

>> just just very interesting to to see

because I think it is like a perfect

microcosm of the migration trend because

of the lack of barriers completely to to

what we see from other countries.

>> Yeah. And if you look at Puerto Rico

especially, that island has seen

significant population decline since

Maria. Uh I mean I think there's like

something like three three million or so

Puerto Ricans in New York. I know

economists have dubbed this a brain

drain where any young person with any

sort of agency is gonna go to where

there's more opportunity especi

especially if it's frictionless to do

that. So I I think that's important is

you're understanding that customers

these are migrants. They're not your

typical uh develop nation wellbanked

type customers. And this is another

reason why uh when I talk to people

they're like oh why don't they just do x

y and z and we'll be a lot better

cheaper. I'm like, well, you have to

understand that how migrants send money

uh you know which products and services

they trust

and uh a lot of that community work uh

is through word of mouth as well. So

it's unlikely after you've already

entrenched yourself in that in that

community to be easily disrupted just

because of the nuances of uh you know

just migrate type culture. Now you

mentioned that you are are very much

bottom up when it comes to the the

companies you invest in. A couple of

those 10 questions that you asked are

have big macro implications. When you

think about these questions, is it in a

macro through a macro lens and how

they're going to affect a broader

economy or are you looking for

companies that are directly affected by

that particular trend?

>> It's a bit of both. And uh like as far

as some of the macro trends we talked

about, what one of the trends that I

think is has not talked about enough is

the rebalancing in consumer in just

general consumer spend versus

uh 2020. Uh you know, and I I think that

uh one of the things that makes you a

good equity analyst is you have to be

somewhat of a social scientist. like you

you have to be observing the behavior of

others and saying, "Oh, is this behavior

a and observing your own behavior?" I

know we all like to think we're special,

different, but understanding that which

parts of my behavior uh are maybe not so

intentional and are are really scaling

every like people are doing this

everywhere. Like I noticed the other day

I was on uh Uber and I was I I ordered

uh Uber Eats and I I think I got an Uber

one uh subscription or something and I

noticed I'm spending a lot more just on

Uber with Eat, you know, eats. And then

I look at go through Uber's uh

transcripts and they're like, "Oh, Uber

1 customers spend, you know, two or

three times as much as your your normal

uh Uber customer." like oh well that you

know anecdotally that that immediately

gives that quantitative data just a

little bit more conviction given that I

I understand it at an anecdotal level.

Uh but as far as uh a broad macro trend

there's been a rebalancing consumer

spend you've seen wages have increased

cumulatively since uh over the last 5

years since the end of 2020 about 26%.

And there's been a lot of essential

categories that have outstripped wage

growth. When you're talking about health

care, vehicle insurance, uh shelter, uh

electricity, all all those uh categories

have increased 30 to 40%. I was pointing

the data here. Motor vehicle insurance

is up 63%. Uh electricity 38%. Meats,

poultry, fish, and eggs 31%. Again, this

is cumulative increase over the last 5

years relative to wages. So you've seen

a lot of these essential categories

outstrip uh wage growth which means

there's less discretionary capacity than

uh other cycles. So there's been a

rebalancing in consumer spend. Uh so if

you're looking at a a discretionary

category and you're saying to yourself,

well is this are the levels of volumes

going to get back to 2020? Uh as a

category probably not. uh but maybe

there's individual companies that uh

that are going to continue to do quite

well, but it's not going to be a

category argument. It's going to be a

more a share taking thesis at that

point. So that that's that that's kind

of uh I think that's a macro uh

structural macro change that I don't

think is talked about a lot and it get

gets back to the house housing uh buying

as well. Like if you is is is are is the

level of housing activity can you get

back to 2018? Well, 2018 tenure was

about uh 2.5 or so. Now the tenure is

about 4.25. It has come down uh quite a

bit. But even if it does come down 2018

levels after we get a a doubish bed

share that, you know turns on

quantitative easing uh or or a

significant amount of quantitative

easing gets there. Uh you know home

insurance, HOA fees, a lot of those have

outstripped wage growth. Uh again the

price of homes are up up about 40%

cumulatively which leaves you know

consumers have to put a lot more down

for the down payment. Uh obviously

consumer balance sheets have gotten a

little better since uh 2000 the end of

2020 but that tends to be lopsided into

uh you know higher net worth uh type

households. So, it's uh my guess would

be that no, the activity doesn't return

to 2018 levels, even though you're

starting to see like a lot of these like

rocket mortgage type companies trading I

I think very healthy valuations

expecting that same amount of activity

to return.

And I would bet well I mean just

psychologically I would bet against it

but you know we don't short positions

but it just seems to me that given this

rebalancing in spend that it's unlikely

that you're going to see that uh level

of housing activity given where uh

prices are at.

>> You're preaching to the choir. I'm a I

am a home h housing market volume bear

as well. I just don't I don't see how we

>> how we get back to those to those levels

either. Um, as far as the the consumer

trends that you were talking about,

>> what are the types of companies that you

think are going to um that are going to

take share? You said you don't think

it's going to be category.

>> I would not make a bet on a

discretionary category getting back to

former glory. That being said, we do

invest in some uh consumer discretionary

names. One of them uh is Doc Martens.

We've invested in quite some time. It's

been roughly flat. They've been growing

revenues mainly through pricing volumes

are slightly down. Uh

but our conviction in the uh in their

brand equity is so high that even if the

category is quite down, we think that

they're going to continue to maintain

share and grow when the category

rebounds uh and it's still the category

the boots category is still at a

cyclical low. uh and we do not expect

the rebound to get back to any former

levels at all for us for the uh for the

thesis uh to make sense. Um so I think

that if you're going to invest in a

consumer discretion type category, you

have to be really really confident in uh

their brand equity uh and confident in

their ability to take share in that

category because it's really a a share

taking type story. I I would not expect

uh the same level of discretionary spend

in certain categories that we that we've

enjoyed in the past.

>> H how does one maintain and get that

conviction? I mean, you look at a

Lululemon, something that a few years

ago people had tremendous conviction in

the brand equity and uh you know, maybe

I'm biased here in in Fashion Forward

New York, but the uh the good-looking

girls are wearing Alo Yoga, not

Lululemon. It's something your mom is

wearing. Um I'm just, you know, it it's

it can happen extremely quickly. what

looks like strong grand equity um you

know flips like how do you I mean I I

guess look Doc Martens has been around a

long time.

>> Yes. Exactly. Yeah. So Doc Martens

really been around since 60s. Uh this is

a company that the majority of its sales

are from a a timeless type of product

their uh 1460 boot. And it's if you look

stylistically if you look at it it's

kind of remained it hasn't changed all

that much throughout the years. So they

haven't had to make hu these huge

revamps and style or whatever to keep

the customer interested. Uh additionally

if you look at all age categories

there's still high level engagement all

age categories. So even the new you know

uh you're looking at new genz new

customers. It's always a problem for a

brand when it's like oh it's your

grandma's brand but not you know younger

generation. But there's something

special uh about the soul of the Doc

Martens brand, the kind of rebellious

spirit of it that refreshes uh every

generation, you know. Um so those

>> old punks and young punks,

>> it's Yeah, exactly. Yeah.

Um as far as uh Lululemon goes, again,

Lululemon would have been difficult for

us to invest in just purely on valuation

basis, but also it's a company that has

been around that long. So, any company

that has been any type of brand or

discretionary product that hasn't been

around that long, you always have to ask

yourself, well, is this kind of just a a

trend that's going to go away at some

point. Um, so clearly they were uh they

were kind of first to this kind of

athleisure

>> type of of a trend. And you've seen a

couple this this other competitor come

along and take a lot of share and and

some of it is because of the this the

fattish nation fattish uh nature of the

category. Um, so yeah, I think any any

type of brand that hasn't been around

that long, you got to be very very

careful ascribing a lot of brand equity

to it.

>> What about those brands that are on the

rise? I mean, some of the best

performing consumer discretionary names

are often those ones that are taking off

at the beginning of a fad.

>> That's typically something we stay away

from entirely. Uh, I mean, usually if

something is fat is fattish, uh, it's

going to be, uh, trading quite rich. Um

so and fash is something that is

notoriously unpredictable for us. We're

looking for something that's concrete,

something that uh we can have some sort

of predictive insight into and anything

that tends to be uh fad driven. Uh yeah,

that we we as much as we can we try to

stay away from those categories

>> with that limited discretionary spend.

Is it going to go towards goods or is it

going to go towards experiences? I

forget who I was talking to recently uh

who was saying that the younger

generation's

uh aptitude to spend more on experiences

is related or connected to this uh lack

of home ownership to some extent. It's

this idea that you know uh we're not

going to be owning a home. Uh there's a

kind of lack of stationerity and

that kind of lends itself to more spend

on experiences of goods or something. I

don't know if that's true. I have no

idea. Maybe it is. Um, but I'm not going

to say something either way about the

structural or cyclical cyclical nature

of uh, you know, goods versus uh,

experiences for uh, younger consumers.

You could make a big argument of social

media just the in social media influence

regarding uh, getting people excited

over experiences and travel. Uh, you

obviously that is going to persist. You

know, it's funny. I remember uh when

people this was uh pre- pandemic when uh

Are you a golfer at all?

>> Yeah.

>> Okay. Um

>> captain of the high school golf team.

>> Oh, nice. Okay, cool. Um so, do you

remember pre- pandemic when there seemed

to be a narrative that uh you know, golf

was kind of dying in a way because

people couldn't spend the time on a golf

course like attention spans were a lot

lower and people are just going to golf

a lot less. Um, and there was just a

kind of decline in the attention of the

game. Is that Do you remember hearing

about that?

>> Yeah. And I mean, it was partially

related to Tiger no longer being there.

I mean, you had this tremendous tailwind

of like a huge star who had propelled

the game, propelled everything forward.

And then there was a bit of an overbuild

too in the early 2000s related to the

tiger boom in golf. And so, you know,

that was a big sort of like cyclical

um sort of unwind there. But

>> yeah, I mean for me I I think that the

clear tailwind for golf has been the

influencer space.

>> Yes, exactly.

>> It's been tremendous and I've seen it

with with friends who I'm just like how

many hours a week are you spending

watching golf YouTube?

>> Um and you know to all of our listeners

who watch both thank you for allotting

some of your time to monetary matters

and to markets. But it's it's pretty

incredible how how much people are

watching golf much less than putting,

you know, five hours into playing it.

>> Uh it's it's unbelievable. I just

remember I would go to uh you know,

different driving ranges pre, you know,

precoid and they'd be empty. And now

it's like I can't find a spot. Um and

it's been like exactly you said a result

of this social kind of media trend which

which flew in the face of the narrative

which which seemed almost structural.

It's like, hey, well, people have a lot

less time. Um, they're just not going to

be golfing as much. Golf is a sport,

unfortunately. One, that just takes too

much time and attention. People just

don't have the bandwidth anymore. So,

there's a structural reason to for the

what we're seeing in golf. And then, you

know, fast forward a few years later and

because of this influencer phenomenon,

you know, the whole structure uh and uh

and popularity of the game has has

completely has completely changed

overnight. So obviously there's a huge

social part of this that makes it uh you

know very difficult to gain insight of

what what's happening or what will

happen. But yeah but going back to the

goods versus experiences we don't know

if this is a cycl sickle thing with

young people or we go back to goods. Uh

it seems to me that experiences are

going to be here to stay for a long time

but I don't know.

>> Well what's interesting about golf is I

I call them gear sports. They are sports

where part of it is the ability to get

the new toy, right? And it also ties

into the K-shaped economy thing of, you

know, whether it's the super nice road

bikes or mountain bikes, like there's a

new thing that you can buy and add on

that's going to change your game. And

you know there is an aspect of work and

putting in the time and the experience

side of it but people you know you get

to buy the outfit, you get to put on the

outfit, you get to put the outfit on

social media, you get to buy the

equipment that goes with it too. It's a

it's it's a good and experience category

and it's also

considered to be like more at the top of

the K. Um, so I think that it's it's got

a lot going for it in that. And you

have, you know, you have some like big

private equity deals like uh like the

Lab putters. Um, they got

>> bought out by private equity. You know,

certainly those guys are paying

attention to what is happening at um in

these golf markets.

>> That's insightful about Gear Sports. Uh

yeah, and maybe there's a social cache

element to it like you said as well. I I

don't know. Uh, it's also funny because

like my like I'm a big believer that uh

just with new generation of golf

equipment, it doesn't like it doesn't do

all that much to your golf game.

>> It's one of the secrets on tour. They're

all playing old. They all have a

favorite prov from like the

playing and it's just stamped with the

new stamp.

>> It's hard for me to relate because I'm

never going to be one of these guys that

goes out and gets tireless driver every

year. Uh because I just don't think it

matters. uh you know I I think that you

know if you look there's a lot of

YouTube videos on them testing all old

equipment versus new equipment and

there's you know a lot of times there's

very there's very little uh difference

uh but yeah no I think the gear that

that whole that whole uh ecosystem is

part of uh the allure for a lot of

people and what's what's grown the game

which is you know really interesting to

see

>> it's pretty hard to play golf here in

New York so I have switched more to

tennis but it has the same dynamics and

I also think not that, you know, women's

golf isn't also very popular, but like

women's tennis, they're the highest

earning female athletes in the world.

They have some of the biggest

endorsement deals and uh like we can

just, you know, come right out and say

like tennis outfits like look good. And

so there's like when we talk about the

social media, the signaling of what part

of the K and the K-shaped economy you're

in, like the attendance at the US Open

is at record levels. there are people

there who couldn't name

>> couldn't name players um and it's just

like a huge thing of like oh I am of

this class of person I live in the New

York City area I am supposed to go to

the US Open whether you're a man or a

woman we just also had the rider cup

which I think was a little bit I think

golf is still skews male in terms of

this trend but similarly it was just

like if you are a red-blooded male male

of this part of the K of the K-shaped

economy, like you should be going to the

RDER Cup with your boys. And if you're

not, then you're missing out. Um, and

you're, you know, it it's it's pretty

incredible, uh, what I've seen. It's

something that I like very much focus on

because it's affecting how much it costs

me to play tennis.

>> Yeah, humans are Yeah, that's bizarre

kind of behavior. Uh it's it's so

interesting because you would think that

uh like it's it's counterintuitive and

I'm also always interested in situations

where it's like oh that's interesting. I

wouldn't have thought that that would

develop that way like like for example

like you have the internet you have

social media and it can you know

whatever fits your persuasion you can go

find you can nurture your interest and

it seemed seems to me that that type of

ecosystem would lead to uh you know a

more heterogeneity in interest and it

seems like what you're describing is the

opposite you're getting a lot of like

clotting around uh just kind of these

social expectations uh which you know

just just bizarre I've never I'm I I

I'll never, you know, cease to be

surprised by uh just behavior of uh

consumers. Like it's always it always

surprises me.

>> Yeah. It's no longer the Christmas card

with you and your family and your new

starter home. It's we had 12 honeydeuces

and we got seats at Arthur Ash for the

big tennis match. Like that's that's the

new status symbol Christmas card.

>> Wow.

>> Yeah. There you go. Let's go to maybe

some of the more commercial trends that

you are wondering about and one of them

is is will commercial travel go back to

COVID levels really interesting uh I

think it was Delta just reported and

they just had an overall drop in

passengers but reported you know great

profits and revenues because of the

strength of business class. So I think

it ties into this commercial travel

question. It ties into these K-shaped

economy questions. How are you thinking

about air travel and um aerospace in

general in the portfolio whether it's

the defense side of things or commercial

air travel?

>> I think we ascribe to just the general

NBA view that those are very you know

capital intensive just structurally

difficult businesses uh very

commoditized. I mean if you look at

airlines they're one of the uh like

seats that has experienced some of the

lowest inflation since 2020. I think

cumulatively it's around 10% or so. Um

so you know costs have been up and

prices they haven't been able to offset

the prices uh just given the extreme

commoditization in the space. Um as far

as the the defense side of things is

totally different. Uh I think we're very

interested in uh in increasing our

defense exposure. It's just hard to find

the right name and a lot of these

companies have been bit up quite a bit.

Uh, as far as going back to the

commercial travel question, I think it

links back to

uh uh just commercial uh or commercial

real estate and are are people coming

back to the office uh in significant

ways? I know there's been a lot of

announcements uh with companies uh

bringing people back to the office. I

haven't seen the latest data on that. I

I mean, you probably know better than me

in New York. Uh it seems like there's

some sort of hybrid model that is

probably more uh that has gained

popularity where people come back three

days or four days uh in the office and

they have um you you know maybe they can

work from home on Friday. I I thought

that uh you know maybe before people

started coming back to the office a

little bit. I thought it was one of the

hardest trends to try to predict whether

this was kind of structural or people

are going to come back. Uh, I mean I it

seemed to me be likely that you know

rents in commercial buildings would

continue to come down and then it would

just be more attractive for people to

kind of oh like I'll just get an office

but that still wouldn't be like people

coming back to the office full-time that

it'd be them just having an office more

of a hybrid model. Uh but I I don't know

what what are you saying?

>> It's definitely hybrid. There is a lot

of return to office. I mean especially

now as people are it's one of the ways

that you can kind of silently downsize.

you can put out a big return to office

memorandum and you have all these people

that were hired and instead of having to

lay them off and and in a not that I

don't think New York has like a

requirement that you pay people

severance but you know it's pretty

common and so if you can say you're

returning to office and it's either quit

or you're fired for cause save a lot of

money on that and you don't have to

announce you don't have to do the big

layoff announcement which looks bad for

your business that you have to explain

so return to office is a way I think

also So to do silent layoffs. Um.

>> Yes.

>> But as far as the commercial travel

goes, like I just booked a trip for like

to go to the eye connections conference

in Miami, uh, the big allocator

conference. And, you know, we were

talking about it, Jack, my business

partner, and I, and we're like, yeah,

it'll be great to get this trip in.

Like, we don't really have to travel a

lot for work. You started out in this

business with, you know, Real Vision. We

would fly around the country to do

in-person shoots with two cameras and

there was a production crew and all

these sorts of things and you know the

podcast industry was was was

>> was around but it was much more nent and

you know you are seeing some return to

the in studio just as the the ability to

make content has people have the

equipment they've seen how the business

model works and so you are seeing a bit

more um sort of like upscaling of the

quality back towards that inperson

instudio type of model. Um but it's

still, you know, you have to have an

established brand to do that or or

you're just lighting money on fire um in

in a lot of ways. And there's a big

difference between traveling to do that

and setting up shoots on location and

having a studio and just saying, you

know, let us know the next time you're

in New York. We'll get it done. Um

>> but you know I think it's less traveling

to shake hands, show face, you know,

sign the deal and actually that

experiential travel of like oh you know

more conferences, more events like that

type of corporate travel I see as as

being like pretty strong. Um especially

because there is less in office. It's

it's a way to for these people.

>> You have a team that is dispersed across

the country. Uh you're going to all come

together for a conference and it's where

you're going to show face and build that

camaraderie. You know, seeing a lot more

like corporate off-site events where

you've got the the team dispersed across

different regions and you know they're

going to get together for a week and do

team building and stuff like that. So

playing into that experiential sort of

trend is is definitely what I see, but

all anecdot not anything hard.

>> Yeah. And that that's interesting like

so you're almost making a case for

here's my reasons why why commercial

travel is going to get back or even uh

exceed uh previous levels. And you know

I mean you have these two counteracting

forces. the other forces you described

where uh yeah there needs to be just

more of a cadence of people meeting in

person given the work from home

phenomenon but then you still have more

people from work from home and generally

when there's more people in an office

there's probably going to be more travel

uh so those two things counteract each

other and I don't know how it nets out

but it does seem reasonable to me that

uh

>> well I look at it as more like we're

sending the whole team like corporate

travel used to be we've got one guy

who's on the road and he's on the road

every week and is flying to a new place

to meet clients and we've got these like

teams that are kind of always on the

road. And so, how does that person who

used to take 50 flights a year is now

taking 10. How does that square with all

right, we're sending everybody to this

conference or to this event and we're

putting everyone on a plane, you know,

40 people. Is that enough to make up for

the loss from the road warrior? Yeah,

>> because I think that is lost. Like we

are doing

>> the the initial call, even signing the

deal, right? Um doesn't necessarily need

to be in person in the same way.

>> Well said. Yeah, it's it like how that

squares uh is is interesting how that'll

shake out. I I don't know uh which which

one of those forces will win out. And

going back to what you previously said

about companies, uh, yeah, like I'm not

sure if companies actually mean it when

they say come back to the office or like

you like you said, it's more of a tactic

uh for headcount reduction. Um, you

know, because it seems to me that

executives on down seem to be h, you

know, happy with flexibility. I'm

unsure. I know there's some productivity

hits in some areas and companies have

kind of had have spent a lot of time

thinking about how to maintain

productivity or productivity or even

enhance productivity uh in kind of like

this Zoom type work from home world. Um

so yeah, I think uh yeah, it's

interesting. I I wouldn't be surprised

if we just stay at these same levels for

a very long time.

>> Yeah, I I do think there's some of a

reset to the new normal. But the the the

other big question you have about white

collar headcount could very much affect

that if the difference between the

person who stays around and doesn't is

they're the one who lives in town and

and comes into the office and has that

facetime versus the person who is remote

regardless of whether it's um their

individual productivity is is better or

worse. It's just we don't need as many

people because more stuff is being done

by AI. Um, is that going to mean, you

know, that that those people in office

are going to to come out on top? You

know, these are these are all these are

all the big questions that I think we

have. I'd like to close with a big

answer, right? Is there anything you

know in in the questions you asked that

you have the most confidence in looking

forward that that really is already

taken up position in your portfolio and

and you barring a major change you see

that staying the case for 2026.

>> I think the allocation to cyber security

uh is going to meaningfully increase for

businesses. Uh if you look at uh this is

a good stat um since about 2023 the

number the amount of cyber security

attacks of businesses has been going up

by something like 30% a year. So because

you know bad actors are using AI in

different ways to kind of attack uh

companies. So the amount of spend that's

being allocated

by companies the amount of energy and

focus that has to be put into cyber

security is is going to continue to take

more share. uh you know there's like

large companies uh you know crowd

strikes paloto networks of the world

that will continue to benefit I think

from those trends they're already very

very large uh I think PaloAlto Network

is something likeund 100 something

billion dollar company um and what I

think is interesting is how how those

big companies compete uh and cyber

security is one of the hardest it's one

of the hardest companies to run well if

like running cyber security given the

threats are always changing so these big

cyber security forms

have adopted almost like this big pharma

model where you know as soon as this new

cyber kind of threat comes out they look

for uh a small company that's been

founded and funded uh to order fight

like you know uh maybe API security is

now a big issue a company that's already

doing that they go and acquire that

company and it's really like this serial

kind of acquire model uh this how these

kind of big big companies are able to

kind of uh maintain agility in a very

very dynamic uh cyber security world. We

would like to increase uh or to uh to

add some cyber security portfolio. It's

just a notoriously uh difficult industry

given just the levels of dynamism and

change.

>> Are you looking for those smaller

companies that are going to be acquired

or is it the big companies but they're

just not at the right price for you?

>> The big companies just aren't at the

right price point. uh we we're not going

to invest in I I don't know what uh like

some of these big companies trading at.

I I won't be surprised. They're north of

10 times sales. I think I think uh

Cloudflare is still north of I think

that's around 20. I I think it they're

trading at obscene valuations in our

opinion. Um so yeah, that we can't touch

them. But yeah, smaller companies

um potentially they're trading something

reasonable is definitely something we're

going to be evaluating.

>> Well, DA, we'll leave it right there.

Everybody can find your work at

parisresearch.com. You're also on

Twitter. Are there any other places

people can find you?

>> Mainly uh Twitter pronouncresearch.com

where we publish our research.

>> Well, thank you so much. We'll do it

again soon.