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Feb 17, 2026
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AVOID
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"The valuation of the software industry has undergone a sharp correction. PE topped out a year ago at 51 times earnings and now it's 27... The vertical software companies... this is the Pincer move from above [and below]." Software is "Ground Zero" for AI disruption. Vertical SaaS is being squeezed by frontier models (Anthropic/OpenAI) offering capabilities for free, and cheap AI startups undercutting pricing. Despite lower valuations, the obsolescence risk is too high. AVOID Legacy SaaS and Vertical Software stocks lacking proprietary data or "system of record" status. Software stocks could rebound if they successfully integrate AI to reduce costs and boost margins. |
The Compound News
“Unrealized” Capital Gains Tax is Economic Su...
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Feb 17, 2026
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LONG
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"Apple could be the stock of the year... They are going to launch an Agentic Siri this year... telling Siri to go into the hundreds of apps on your phone and do things across those apps." Apple has underperformed due to a lack of "AI hype," but they own the distribution (2 billion devices). By launching an "Agentic" AI that controls other apps, they make standalone LLMs (like ChatGPT) features rather than platforms. They avoided massive CapEx spend and are positioned to capture the consumer AI interface. LONG Apple as a contrarian AI play with a major catalyst (Agentic Siri) expected in May or September. If the AI launch underwhelms or Siri remains "useless" compared to competitors. |
The Compound News
“Unrealized” Capital Gains Tax is Economic Su...
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Feb 17, 2026
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WATCH
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"Energy is the best performing sector on the year so far... no fundamental benefit whatsoever. That's pure multiple... The market's looking forward toward either higher oil prices or increased demand for electricity." Energy stocks are rallying on sentiment (AI power demand) rather than current earnings (which are flat). While the momentum is strong, the lack of fundamental earnings growth makes this a momentum trade rather than a value trade currently. WATCH Energy for confirmation of earnings growth to justify the multiple expansion. Oil prices falling or the "AI power demand" narrative fading. |
The Compound News
“Unrealized” Capital Gains Tax is Economic Su...
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Feb 17, 2026
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LONG
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"Industrials [earnings growth] 26%... This is your earth movers... heavy equipment... building data centers... It's not just a rerate. There is something happening here with capex that's leading to higher revenue." The "HALO" (Heavy Assets, Low Obsolescence) thesis suggests capital is rotating out of asset-light software into asset-heavy companies building the physical infrastructure for AI and energy. These companies have tangible moats and are currently delivering the highest earnings growth in the market. LONG Industrials and heavy machinery stocks as the primary beneficiaries of the infrastructure boom. A slowdown in global CapEx spending or a recession curbing construction demand. |
The Compound News
“Unrealized” Capital Gains Tax is Economic Su...
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Feb 13, 2026
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LONG
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The market is bifurcating into "disruptible" and "non-disruptible" stocks. Physical goods companies are insulated from Generative AI disruption. A chatbot cannot manufacture a physical liter of liquid. As fear grips the "disruptible" sectors (services, software), capital will flee to physical safety. Defensive rotation into tangible consumer staples. GLP-1 weight loss drugs impacting demand for sugary drinks. |
The Compound News
The Baddest Hedge Fund in the World | TCAF 22...
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Feb 11, 2026
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AVOID
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"We are separating the market into two camps... Information merchants... and legacy platforms... the value of selling information to people is declining at a precipitous rate." For 15 years, the market fetishized "asset-light" software models. AI has flipped this. If AI reduces corporate headcount, the "per-seat" pricing model (SaaS) of companies like Salesforce and Workday collapses because there are fewer humans to sell subscriptions to. Furthermore, AI can replicate "information merchant" value propositions cheaply. Avoid "Vertical Market Software" and companies selling pure IP/Information; they are the "losers" in the AI shift. AI adoption might be slower than expected, or these companies successfully pivot to consumption-based pricing. |
The Compound News
Is It Time to Buy Software Stocks?...
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Feb 11, 2026
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AVOID
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"I sold 85% of my position... This is going to be two years of slop." Netflix won the streaming wars against legacy media (Disney/HBO), but the prize is a new war against YouTube (GOOGL) for attention. Additionally, the pending merger/acquisition activity introduces massive execution risk, labor disputes, and union issues (Director's Guild/SAG) that will weigh on the stock. The stock will be "under a boulder" due to deal complexity and saturation. Netflix successfully integrates acquisitions faster than anticipated or creates a "must-have" content monopoly. |
The Compound News
Is It Time to Buy Software Stocks?...
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Feb 11, 2026
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LONG
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"I am calling those the Halo stocks... heavy assets low obsolescence risk... Can Claude whip up a can of Diet Pepsi? No." In an AI-disrupted world, capital flees replicable code and flows to tangible, physical assets that AI cannot generate. Companies that move atoms (airlines, manufacturers, staples) have a moat that software companies no longer possess. Long "Halo Stocks" (Heavy Assets, Low Obsolescence). Global recession reducing demand for physical goods/commodities. |
The Compound News
Is It Time to Buy Software Stocks?...
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Feb 11, 2026
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LONG
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"I bought Devon Energy last week... hit the best stocks in the market list." Energy stocks have been excluded from the market rally for two years and are now breaking out technically. Brown entered based on a technical setup and is managing it as a trade by raising trailing stops (currently at $40). Long as a technical trade, riding momentum. Oil price collapse or technical trendline breakdown. |
The Compound News
Is It Time to Buy Software Stocks?...
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Feb 11, 2026
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LONG
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"I did that same trade with Exxon at 119... I'm starting to think about Exxon maybe being a long-term holding." The strength of the move in a mega-cap like Exxon suggests a regime change. Brown views this not just as a trade, but potentially the start of a 7-year bull market in energy, prompting a shift from "trading with stops" to "investing for the long haul." Long-term hold. Global energy demand destruction or regulatory shifts. |
The Compound News
Is It Time to Buy Software Stocks?...
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Feb 11, 2026
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LONG
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"Microsoft is a data center business... Azure." While generic SaaS is at risk, Microsoft owns the compute infrastructure (Azure) required to run the AI disrupting everyone else. It should not be lumped in with the "software crash" basket because it is effectively an infrastructure/utility play on AI workloads. Differentiate Microsoft from the broader software sell-off; it remains a core infrastructure holding. AI capex spend slows down without ROI. |
The Compound News
Is It Time to Buy Software Stocks?...
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Feb 11, 2026
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WATCH
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"We have apartment building gluts in Nashville in Austin... takes four years to bring that stuff online." The multifamily real estate market is efficient at creating supply, leading to gluts in specific hot markets. While this hurts rental prices, it highlights that large players (like Blackstone) own the assets, and regional oversupply is a specific risk to watch in the housing sector. Be cautious of multifamily exposure in specific overbuilt metros (Austin/Nashville). Interest rates drop significantly, reigniting demand and absorbing supply. |
The Compound News
Is It Time to Buy Software Stocks?...
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Feb 10, 2026
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LONG
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Despite "consumer cracking" narratives, high-end travel remains robust. Brown notes people are "crisscrossing the country" and JPM data shows no explosion in credit card delinquencies. The recovery is K-shaped. While low-end retail misses, the upper-middle class (the target demo for Hilton/Marriott) continues to spend on experiences. If the consumer were truly broken, travel would collapse before retail; it hasn't. Long premium hospitality chains as a play on the resilient, wealthy consumer. A sudden spike in unemployment affecting the white-collar sector. |
CNBC
Here's how to trade the surge in stocks...
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