Mitchell Green 1.8 7 ideas

Stated Lead Edge sold Toast shares in secondary markets at $40-50 per share, and the stock price at the time of recording was ~$30. The firm constantly underwrites forward IRR. They deemed the secondary market price at the time "lunacy" and unattractive for future returns, leading them to sell a significant position. The view at those price levels was clearly bearish, justifying an AVOID direction as the valuation was disconnected from their forward return expectations. Being wrong on the company's ability to grow into the high valuation, missing further upside.

Explicitly stated, "I think the best risk-adjusted returns right now are in public software names," adding that "people hate software" currently. Applies a contrarian, Buffett-esque principle ("buy when everybody is fearful") to the software sector, which is currently out of favor, implying depressed prices create opportunity. This is a clear, bullish call on the asset class of publicly traded software companies, hence LONG. A prolonged sector downturn or fundamental degradation in software business models that justifies the low sentiment.

Green explicitly states we are in a "Giant AI CapEx Bubble" and that the amount of money being spent on infrastructure is "mind-boggling" relative to current revenue. Overbuilding is rampant. Similar to the telecom fiber bubble, capacity is being built that may not be utilized immediately, leading to massive depreciation cycles that will hurt the owners of this hardware/infrastructure. AVOID. The risk/reward for pure-play infrastructure build-out is skewed to the downside if utilization lags. If AI adoption accelerates exponentially (AGI), the demand for compute could outstrip even this massive build-out.

Green calls Palantir an "amazing company" and owns the stock. Newman notes they are a driver in the enterprise space. Despite high valuations, PLTR is in a "category of one" for delivering actual revenue/margin expansion from AI (the "receipts"). They are successfully bridging the gap between AI hype and operational utility. LONG. A winner in the "application layer" of AI. Extremely high valuation multiples make it vulnerable to any growth deceleration.

Green points out that Chinese tech giants like Alibaba and Tencent have doubled off their lows but remain cheap, generating billions in profit. The geopolitical discount is too steep. The US and China will likely find a way to coexist ("One plus one equals four"), and these companies are dominant monopolies trading at value multiples. LONG. A contrarian value play against the expensive US tech sector. Geopolitical tensions escalating or further regulatory crackdowns from Beijing.