Committed some capital to software stocks amid selloff, says First Eagle's Matt McLennan
Speakers
Summary
Matt McLennan of First Eagle discusses buying software stocks amid a selloff, citing low revenue multiples, continued growth, and AI tailwinds. He names Workday, Salesforce, Dassault, Microsoft, and Oracle as holdings. The conversation also touches on Microsoft's voluntary buyouts as a sign of efficiency focus.
- Matt McLennan has committed capital to software stocks during the recent selloff.
- He notes that software revenue multiples are around 3x, half of private market valuations.
- Companies like Workday and Salesforce are growing ~10% with an efficiency focus.
- McLennan sees these companies as well-positioned for AI due to proprietary databases and mission-critical systems.
- Specific holdings mentioned include Workday, Salesforce, Dassault, Microsoft, and Oracle.
- Microsoft's voluntary buyouts are viewed as part of a broader efficiency trend in software.
- The global fund managed by McLennan has outperformed the S&P 500 recently.
- The overall thesis is that software stocks offer an attractive risk/reward at current valuations.
Trade Ideas
Software stocks cheap with growth and AI opportunity.
Software stocks are attractively valued with revenue multiples around 3x, half of private market transactions and a fraction of previous highs, while companies still grow ~10% with a focus on efficiency, and they are well-positioned to benefit from AI due to proprietary data and mission-critical systems. He has committed capital to the software space, naming Workday, Salesforce, Dassault, Microsoft, and Oracle as positions.
