February 2026

The fund declined -3.7% in February. Financial year to date the fund is up 8.3% net.

February's drawdown was driven by a sharp and unusually concentrated selloff in software and AI related equities. The MSCI ACWI (AUD) declined 0.9%, the S&P 500 declined 0.9%, the Nasdaq declined 2.3%, the ASX 200 increased 4%. The headline indices did not reflect the carnage beneath the surface which saw many individual software names experience recession like declines.

The primary catalyst was growing concern that AI could disrupt traditional software businesses. While some companies may face genuine disruption risk, the selloff was broad and sentiment driven, with high quality businesses declining alongside weaker peers.

During the month we increased exposure to several high quality technology companies trading at attractive valuations. As sentiment deteriorated further, these positions declined alongside the broader software sector. AMD, Xero and Amazon together accounted for 80% of the monthly drawdown. Because the selloff was concentrated in individual companies rather than the overall market, the fund's Nasdaq hedge provided limited protection.

The escalation between Israel and Iran adds a further headwind. Oil has surged, raising inflation expectations, delaying rate cuts, and compressing growth equity multiples. If tensions ease the market impact should be manageable. Our view is that the market will price in a resolution relatively quickly. Sustained oil above $100 jeopardises the rate cuts the administration has been publicly anchoring to, which creates a strong political incentive to resolve the conflict. We are monitoring this closely.

In early March we have reduced gross exposure significantly, our Nasdaq hedge remains active, and we are carrying close to 50% cash. If the selloff deepens from here the portfolio is positioned defensively. If conditions stabilise we believe the quality names we own recover quickly.

At month end the fund held 19 long positions and one short (Palantir), with net exposure of 69% and approximately 36% cash. Downside protection included a Nasdaq put spread and gold put spread which are both out of the money.

The portfolio remains concentrated in high quality companies with strong earnings growth and durable competitive advantages. Beyond our technology holdings, the fund has approximately 14% exposure to materials and 4% to energy.

Our top holdings are Microsoft (6.4%), Amazon (6.0%), WiseTech (5.9%), and AMD (5.8%).

Microsoft became our largest new position during the month. The stock has declined approximately 30% from its highs and has derated from 38x forward earnings to 22x today. A meaningful discount to its 5 year average multiple of 30x P/E.

We believe the market is underestimating Microsoft's positioning. Azure and AI are the primary growth engines, cloud revenue is accelerating and Copliot monetisation is ramping across M365 and Dynamics.

The company is not dependent on a single AI model. It controls the infrastructure and application layers where AI is deployed and monetised. With more than 450 million paid M365 users, Microsoft has the distribution platform for AI driven productivity tools that is hard to match. As AI agents operate across enterprise workflows, Microsoft monetises that usage through both Azure and its productivity software.

We view this as a compelling entry point into a extremely high quality global franchise.

WiseTech is our largest Australian technology holding. CargoWise is the dominant platform for international freight forwarding, used by 24 of the 25 largest global freight forwarders. It is deeply embedded in mission critical logistics workflows where switching costs are high.

The stock has declined roughly 60% from its late 2024 peak near $140. At the highs the business traded around 60x forward EV/EBITDA and more than 120x P/E. Today the multiple has compressed to roughly 20x EV/EBITDA.

We believe WiseTech is resilient to the AI disruption narrative. Its commercial model is transaction based, not per seat. The company gets paid every time a shipment moves through CargoWise, regardless of how many users a customer has. Even if an external AI agent connects via API, it generates a transaction and WiseTech gets paid. This makes the revenue model highly defensible in an AI driven world.

The recent 1H26 results were broadly in line, with CargoWise revenue growth guidance of 14 to 21% reaffirmed. WiseTech is also using AI to cut its own cost base, reducing 2,000 roles estimated to save up to $300 million p.a.

We don’t think Wisetech re-rates back to the highs, but we view the current valuation as attractive for a business of this quality and durability.

AMD was the largest individual detractor during the month, falling alongside the broader AI related selloff despite delivering results ahead of guidance.

Global hyperscaler capital expenditure continues to accelerate, with roughly $660 billion in AI infrastructure investment and approximately 24% growth expected in 2026. AMD's architecture is particularly well suited to the inference workloads that are expected to scale rapidly as AI adoption increases.

While the stock experienced short term volatility, the long term demand outlook for AI compute remains extremely strong.

Amazon declined approximately 11% following its February earnings release.

The results themselves were strong, with revenue growing 14% to $213 billion and AWS revenue accelerating to 24% growth, its fastest pace in more than three years.

The market reacted negatively to Amazon's $200 billion capital expenditure guidance, which was approximately $53 billion above expectations. The majority of this spending is directed toward AWS infrastructure and AI capacity.

We view this investment as a strategic strength rather than a weakness. AWS exited the quarter with a $244 billion backlog, and Amazon's custom silicon chips provide a structural cost advantage relative to competitors reliant on third party hardware.

Operating cash flow reached $140 billion in 2025, and the stock currently trades near its lowest price to operating cash flow multiple in the past decade.

Risk management remained a key focus during the month.

We exited six positions as the selloff broadened across technology. Some trades were profitable, including DigitalOcean, which was the largest positive contributor and was exited during the month. Other positions were closed to contain losses as market conditions deteriorated.

In choppy markets, it’s not the time to be a hero. We reduce gross exposure, preserve capital, and stay confident we can recoup performance when trends reappear.

Beyond our standard attribution analysis we have built an internal system that evaluates every trade in the fund’s history to identify what’s driving returns and recommend improvements live.

Two findings are already influencing portfolio construction:

The system will continue to evolve over time, helping refine both risk management and position sizing.

The recent selloff in software and AI related equities has been severe. In our view the market has repriced many companies based on worst case disruption scenarios.

However, we believe the highest quality businesses are more likely to be beneficiaries of AI adoption rather than victims. Companies such as Microsoft, Amazon and WiseTech have strong competitive positions, durable customer relationships, and significant exposure to the growth of AI infrastructure and applications.

The strategy continues to target double digit annual returns over time, and we’re confident we will acheive that. The portfolio remains diversified across technology, resources and value oriented positions, with no single holding exceeding 6.4% of capital.

I increased my personal investment in the fund during February. I would not be adding capital if I did not believe we are well positioned for long term compounding.

Our approach remains unchanged: concentrate capital in our best ideas, actively manage risk, and invest only when the opportunity offers compelling upside relative to downside.

I appreciate the continued support of all investors. Please feel free to contact me directly if you would like to discuss the portfolio in more detail.

Regards