Adobe Systems (ADBE)

They report Thursday. It's part of the software cohort. Even after this thrashing, he doesn't think shares are low enough.

The chart says it all for what the market thinks. The AI imaging models are getting better and better with each iteration, disrupting the entire creative process. Super vulnerable.

Sold off with software industry on AI concerns. Better places to deploy money. CEO change -- especially doesn't like when there's a debate about future of the company. They sold. Business remains strong and profitable.

Exited for clients (still owns personally due to regulatory restrictions, but he'll sell when he can).

His clients took a capital loss on this. Swapped it for CSU. Adobe management is seeing no signs of fallout from AI, so you should do fine here. AI should enhance its business. Not growing as it used to, now only ~10%. Beautiful balance sheet. Attractive valuation.

Still growing, so you could buy more. Or take the capital loss. Each investor has to decide.

Is -30.5% in Q1 and one of the worst performers on the S&P. The street expects AI to displace their software. Trades at only 10x PE, very low.

Question is will AI destroy the moat around a lot of these companies? This name is one of them. There are cheaper PDF readers out there, and AI can do a lot of creative work. Likes it here and bought some for a trade, risk/reward pretty compelling.

Contrast that to the IP of MSFT -- the moat's a lot bigger around it, as we're not going to create another widely adopted suite like that of MSFT.

AI is an overhang on this stock, which could pressure subscriptions to their software. Adobe is trading at a low PE and is growing, however, the CEO of 18 years is retiring, which surprised the street. Nobody likes surprises. 

There are better software companies to invest in.The growth rate is decelerating  and the sentiment is negative. Sentiment drives stock prices more than fundamentals in today's market. The last few quarters have been pretty good with beats but the stock has sold off. Also Adobe is more of a point solution rather than an enterprise platform.

He bought more personally, because fears are overblown. Yesterday's earnings and guidance were good, but not enough to put the bear case to bed. He's not happy the CEO is leaving, but is a buy opportunity. Sales growth is over 10% and PE is 11x and free cash of 11% is also growing. They have bought back 10% of shares over two years and will continue. It feels lousy owning it now, but he will do well with this in time.

Should have pushed more to buy Figma. Now stuck in a dinosaur state. CEO change might help turn the ship around.

Continues to grow revenue (10% on the topline), buying back shares. Trades at very low multiple. Product is well-known and familiar. From its communications, people had high expectations on how AI would change its business, rather than ADBE just incorporating AI and letting that speak for itself. No dividend.

A name to look at in the beaten-up software space.