Fred KetchenThomson Reuters CorpTRI.TOHOLDNov 27, 2007

AI won't replace it, but its PE is too high at 28x PE. The PE needs to decline and the yield rise.

In general the stock market tends to sell and ask questions later. He feels this is the case with Thomson Reuters. It is a great business and can use AI effectively. It will take time but it has long term shareholders that believe in the business. and the Thomson family is a strong advocate. They are not selling and are willing to let the company do what it needs to do.

Faces an AI overhang, fears that AI will replace TRI's services. Shares have stabilized and rebounded a little. They reported a decent quarter last week. TRI is buying back shares. AI fears are unwarranted. You can start buying this now.

Bought just a couple of months ago. It's the data that counts. AI needs data to actually populate the answers. Lawyers and accountants still have a fiduciary duty when they use the AI data. Not going anywhere soon. AI will actually help people find things more efficiently, and they're doing that today. Yield is 2.45%.

It got whacked in the SAASpocaylpse, but TRI has a great historic database of huge value. TRI isn't as bad as the market makes it out to be. If money ever rolled out of AI, it would return to software.

Continues to show 8% topline growth and good earnings. But the market doesn't seem to care. Competitive advantage today will not carry through to the future. Proprietary data won't protect them.

It was a market darling, but this AI business has hit them. Their main business is their legal database, and the fear is that AI will replace that. He expects TRI to protect their data and the stock to rebound in the future. Wait till you see an uptick.

Has been a great company, but people fear that AI will take over their business. These companies are going through a difficult period of people not understanding their businesses, which will continue to benefit from AI, not be erased by AI. There's still demand for TRI's services. TRI has been a great business for many years.

Really good business model. Fairly solid moat. Should benefit, not suffer, from AI. In the meantime, market's really punished it. From its previous lofty valuation, now trading ~18x PE. FCF of ~6%. Super-strong balance sheet. Lots of levers to pull to create shareholder value over the long term. Tremendous value right now as we wait for sentiment to change. Yield is 3.21%.

AI is perceived to impact it. Below 200-day MA, which has also fallen. AI continues to cloud its competitive advantages. Technical structure looks tough. Wouldn't add until some stability.

The market fears AI will take over software. The most important thing in this discussion is owning proprietary data that no AI can access. TRI probably fits this bill; they've collected years of data on accounting, law, health care, which is protected from AI. Demand for their products will continue. He owns TRI's peers like TMX, which are better run, but if you own this, don't sell TRI. TRI's fundamentals are still doing very well. The valuation is no longer extreme, but attractive. The Thomson family owns a lot of shares. Let it breathe and give it time. Would be attracted to it if he didn't already own similar names.

Ask yourself:  What's the difficulty of replicating its unique proprietary data? Provides go-to solutions for lawyers, and that has to be from a trusted provider. Last quarter's report showed that it'll probably be able to improve efficiency by adding AI.

Before the drop, it was trading at very lofty 50-60x PE, so some of this may be a recalibration of investor expectations to a more reasonable level.

A classic downhill chart that seems to be leveling off. Now, we see a transition based on a March low and slightly higher April low. It's a consolidation pattern. Scores 6/10. If the chart breaks out, it will be quite bullish.

Believes it's making strategy mistakes on AI. On price, he'd be a tactical buyer today. The road ahead is significantly worse than the road behind. There's no hope it's going back to $300 or anything close.

Getting disrupted in the highest-margin part of its business (legal division).

Such a big run, now a huge amount's come off. Looks attractive. Pace of change in the AI space makes things uncertain. Hard to determine pricing power of a tool. The market's not stupid, there are serious concerns.

One thesis says to look through that and say the moat will be fine. For him, it's too risky.