SoloFIRE Portfolio Update - 2026 Feb - $865k

Table of Contents

• 💡Monthly Highlight

• Earnings Release and Updated Stock Valuations

  • Alphabet (Google)

  • Brookfield

  • Amazon

  • Salesforce

• International Holdings (Not shared on Blossom)

  • Japanese Holdings Sold

  • Hennge KK (4475)

  • Vitec Software (VIT-B)

• 💸Detailed Portfolio Update

  • Holdings Breakdown

    • Option Holdings

  • Trades in TFSA Account

    • TFSA portfolio long-term performance

  • Trades in RRSP Account

  • Trades in Taxable Accounts

• Smith Maneuver Portfolio Updates

• Quick Links

💡Monthly Highlight

The net portfolio value declined about $53,000 in February, or 5.8%, as sell-off in software sector intensified. As mentioned in my previous update, there is no doubt that AI is introducing additional risks such as increased competition and pressure on the traditional seat-based pricing model. However, for many leading software companies in my portfolio, such as Adobe and Constellation Software, these risks have yet to be reflected in their reported earnings 3 years after the initial release of ChatGPT. In fact, both companies have continued to grow revenue and earnings per share at rates exceeding 10% annually.

The important question to ask is, to what extent will AI disrupt the business models of software companies and how much of that risk has already been priced in? Many software stocks are trading at less than 15 P/E or P/FCF at the end of February (6.6% earnings yield). Even if these firms were to stop growing completely, investors could still expect returns much higher than the 4% yield on the 10-year Treasury.

On the other hand, if software companies successfully adapt by integrating AI into their products and development workflows, and transition toward usage-based pricing models, they may be able to sustain their current growth trajectories. In fact, increased productivity could even lead to higher profit margins and faster earnings growth.

As someone working at an enterprise software company, I have not yet observed any significant increase in churn rates, but I have seen some material productivity improvements in software developers. It appears that enterprise software customers are resisting changes that may disrupt their businesses. During the Vitec Software earnings call, the CEO has mentioned that while vertical market software (VMS) customers are asking for AI features, they always emphasize that no changes should be made for existing features, demonstrating the strong stickiness of established VMS products. So far as the evidence suggested, I believe it is more likely than not that the software industry will adapt to this new era of AI, and the incumbents will continue their current growth trajectory for the foreseeable future.

To capitalize on this rare opportunity to buy highest quality software names at significant discounts, I have again increased my position in Constellation Software (CSU) by adding 6 more shares, bringing the total to 48 shares. I have also further increased my share count in Adobe and Salesforce stock.