Focused Compounding Ep 478. A-Z on IGV: Value Hunt in Software
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May 1, 2026 Jeff Gannon, an investment professional known for tech and valuation analysis, walks through IGV software holdings. He discusses valuation compression, AI’s threat to long-term moats, and why understanding a business matters. They spotlight names like BlackLine, Adobe, AppFolio, and C3.ai while deciding which stocks merit deeper research.
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AI Is Repricing Software Terminal Value
- The AI era has materially re-rated long-duration software moats and terminal value assumptions.
- Jeff Gannon and Andrew Kuhn note market valuations compressed as investors question ten-plus year cash flows and moats due to rapid AI change.
Discovering GuruFocus Manual For Fast Company Digs
- Andrew discovered GuruFocus's 'manual' feature that generates readable one-page company summaries from ticker lists.
- He used it to quickly create an IGV ETF booklet and subscribed mainly for this feature.
Software Operating Leverage Magnifies Valuation Risk
- Software businesses have high fixed costs, low marginal costs, and large operating leverage that magnifies valuation sensitivity.
- Jeff Gannon explains small changes in volume or margins can produce big swings in operating profits and multiples.