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Scalpel or Shotgun?
I bought some IGV on Friday
Has the software sell-off been overdone - at least, in the short-term? I thought so. I got long.
I took a shotgun approach. I know all the big names in this ETF generally but I don’t spend a ton of time on each of them every quarter or think I have an edge over the folks who do. I basically just wanted to buy pure, unadulterated panic at the close of trading last week. So I did. IGV is the iShares Expanded Tech-Software Sector ETF and it’s in a 30% drawdown since October.
It’s bouncing today, mostly thanks to Microsoft, Crowdstrike and Palo Alto. I don’t know if the bounce lasts an hour, a day, a week or a month. I won’t be here long.
Jonathan Boyar is not hunting with a shotgun. He’s digging in with a scalpel. Knowing these companies inside and out is his business. He writes them up, tracks them over months and years (decades) and lives and dies by their rallies and crashes.
Here’s what Jon and his team told their clients about Salesforce (CRM), one of their portfolio holdings, back in February:
Salesforce (CRM) Salesforce entered the recent turmoil already under pressure, largely due to concerns that the per-seat SaaS model may be vulnerable if AI drives workforce efficiency. While that risk exists, we believe the narrative is overly simplistic.
Salesforce has already begun migrating toward consumption-based, value-based, and hybrid pricing models—most notably with Agentforce and Data Cloud—where customers purchase credits that are consumed based on usage. If anything, AI-driven activity could increase data volumes, workflow complexity, and mission-critical reliance on Salesforce’s platform. Importantly, Salesforce maintains approximately 21% global CRM market share—roughly four times that of its closest competitor—and is deeply embedded across sales, marketing, service, commerce, and data workflows.
Ripping out Salesforce is not a trivial exercise. Somewhat paradoxically, Salesforce partners with Anthropic to power portions of its own LLM and agentic offerings—suggesting that advances in Claude enhance Salesforce’s value proposition rather than undermine it. Salesforce has never been “cheap.” Over the past five years, it has traded at an average of roughly 30x forward earnings. Today, shares change hands at approximately 14.5x forward EPS.
No one knows for sure whether or not the bounces in this sector or in Salesforce in particular are just stops along the way toward even lower lows. In a situation like this, it’s important to know whether or not you’re an investor in software businesses (I am - Toast, Crowdstrike, ServiceTitan) or a trader (I’m also trading IGV) and know the difference. An investor is looking to add on weakness. A trader is walking away.
At Boyar they are investors. They buy misunderstandings and misperceptions. They use their own time horizon as a weapon and go on offense when others are on defense. It’s harder than I am making it sound. And it doesn’t always work. Not every value stock turns out to be a value. But when it does work - when it really works - it’s better than sex. Or so I’m told, I don’t know about that.
Anyway, Jonathan Boyar was the perfect guest for this week’s The Compound and Friends. Couldn’t have timed it better. We had a blast talking about Microsoft, Salesforce, Adobe, Sphere, MSG, Scott’s Miracle Grow and so many other names he’s currently buying, selling and passing on. Over 50,000 people have already watched this episode on YouTube and the audio podcast downloads are probably double that.
You’re going to love it. I promise.
Jonathan Boyar on The Compound and Friends
we laughed and learned with Jon
These are Cheap Stocks with Catalysts
THE COMPOUND & FRIENDS
These are Cheap Stocks with Catalysts
Michael Batnick and Downtown Josh Brown are joined by Jonathan Boyar to discuss: finding value in a volatile market, Mag 7 valuations, the only publicly traded basketball team, how Uber could win big on autonomous, and much more!
