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Friday, September 4, 2026

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@negligible_cap

Negligible Capital on X

The rising tide is lifting all AI threatened boats… but should it? Some weekend thoughts as the saaspocalypse seems to be winding down -- TLDR: Long software, short consulting / IT services is interesting: Consulting and IT service names like ACN, CTSH, INFY, GLOB, etc. have rebounded sharply alongside enterprise software names (eg. CRM, NOW, WDAY, TEAM blah blah blah) recently. These moves have been driven pretty much entirely by factor rotation - the rebound in consulting names comes from software’s new AI tailwind rather than being earned by their own fundamentals $ACN, for example, is up 50% in the last two months since the June lows, despite posting their 2nd consecutive guidance cut last quarter -- $CTSH up 67%, $GLOB up 40%, $INFY and $TCS both up around 20%. Despite the rebound, most of their results were very “meh” – several misses in growth / guidance expectations (largely attributed to conflict in the middle east, which probably has some merit), leading to some violent selloffs (Eg. Accenture dropped 18% on June 18 after earnings) Meanwhile, software as we all know is seeing genuine acceleration in some cases, especially in their AI-related revenue metrics, and the narrative is quickly evolving to one in which software is likely to benefit from AI (largely due to strong moats) The same can’t be said for IT services names. Unlike software, where AI is seemingly becoming more additive for their platforms, AI is likely to be structurally deflationary for labor-based IT service models. The current pricing model faces disruption as enterprises seek greater efficiency in delivery and shift towards more outcome-based work. Customers are likely to demand service providers pass on AI productivity gains via lower pricing, especially for contract renewals. Also clients are delaying IT spend due to concerns over rapid AI investments / prioritization of spending elsewhere (eg. IBM’s pre-release, which saw consulting revs miss expectations, among other issues). The growth uncertainty alone likely puts a ceiling on multiples Anyways I know I’m making some very broad generalizations and am probably wrong and this isn’t financial advice but I’ll close it out reminding everyone that Accenture has 800k employees
@marginofdanger 3 clicks

marginofdanger on X

$LIEN is an interesting small cap BDC. $13.26/share NAV, stock last $10.20/share, dividend yield of 13.3%. Company is doing an all-stock deal with $REFI which will essentially double the asset base to c. $800 million. Larger asset base should help narrow NAV discount given economies of scale and better cost of capital. Portfolio is largely cannabis credit, which is high coupon / low leverage and the $LIEN mgmt team has done a good job with its credit underwriting.
@marginofdanger 2 clicks

marginofdanger on X

$LIEN is an interesting small cap BDC. $13.26/share NAV, stock last $10.20/share, dividend yield of 13.3%. Company is doing an all-stock deal with $REFI which will essentially double the asset base to over $600 million. Larger asset base should help narrow NAV discount given economies of scale and better cost of capital. Portfolio is largely cannabis credit, which is high coupon / low leverage and the $LIEN mgmt team has done a good job with its credit underwriting.
@majgeoinvesting 1 click

Maj Soueidan on X

With OCC, using historical backlog, conversion multiples, the backlog implies that they can report $.25 EPS. The wildcard here is two things. 1. Have operating expenses stabilized? 2. Will backlog remain strong so that the company can at least hold that new level of EPS if they achieve it? To be clear, a bullish EPS outlier scenario could occur because I used the historical low-end backlog to revenue multiplier. I haven’t modeled $RFIL. I’m just using their shareholder letter as a barometer, where they talk about stronger markets and more visibility. It’s worth noting that both companies are moving into their seasonally stronger quarters. They’re also both benefiting from a recovery in their legacy telecom markets. Furthermore, I don’t think either of them have seen much contribution from their data center business. So, hopefully, you have this perfect storm situation where their legacy markets, along with new markets are hitting it in stride at the same time Personally, I think RFIL is the better company, long-term, but that OCC can have the biggest wow factor for the quarter. RFIL has done a better job at addressing its entire business plan to reduce cyclicality, even within its legacy markets. I’m not convinced OCC has done that.

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EVC Update

EVC reported a solid second quarter and outlook.

EVC $727M
Nat Stewart - Stock Picking Newsletter 15 clicks

IEH Corporation: Research Note

IEH Corporation won $6.5 million of APKWS orders, lifting backlog above $45 million as defense connector demand drives capacity expansion.

IEHC $72M
Atrium Research - Equity Research 1 click
TOYO · short

Toyo CO LTD

TOYO CO LTD is the target of a short thesis.

TOYO $192M
Value Investors Club

The Verra Sneerer (NASDAQ:VRRM)

Verra Mobility renewed Hertz tolling management for five years. AutoKinex lets rental customers buy tolling, fuel and protection products…

VRRM $536M
The Oak Bloke 6 clicks

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