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Around the Desk: This is where we at Avory think out loud, challenge narratives, and look for signal through the noise. Each episode, the Avory & Co. team dives into what’s moving markets, how companies are performing, and where opportunities may be forming. We break down earnings, macro trends, and investor sentiment — all from the lens of a concentrated, high-conviction portfolio.
*** The views expressed on Avory Podcast: Around the Desk are those of the hosts and guests and do not constitute investment advice. This podcast is for informational purposes only and should not be relied upon to make investment decisions. All investments involve risk, including potential loss of capital. Avory & Co. may hold positions in the companies discussed.
Sean-1: All right, you are listening
to Avery's around the Desk podcast
where we dig into markets, companies,
and ideas shaping what is coming next.
I am Sean Emery, chief Investment Officer
and founder here at Avery and Company.
You know, this conversation is
for informational purposes only.
Should not be considered
investment advice.
We may hold positions
in companies discussed.
Uh, please do your own research
before making any investment.
Decisions, you know, all of that.
You know, this week I think our goal
is to talk about, you know, software
in general, AI in general, the economy
in general, and, you know, focusing
on, you know, what are some of the
characteristics we're looking for.
If you went back last week, we made
a list of seven different things that
could happen, uh, you know, for the
AI narrative to start bending again.
We're big believers in, in, you know,
how transformative it it is to, you
know, workflows, businesses, uh, the
economy, you know, both from a positive
and from a negative standpoint.
But, you know, this week I wanted to start
with, you know, setting the tone here.
It's, you know, let's
start with sentiment.
You know, we're looking at
insider buying here, uh, you know,
going back to 2010 every time.
You know, insider buying has
reached kind of this level
of, of, of scale or magnitude.
Let's say, you know, I'm just eyeballing
this, but, you know, 20 12, 20 15
is 16, 20 18, 20 20, uh, 20, 22.
And then today you are
seeing this level of buying.
You know what's interesting I think is,
you know, 20 15, 16 is very similar,
um, to what we're seeing today.
You know, back then we saw.
Uh, software under pressure.
We saw growth concerns, you know, gyrating
back and forth, macro uncertainty and
insiders, the one that are ultimately
buying or running these companies,
uh, were buying, uh, their shares.
So insiders, you know, for us, you
know, if you just step back, you
know, insiders don't buy headlines.
You know, they buy, you know,
the durability, the, the vision
and, and ultimately what they're
seeing, uh, in their business.
And I think that ultimately matters,
if you, if you take the insider buying
on the bottom side and you, you, you
map up and you look above, you can
just see where those periods were.
They tend to be.
You know, flushed out periods.
They, they happen in, in, in, in bunches.
So it's not like a, you know, a
single moment, but it's, uh, you
know, the compounding of, you know,
a consistent buying spree from them.
And you're seeing that today at levels
we saw during, you know, um, moments
where, you know, seemingly, again, looking
backwards, those ended up being, you
know, good, uh, proxies for what to do.
Now.
Next again, is tariffs.
Um, we learned today, this
is Friday, you know, 20th.
Uh, that the Supreme Court struck down,
you know, global tariffs and ultimately
potentially, you know, cutting the
effective tariff rate by more than half.
Now we know, you know, the administration
and Trump is, you know, currently
in meetings, you know, I'm watching
headlines, you know, pop on my screen,
you know, potentially a 10% global tariff.
Um, but the directionally, directionally,
I think though this is positive, you know,
it, it does lower ultimate cost pressures.
I know, you know, terrace is
used as a tool, seemingly it
seems, you know, for trade.
And there's, you know, there's
definitely been some, you know,
positives from that aspect.
You know, if you go back to April
of 2025 last year, you know,
our view was, you know, tariffs
wouldn't induce a inflation shock.
And the reason behind that was just
simply that tariffs were going to
take place over, uh, multiple years
as opposed to a single point in time.
And I think that was the big difference
that I think, um, you know, investors.
Uh, or even economists really,
uh, you know, got wrong.
Uh, and you know, our view that, you
know, it wouldn't be a, a single burst
in inflation, uh, was predicated on just
thinking through logically how humans and
businesses interact with, uh, you know,
their supply and their supply chain.
So, uh, we'll see what happens there.
I think the messy part here
is really around refunds.
Uh, if there is any refunds.
And, you know, one interesting thing, and
we noted this, um, last year, last summer.
Where Lutnick, you know, who's in
the administration, uh, was head
of, um, Kenner Fitzgerald, right.
He, you know, founded it and, and no
longer, I believe is a, you know, totally
influencing any of the decisions there.
But they had a, a program around, uh, you
know, refunding, you know, for tariffs
and, and essentially creating a market.
And I highlighted, you know, back in,
in, uh, you know, July, roughly July
of last year, just articulating that.
I find it interesting that somebody
that's in the administration.
That is putting together much of the
trade relationships has a firm that, you
know, seemingly no longer associated with.
Let's say, um, you know, day
to day is one of the only ones
creating a market for a refund.
So I thought that it was
interesting for me, it was
signal, uh, of what could happen.
Um, and sure enough, here we are where,
you know, not that we're seeing refunds,
but the, the idea that tariffs can
get knocked down and potentially, uh.
Suggest refunds are on the way.
And the refunds, I believe,
you know, the math around that
is, is around 170 billion.
And that would go obviously back
into the coffers of, of companies
inside, um, the us, you know,
and, and probably some abroad.
Next up is, is business formations.
And I think this is important,
you know, business formations
are up 36% year over year.
It's massive, like, totally massive.
You know, I isolate here,
the, the growth there.
You can see it on the, on the bottom
right, where you know, ultimately.
36% growth.
There's no real comparable periods.
The only comparable surge we've seen
in recent memory was during COVID.
Another, you know, structural shift
moment AI is, is three years old
now, and what we're seeing is more
businesses being created, not fewer.
Uh, you know, the AI is not necessarily
suppressing entrepreneurship.
It seems to be accelerating
entrepreneurship.
Um, and creativity overall seems to be
being unlocked here, where ideas can turn
into businesses much faster than ever.
And, you know, I'm a big believer
that we'll likely see smaller,
uh, organizations because of
ai, but we'll likely see more
businesses, uh, because of ai.
And, and that's showing
up in the numbers here.
Um, so very interesting,
uh, to say the least.
Now, next up is, you know, what
is the health of the consumer?
And so we look at like high
frequency indicators, you know,
open table reservations, TSA,
you know, passenger traffic.
And both of those are stable.
You know, they're not booming,
they're not collapsing.
Um, you know, they have their seasonal
moments, uh, but ultimately stable.
And I think it's very important
when you put that into the
context of, you know, markets.
And different areas of the
market that obviously you want
a stable, uh, macro backdrop.
And we think it's only going to improve.
As, you know, tax refunds really
start to, uh, to hit here, and we
talked about that in our annual.
Next up is, you know, we've been sharing
this, which is, uh, looking for washed
out conditions specifically in software.
Um, and we track, uh, a signal
that we have internally, um, and
we, we can use it on any, any, um,
market let's say, or any security.
Uh, in this case we're looking
at, you know, the software
index and we just got our second
signal, um, in two weeks roughly.
And historically what we, what we know
is, you know, this signal, which is
again used as a washed out signal,
it has a couple different indicators
inside of it that then suggests,
you know, things are washed out.
Um, that doesn't mean things, you
know, it's not perfect by any stretch.
Uh, but I do think, you know,
there's very few instances where
software has been this washed out.
And historically it's been, you
know, fairly meaningful bottoms.
The only other time really, uh, in
the recent history is 2020 again.
So a lot of, uh, analogies in terms
of business formations, washed out
behavior, um, and some of the other,
you know, stuff I mentioned above.
But, you know, we're not guaranteed
a bottom by any stretch, but
positioning is washed out.
You know, sentiment is stretched,
uh, signals are flashing
here with our second one.
And, and again, I don't think the
combination of all this is random.
Um, you know, what is a bottom, you know,
not really part of, you know what I wanted
to talk about, but a bottom, it doesn't
have to be, you know, precise, right?
It's, you know, are you
in the bottom phase?
And then you can build back up.
And we call that, some people
call it the wall of worry.
I talked about that last week.
How do we climb that wall of worry?
And then there's the technical
aspects, which is really around.
You know, um, what is sentiment
and what are the indicators
suggesting within software?
And I think, again, if software bottoms
finds a floor and, and kind, uh, build
back up, uh, what that can imply and
suggest for companies and, and portfolios
that have, you know, some exposure there.
Um, next up is, is, uh.
The AI job narrative, um, verse
kind of some of the reality
checks that are out there.
So there's this loud narrative,
clearly, and I, in, in many ways
I believe it, uh, depending on
the specific category and area, is
that AI is killing, you know, jobs.
Um, it's, that's not showing up,
you know, in scale, let's say.
Um, but it, there's also the
idea of AI killing software jobs.
And so we looked at Indeed job postings.
Uh, people post their job, uh,
of who they're trying to hire,
and they aggregate those up.
And they're rising,
they're not collapsing.
And if AI were displacing developers
in total, uh, I think this would be
the first place we'd see it, right?
You'd see this, uh, collapse and
continue to go down to the right.
And, you know, job postings
are not 20, 20 versions, right?
That was the moment where you saw massive
job postings in software development.
So that's a little bit of counter there,
but instead we're seeing, you know,
postings are trending higher since.
You know, last year, and they
continue to trend higher.
And ultimately I would've thought
that this would've gone the other way.
So it's a little bit counter to the
narrative, and maybe because we have
more companies being formed, um, that
we need more isolated, you know, um,
smaller teams of, of software developers
that know how to, uh, oversee, uh, their,
their agenda coding, um, versus not so
interesting, uh, data point nonetheless.
Now the next one is, is really around.
Again, more of the creation
creativity that's happening out there.
We're seeing more creation, not less.
And this is again, our thesis around
ai, which is, you know, there's a lot
of nuances to the AI story, but when we
look at app store releases or anything
related to developing things, um, for
others is, is this, you know, iOS app
releases are up 68% year over year.
Um, you can just tell on this, on
this graph, like, this is far exceeds,
exceeds like any other moment in time.
Yeah, even if you take like
a trailing 12 month and you
aggregate that up, it's 31% growth.
So all of that is explosive.
Companies are getting, you
know, potentially leaner.
Um, that's a good thing.
Uh, I do believe that that leads
to probably more fractional
work long term, but I think the
ecosystem overall is expanding.
So more apps, more tools, more creation,
you know, that's what, um, I think early
platform revolutions tend to look like.
Um, and so again, not saying,
you know, AI this or AI that, but
it's more what, what is happening?
Uh, underneath the surface.
A couple more, uh, slides here, you
know, zoom, uh, report, uh, not reported,
but Zoom had a, uh, you know, I was
on a podcast, uh, chitchat stocks.
Uh, so go check them out, you know,
um, they do good work over there,
but, you know, I, I went on there and
talked about the, the Zoom thesis.
You know, the thesis
there is, is, is healthy.
You know, they're integrating AI
across their stack, you know, it
has a big, uh, uh, stake relative
to the size of their business.
You know, it's roughly,
you know, 10 to 15% of.
You know, their market cap today
is an investment in Anthropic.
Uh, I talked about that over
the course of the last month.
Um, and it's positioned, well, it's
positioned at application layer, it's
positioned, uh, you know, they have,
you know, model capabilities that they,
that they're building out as well.
Uh, they call it federated models, and
they, they have smaller language models
as well that are specific to their domain.
So again, I think, um, there's, uh,
you know, some information that you'll
learn new, uh, if you go listen to
it, but you can listen to it on like
Spotify and, and, and other, uh, venues.
The other one this, uh, you know,
notable for us is, you know, Mr.
Car Wash.
We made an, that investment, you know,
less than, you know, seven, eight months
ago, roughly, um, nine months ago, eight
months ago, whatever it was, and, you
know, uh, have, you know, building that
position here over the course of time
and, and, uh, they were taken out by.
Um, private equity, uh, again, I think
more, more importantly is, you know,
it's validation of finding, you know,
a good asset, um, that has some of
the characteristics you would look
for, and there's clearly value in it.
Uh, and private equity sees that.
And, you know, again, it's not
screaming AI or anything like that
or, uh, but it, I think it's a
notable, uh, thing to, to articulate
here, uh, big earnings next week.
Very big earnings.
You know, we get Salesforce,
we get the trade desk, we get
Nvidia, we get Snowflake synopsis.
Pure Storage Nutanix.
Uh, who else we got
Workday, Xometry, Duolingo.
You know, some of those are in
the face of AI and people are
questioning their stories and
their fundamentals and and whatnot.
And some of those are, you know, on
the, on the, on the front end of, of ai.
And, um, it's gonna be a, a interesting
week to, uh, to see the dynamics
at play, to see, you know, what's
happening in both those spaces.
You know, Nvidia we'll have,
you know, maybe our own.
You know, a conversation on that.
Uh, uh, next week after they
report Snowflake as well.
Uh, some of these we either have a
position in or may not have a position
in, um, some we've owned in the past.
Uh, so we'll, we'll be, you
know, good observers there.
Um, that is most of it, um, you know, and
not shown here, but the, the, uh, the, um.
You know, inflation data, the GDP data
all fairly constructive, you know,
pointing generally in the right direction.
So ultimately that is that.
So in closing, you know, are we,
you know, at a bottom in software?
You know, I don't know yet.
You know, nobody actually knows that.
But here's the facts, you
know, in insiders are buying,
that's generally a good signal.
Broadly, uh, for markets.
You know, business formations are surging.
You know, software jobs are
rising, not actually sta not
even dropping or, or coming down.
App creation, uh, is
accelerating with the iOS data.
You know, consumer activity is stable.
With some of the other data points
that we're, we're, we're sharing there,
technical signals are flashing that,
you know, if that signal holds up,
you know, we're clustering around,
you know, some of these, uh, bottom.
Ticks, let's say.
Um, is it the perfect bottom?
Who knows?
Um, we're not market timers like that.
We're, you know, definitely fundamental
investors looking for strong businesses.
Uh, the market is the mechanism
of making those investments.
So, you know, really taking that, you
know, old school approach and in the
markets and, you know, not trying to,
you know, trade every day and, and
do those things, but if fundamentals
hold up, sentiment eventually follows.
You know, with that, have a great weekend.
We'll see you next week.