Episode summary
Navigating an AI-Driven Market w/ François Rochon | Constellation Software, Kinsale Capital, & LVMH
We Study Billionaires
· · 1 hr 22 min · Hosts: Clay Finck · Guests: Francois Rochon
Summary
Francois Rochon said 2025 was a difficult year for his portfolio, with Constellation Software falling 26% despite solid operating results and two long-held positions, CarMax and Fiserv, disappointing enough that he sold both. He emphasized that his approach is long term, but he will still sell when he thinks a business has lost some of its moat or when balance-sheet risk becomes too uncomfortable.
A major theme was artificial intelligence. Rochon argued that AI has advanced extraordinarily fast, making it hard to predict five or ten years ahead or to assign durable earnings power to related businesses. He compared the current buildout to the internet era and, historically, to the railroad and fiber booms, but said the big difference today is that companies like Alphabet and Meta are funding the spending from their own cash flow rather than heavy debt.
He was especially constructive on Alphabet and Meta as defensive AI spenders protecting core franchises. He also defended Constellation Software, saying the market has re-rated software names too harshly on AI fears, even though he believes most of Constellation’s niche software should not be easily displaced. He said the stock’s lower multiple now looks attractive if the business remains intact.
Key takeaways
- Rochon said 2025 hurt performance mainly because Constellation Software fell 26% and he sold CarMax and Fiserv after both weakened materially.
- He argued AI is a real revolution, but its speed and shifting leadership make earnings and valuation models highly uncertain.
- Rochon said Alphabet’s and Meta’s AI capex is different from the railroad era because both fund it from strong cash flow, not debt.
- He believes Meta has gotten the best return on AI spending so far because the investment improved ad targeting and monetization.
- He thinks Constellation Software may be cheap at about 18 times earnings if its businesses remain intact and growth stays around 20%.
Notable quotes
“I think they are investing those large amount of money to protect their business mostly”
How the episode opens
0:00It's it's not a bubble. It's really because those companies have grown at incredible rate. So as they cut be bigger weight in the S&P their 0:099 secondsperformance increase the overall growth in earnings of the S&P because if you would probably subtract those companies 0:1717 secondsall the other sectors I would guess that the growth has been close to 6% the average.
0:2424 secondsSo yes, it's justified the the 14.1% growth in the last decade for the S&P. 0:3030 secondsThis while the 10.8% growth in earnings and plus dividend, but also the increase in the P ratio. It's also justified 0:3838 secondsbecause these companies are growing faster than the typical company and they warrant a high higher P ratio.
0:5353 secondsBefore we dive into the video, if you've been enjoying the show, be sure to click the subscribe button below so you never miss an episode. It's a free and easy 1:001 minuteway to support us and we'd really appreciate it. Thank you so much.
Hey everybody, welcome back to the Investors Podcast. I'm your host Clayfink and 1:091 minute, 9 secondstoday we welcome back Francois Roshan from Jabverni Capital. Francois, as always, it's great to have you back.
Thank you. 1:171 minute, 17 secondsSo, you just published your annual letter for 2025, which I certainly always enjoy visiting each year, and we'll be getting to, you know, your 1:261 minute, 26 secondsletter, the markets, and your investments as always, but I'm curious as you look back on 2025. 1:331 minute, 33 secondsWhat are some of the things you learned throughout the year?
It can be investment related or really anything you found useful or interesting. 1:401 minute, 40 secondsWell, it was a tough year. uh you know at first our biggest holding consolation software although it had good results 1:481 minute, 48 secondsthe stock went down 26%.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- ai valuation
- alphabet and meta
- small business software investing
- insurance and fintech
- s&p 500 outlook
Companies and tickers mentioned
- GOOGL
- GOOG
- META
- KNSL
- LVMUY
- KMX
- Alphabet
- Meta
- Constellation Software
- Kinsale Capital
- LVMH
- CarMax
- Fiserv
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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