Life Sciences, Adyen, and the Ongoing Software Debate
Takeaways from Our Latest Member Call
Yesterday, I hosted a bi-monthly open-forum member call, and I was impressed by the depth of the conversation. Echoing the lively debates we’ve been having in various online and offline settings, much of the discussion centered around opportunities born out of AI adoption (or fear thereof).
For those who couldn’t join us, here is a synthesis of the key insights and specific investment thesis highlights shared by our community of intelligent capital allocators. (Note: I have intentionally omitted most participant names in order to preserve their privacy.)
Life sciences: a setup still hiding in plain sight
Elliot Turner, Managing Partner and CIO of RGA Investment Advisors, opened with a multi-year research subject of his: picks-and-shovels life sciences. The argument is that the post-COVID overbuild has finally burned off, that tariffs, FDA disruption, and NIH funding strains are in the rearview mirror, and that these companies have quietly re-accelerated even as the market has refused to notice. Meanwhile, some of the most credible voices, including Jensen Huang, Demis Hassabis, Anthropic’s leadership, and even Stan Druckenmiller, are converging on life sciences as the single most compelling field for AI deployment. The gap between that chorus and the tape on these stocks is the opportunity.
Elliot’s two specific names: Sartorius (Germany: SRT, SRT3) and Bruker (US: BRKR). He frames Sartorius as one of only two pure plays on actually making biologic drugs, the other being Repligen. Within the Sartorius complex, his preferred vehicle (for investors who can live with the liquidity) is the preference shares, which currently trade at roughly a 20%+ discount to the ordinaries; historically they’ve traded close together. He also flagged a catalyst: the Sartorius family trust expires in 2028, ending a standstill with the founding family’s heirs, which could open the door to a takeover or capital actions not on the table so far.
On Bruker, the pitch is a founder-family-led business at its cheapest valuation ever (roughly 13x fully loaded earnings), with recurring revenue now at 40% of sales, up from 20%. He thinks the recent preferred issuance was unnecessary in hindsight, since the NIH resumed disbursements shortly after, but the business itself is well positioned. A large-cap-oriented member then echoed the thesis from the other end of the market-cap spectrum, favoring Danaher (US: DHR), Thermo Fisher (US: TMO), and Agilent (US: A), noting that the sell side won’t get interested until the inflection is clearly behind us.
A follow-up came on Avantor (US: AVTR). Elliot’s verdict: salvageable, but not nearly the asset management presented during the better years. Pieces of the portfolio are excellent, and the whole thing would be an attractive PE or strategic takeover target.
Payments: Adyen as a software-priced anomaly
Elliot’s largest software-adjacent position is Adyen (Netherlands: ADYEN; US: ADYEY). The bull case: 20% of market cap is cash, the company guided to 21–23% growth, got a 20% drawdown for its trouble, and trades at 22x this year’s EPS (mid-teens ex-cash), with some bottom-line leverage on top. 50% EBITDA margins, and a capex cycle rolling over. Adyen’s differentiators, as the UK-based investor who owns it as his largest position laid out, are enterprise-grade customers (Microsoft, McDonald’s, LVMH, Hugo Boss), a fully in-house stack that makes acquisitions nearly impossible, and cultural continuity despite the recent co-CEO handoff (Pieter van der Does stepped down; his co-founder remains).
The debate centered on the $5 billion of cash. Both Elliot and the UK member believe a buyback is the most sensible use of capital at this valuation, and both are implicitly betting management eventually gets there.
In response to a question on Shift4, Elliot’s work points to a lower-quality growth algorithm: processed-volume growth is high, but true organic volume on their own rails is essentially flat. It’s a “land-and-expand via acquisition” model targeting small business rather than enterprise.
Guidewire and the software-vs-AI standoff
Elliot flagged Guidewire (US: GWRE) as the rare vertical-software name that may actually benefit from AI, because it sits on a mountain of insurer data and prices on direct written premium rather than seats, so the standard “AI kills seats” argument doesn’t apply. A portfolio manager who sold the name in 2024 agreed with the moat (system, software, and service in one).
That set up the most animated debate of the call. On one side: a member who has been a student of the playbook of Constellation Software (Canada: CSU) argued that vertical market software is Constellation’s market to lose. His thesis rests on the scale of Constellation’s private-company database (essentially every VMS vendor on earth), the discipline of keeping annual relationships with every one, and Topicus’s 2025 acquisition cadence (more deals than the prior four years combined) — all of which AI only reinforces, because cheaper R&D favors incumbents who already own the workflow and the data. A second member, who has been adding to Constellation, Topicus (Canada: TOI), and Lumine Group (Canada: LMN), argued that for the typical customer, Constellation’s software is under 1% of revenue, so full in-house replacement generates rounding-error savings against the risk of breaking a mission-critical system.
The pushback: The real threat isn’t a weekend vibe-coder; it’s well-funded, industry-expert small teams with the Andreessen Horowitz playbook, AI tooling, and a plan for distribution. A16Z is literally publishing step-by-step guides on disrupting previously undisruptable verticals. And the rule that we overestimate one-year AI progress and underestimate decade progress applies with force. It’s easier to align with assets that benefit from AI adoption than debate moats that may look very different in five years.
An investor-programmer member summarized the in-between view: incumbents likely win eventually because they own the workflow and the data, but the intervening years are an arms race, and the question is how much margin and pricing gets competed away. He also nudged the group toward a more direct way to play AI: real-world operators like pest control and elevator maintenance, where productivity gains are not yet priced in.
Real assets, real estate, and Europe
I’ve been parking capital in undervalued European residential real estate, specifically Vonovia (Germany’s largest apartment owner, ~$20 billion market cap, less than one-half of NAV) and Aroundtown (less than one-third of NAV, engaged shareholder, recent buyback). Real estate is classic inflation protection that underperforms in the first leg of rates rising and catches up once pricing power gets recognized. It’s also one of the few places you don’t have to hold a view on AI.
A US-based investor added Healthpeak Properties (US: DOC) as his own life-sciences-adjacent real-estate idea: the Janus senior-housing IPO unlocked value that leaves the RemainCo (medical office buildings and lab space) trading above a 9% cap rate with a fortress balance sheet. He’s also watching Brad Jacobs’s vehicle as a roll-up in distressed home-building supply.
For European industrials more broadly, I’d point to the thesis that the US cheap-energy advantage is structural and that German energy policy has hobbled its industrial base. Plenty of US chemical names are still interesting.
A UK small-cap specialist confirmed that overseas buyers are now calling about UK-listed international businesses at London discounts, Auction Technology Group (UK: ATG) being a recent case in point. His playbook: market leaders with asset backing that have over-spent capex for three or four years and convert to cash generators in an inflationary environment. He won’t touch UK housebuilders (Barratt, Redrow, Vistry); expected rate cuts have flipped to potential hikes and build costs have exploded.
A special situation
Finally, a member I hold in high regard walked the group through a mineral-royalty owner the institutional world doesn’t bother tracking. I refer to the entity tongue-in-cheek as the next Texas Pacific Land Trust. While the member shared the name with the call participants, he stated that he is still building a position and would prefer the name not to be released.
I found yesterday’s call incredibly valuable, and I hope this summary provides you with a few actionable insights for your own capital allocation process.
Our next live call will be on June 24 at 2:00 pm ET. No formal registration is needed; you can simply click the following link at the scheduled time to join.