Dear Esteemed Investors,
Technology, for a long time, was treated as something of an exception within equity markets. That perception has changed. The scale of capital deployment within it has expanded to the point where many of the underlying businesses now exhibit characteristics that are far more cyclical than previously true. Tech is now a cyclical. With tech-with-moats no longer asset-light, its capital-intensive ecosystems are tightly bound to global macro forces, financing environments, and geopolitical realities. When economic uncertainty rises or when political tensions begin to affect capital flows and trade, these businesses are not immune. In fact, given the attention they attract and the positioning they command within portfolios globally, the market's reaction to any perceived slowdown will be amplified.
We have seen elements of this dynamic play out in recent weeks. The global economic environment may no longer be as supportive as it has been in recent years. Our portfolio has suffered from the first rounds of risk blowout, and a sustained period of highly volatile markets with rising economic risks is a genuine and present danger for portfolio performance in the coming months.
It is important to acknowledge this clearly. The businesses we own are not detached from the broader economic cycle. They will, at times, be affected by it both operationally and in terms of market perception. They are, in many ways, a natural consequence of investing in areas that sit at the intersection of rapid innovation and large-scale capital deployment.
The key question for long-term investors is whether the secular force weakens or is postponed, or counterintuitively strengthens. We believe it is strongly the latter.
As we have discussed over the past several months, generative AI presents two distinct sets of benefits for individuals and for enterprises. The first is the creation of new products and services, along with improvements in efficiency and capability. This is the more visible side of the story, and the one that typically attracts the most attention when times are good.
The second, and equally important, is its ability to fundamentally reduce the cost of performing a wide range of activities. This aspect is often less discussed, but it may prove to be more consequential, particularly in a world where economic conditions become more constrained. In the history of innovations, few have had as much potential to reduce costs as quickly and broadly as generative AI. If businesses and households globally shift their focus to conserving resources, improving productivity, and reducing expenditure, technologies that enable meaningful cost savings will naturally see accelerated adoption. In such an environment, generative AI moves from being an optional enhancement to becoming a necessary tool.
This is not a theoretical observation. It is something we have experienced directly.
When we started building GenInnov, we did so with a clear understanding of the constraints we faced as a bootstrapped start-up. From a standing start, without the benefit of legacy infrastructure and given the uncertainties across regulatory processes, operational requirements, and business development, GenInnov needed to build frugally and innovatively. From the very beginning, we adopted a disciplined approach towards costs, focusing on building a robust platform while remaining extremely selective in how we deployed resources.
Partly because of these constraints, partly because of our tendencies, and supported by our enthusiasm, we turned to the latest generative AI methods to shape every process and operation. Whether it was navigating licensing requirements, conducting research, constructing investment frameworks, developing risk models, or streamlining internal workflows, leveraging these tools not only shaped our culture but also significantly reduced the capital we needed to commit.
Looking back, it is reasonable to say that we have reached our current position at a fraction of the cost typically associated with setting up and running a similar operation. If we had to put a number, we would suggest less than a quarter of what could have been required otherwise. The philosophy of disciplined spending played a role, but the enabling factor has been the technology itself. It has allowed us to do more with less while simultaneously improving the depth and quality of our work.
This experience shapes how we think about the broader opportunity. The adoption curve for technologies that deliver tangible savings could steepen considerably in a slower economy. Generative AI has the potential to benefit not only from growth-driven demand but also from constraint-driven demand.
This does not imply that the stocks associated with these technologies will be insulated from market volatility. Valuations, positioning, and sentiment will continue to play a significant role in how they trade, particularly in periods of uncertainty. However, the underlying demand drivers may prove to be more resilient, and in some cases, counter-cyclical.
For us, this duality is important. On one hand, we remain mindful of the cyclical risks that are becoming more evident in the current environment. On the other hand, we continue to focus on the structural changes that are reshaping industries and creating new forms of demand. Navigating between these two forces will require patience and resolve, without losing sight of longer-term opportunities.
In our portfolio management, we do not attempt to predict short-term market movements, nor do we assume that volatility can be avoided. Instead, we focus on understanding the underlying businesses, the nature of the demand they serve, and the sustainability of their competitive advantages. Where we believe the long-term trajectory remains intact, we are prepared to accept periods of discomfort in the interim.
As we reflect on the journey so far, it is also a moment to acknowledge the support we have received. We are approaching important, digit-changing milestones on both assets under management and investor count in the coming weeks when we will also mark the funds’ two year anniversary. Each new investor represents not just additional capital, but a shared belief in the philosophy and the process that define GenInnov, and we remain deeply grateful for this trust.
Building an investment firm is a gradual process, shaped over time through consistency, transparency, and performance. While we are still in the early stages of this journey, the foundation being created is a direct result of the confidence and engagement of our investors. We will continue to approach this responsibility with the same discipline that has guided us from the start, careful in our decisions, thoughtful in our analysis, and focused on outcomes that justify the faith placed in us.
GenInnov's operating philosophy is the same thesis we are investing in. We have built on less, with more to show for it, because of precisely the technologies we believe will matter most in the years ahead. That alignment is not incidental. It is the point.
As we navigate the turbulent months ahead, please feel free to reach out if you would like to discuss any topics related to our portfolio. As always, our doors remain open if you want a demonstration of the technologies we use.
Yours sincerely,
Nilesh Jasani
Portfolio Manager
Dear Esteemed Investors,
Sometimes markets are simply wrong. Period.
One of our largest holdings has risen nearly seven times since our initial purchase. Yet, even after this move, it trades at roughly seven times forward earnings. It is certainly benefiting from a one-off spike in demand amid shortness of supply, but companies do not climb on a run rate of USD 100 billion in annual profits out of happenstance alone. So, seven times rise and still around seven times PE is not just a fancy statement to open a letter, as much as we love the setup, it has more things that we need to worry about other than the sheer price momentum.
Another large holding, which we described as one of the world’s most important robotics companies despite its classification as a car manufacturer, has nearly tripled since our purchase. At the time of entry, its forward price-to-earnings ratio was so low that it was comparable to, or even below, its dividend yield. Another thing to boast, and another to worry about.
We had written extensively in late 2024 and early 2025 about the extraordinary mispricing in the Korean market. An economy with per capita income exceeding Japan’s was still classified as an emerging market by many global investors because of its historic baggage. It was far worse: Korea traded lower than almost any emerging market multiple, and people had justifications in corporate governance or geopolitics, as if there was no one with worse companies, assets, politicians, rules, and geopolitics in the world, irrespective of the facts saying the absolute opposite.
We believed the simpler explanation was mispricing. Mispricing, however, does not imply an immediacy of correction. We are old enough to know that markets can remain inefficient for far longer than our patience. Our investment decisions were not based merely on statistical cheapness; they were based on the belief that structural and technological developments afoot would force a quick recognition.
And now we are on the other side: the rerating of Korean technology and industrial companies has been unusually rapid. Some of our holdings have appreciated to levels that would have seemed improbable even three months ago. These moves bring satisfaction, but they also bring responsibility. Our task is not merely to identify mispricing; it is to continuously reassess whether the original thesis remains intact, strengthened, or fully reflected in price. While we still see tremendous value in what we hold in Korea, we have to recognise that market appreciation of this pace is going to attract regulatory controls to contain it, and the volatility that could engulf our portfolio on account of the involvement of new momentum investors. A fear of volatility should not force us to change but we equally recognise that our risk monitoring on the Korean positions must be higher. More importantly, the bigger danger is intellectual inertia, particularly around companies that could be transforming from the forces at work. This is where we may have opportunities elsewhere, in fields we have not explored so far.
Several themes that were previously overlooked are now widely understood. Hardware infrastructure, advanced manufacturing, and robotics are increasingly seen as foundational layers of the AI economy. Businesses once dismissed as cyclical or commoditised are now recognised as critical enablers of structural technological change. In many cases, this recognition is justified and long overdue. At the same time, the opposite is occurring elsewhere. In the software and application layer, we are witnessing significant disruption. Business models that appeared stable are being reassessed. Competitive advantages built over decades are being challenged by technological shifts occurring over months. The market has reacted swiftly, and in many cases, harshly.
We are not contrarian investors for its own sake. Nor are we value investors seeking statistical cheapness. Our focus remains innovation and growth. We seek businesses with expanding technological relevance, not merely depressed valuations. Oversold conditions alone do not create opportunity; reinvention does.
What is increasingly evident is that companies across the application layer are responding. Many are reorganising, accelerating innovation, and building new capabilities that did not exist even a year ago. Disruption, while painful in the short term, often serves as the catalyst for the next generation of growth. This is where our attention is increasingly directed. To be clear: we are not interested in mere value or in stocks that may simply be excessively pricing disruption. We are looking for application-layer companies working on new innovations for the new environment. These are companies with the most dynamic managers and extraordinary human talent, aided by machines whose capabilities are rising exponentially.
Yes, a great deal of what machines are doing is disruptive of these companies’ old ways. But these are organisations capable of innovating the new—the Netflix of the 1990s, if you will. We are evidence-based, and as a result, we are unlikely to invest on the announcement of plans or visions of what might be. But our eyes are now wide open.
Some of the themes we wrote extensively about over the past two years are now widely discussed. The informational advantage that once existed has diminished as these ideas have become part of a broader market consensus. This is a healthy evolution, but it also means what we look at and discuss must keep evolving. To our readers, some of this shift might already be visible in our recent notes around drug discovery. We hope to continue on much more in the coming months, not just in our writing but in the way the portfolio takes shape. We also remain deeply aware that innovation rarely follows linear paths, and many themes will last us for decades irrespective of whether the underlying stocks have already gone up multiple times. After all, everyone has a story of NVIDIA-like 100x gains for themes that actually endure. It is between such massively long-term themes and innovations born out of the need to pivot that we must find the right balance.
As always, we remain grateful for your trust and partnership. We encourage continued dialogue and welcome your observations. Some of our most valuable insights have originated from conversations with investors who observe industries from perspectives different from our own.
Yours sincerely,
Nilesh Jasani
Portfolio Manager
Dear Esteemed Investors,
Happy New Year. We hope 2026 brings good health, clarity, and calm amid what continues to be a noisy investing environment.
This wasn't a month of surprises. It was a month where ideas we'd held quietly began surfacing in broader market conversations. Our portfolio isn't built on a single grand bet. We try to piece together multiple, durable themes and hold them long enough for their value to be recognised. Some work in silence. Some only matter when others start asking the same questions.
Over January, three of these themes became more visible.
The first is one we've highlighted for more than two years: the erosion of application-layer software moats in the age of generative AI. While investor attention has centred on AI winners at the model and infra level, we've focused on where disruption hits hardest. Software companies with shallow or UI-level moats are more exposed than commonly believed.
This has never been an anti-software argument. We continue to admire the pace and creativity of software innovation. But rapid innovation does not always equate to defensible business models. Generative AI lowers switching costs, compresses differentiation, and trivialises feature-level distinctions. Prompts can replace interfaces. Integration becomes interchangeable. When everything starts to look similar, economic moats fade.
For a long time, this sat uncomfortably with the consensus. Software was seen as the natural beneficiary of AI. That narrative is now being challenged. Analysts are beginning to ask what survives, not just what leads. Our positioning has benefitted indirectly from this realignment. We've deliberately avoided areas where value capture depends on increasingly fragile moats.
The second theme lies in the upstream end of the semiconductor value chain. As generative AI scales, bottlenecks have moved from model performance into physical constraints around compute, packaging, and memory.
We've written about this consistently all through 2025 and discussed the rapidly creeping crunch under the term "Silicon Shock” to start the year. Bottlenecks at the atomic level have outsized ripple effects. They show up in pricing, power dynamics, and strategy shifts across the entire AI ecosystem. What we once considered cost centres have become chokepoints. Companies in this segment are not just beneficiaries of AI. They are becoming its gatekeepers.
This view has guided several of our investments. Over the past few weeks, some of these names have begun to rerate meaningfully. We believe this theme is far from done. The investment debate, in our eyes, still underestimates the macro and other implications of the shortages underway.
The third theme concerns Hyundai Motor, and more specifically, the part that few analysts ever discussed: Boston Dynamics.
We sized our position meaningfully over the past year and a half. On the surface, it was a dividend-yielding car company with improving capital discipline. What interested us most was hidden optionality: ownership of one of the world's most advanced robotics platforms. No one was paying for it. If recognition arrived, the impact could be outsized.
This month, that optionality surfaced. Market attention shifted from vehicles to autonomy, from legacy multiples to technology ownership. Hyundai's stake in Boston Dynamics is now viewed as a significant strategic asset in a world where robotics and AI-driven motion are set to converge. The stock responded with sharpness we could not have imagined. We were glad to have been positioned on a quiet thesis patiently held.
This is the kind of mispricing we try to find. Not because we believe we're smarter, but because we're willing to look where others aren't. Often that means enduring long periods where little happens. Occasionally, those periods end with sharp re-ratings that justify the wait.
Across these three themes, we find a common thread. All reflect our instinct to look ahead, but not fall in love with being early. Being early only matters if you're right and can stay the course.
As always, thank you for your trust and your time.
Warm regards,
Nilesh Jasani
Portfolio Manager
