I have just bought some more WTC at $42 having topped up yesterday at $47.50 but will be buying no more reaching the limit to the capital I will deploy for it. The position is now 7.5% so over weight and the third highest amount of capital I have committed to a single company (XRG and RCE being the two higher).

The drop today on no news only sector sentiment tells me that momentum rather than fundamentals are driving the price. PME, REA, XRO, TNE, etc are all getting pummeled – it’s indiscriminate for the most part and while the first 50% of the drop in most of these companies was a fair adjustment on valuation grounds, things are going beyond – but may well keep going.

So I am set in what I consider a long term dominant business that will weather or ride the AI disruption well, continue to innovate and adapt to change and who’s current strategy is appropriate and will be seen as insightful in time.

There are plenty of hairs on the business, but I see the DNA of what got the company to it’s current dominant position as sound despite these issues. The rotation of pricing policy I think is bold but ultimately the only rational way forward, the expansion across the supply chain will ultimately lower risk despite the debt increasing risk near term and I also see WTC as very well placed to deliver customer needs such as CTO and AI workflow productivity improvements better than anyone else and from an incumbent position of power.

I am amazed at where the price has fallen to, having bought from $74.60 down I expect to hold at a loss for some time (situation normal for me). I was tempted by the other names I mentioned above but I see a lot more value in WTC and am a lot closer to it in understanding.

Lucky Friday to all.

Disc: I own RL+SM

Business Context

Wisetech is a leader in freight logistical solutions via it’s CargoWise product which is expanding it’s services and value to customers with additional features (modules) and across the supply chain via the E2 acquisition. In doing so it faces technical and market changes for the new products and services offered, integration challenges with the addition of E2 and a disruptive threat with AI that may provide bespoke and lower cost solutions for customers. In addition, it faces an increased polarization of global trade which threatens to reduce trade levels.

Investment Thesis

Wisetech will remain at the cutting edge or ahead of solutions for freight solutions due to it’s founder drive and focus on software engineering and customer value. The adaption in pricing model will enhance margins and align it to it’s customer value proposition to keep it focused on finding solutions to customer problems rather than customers for it’s solutions.

Deglobalisation of trade is yet another challenge for Wisetech’s customers, with increased complexity over trade rules and supply chain shifts. While trade levels may be in threat, the demand for supply chain solutions capable of handling such complexity will grow and Wisetech is well places to lead in providing customer solutions.

The current price at around and EV/M Cap of ~40 and PE ~34 on FY26 earnings requires the bottom line to grow at 15%+ for at least the next 5 years, which is reasonable given history but still challenging. In addition to customer growth it requires the revenue per customer to grow through the role out of CTO, new modules and the “sharing of the savings” approach to pricing with AI automation and workflows which offer revenue growth that can scale with value rather than diminish with efficiencies like the seat based model.

Like most long-term high growth compounders, it requires the company to adapt and change hence it’s the DNA of the company and management to meet and excel through periods of change that matter. This can not be modelled, only monitored to ensure the company continues to innovate and is prepared to make hard decisions that impact the short term for long term benefit.

Hence the thesis rests on the continued drive and innovation shown by Wisetech to date. This has been most attributed by Richard White directly, but is also part of the company DNA, I see CEO Zubin as a sign of this. If this is shown to not be the case then the thesis breaks down more than any other AI or competitive factor that may pose a threat.

Position

I have been building a position since late October and reached a full position allocation last week and am down 27% to this point. Which is small given the drop and not an issue given the long-term intention to hold and I am considering increasing it to an overweight position at current price levels. I last held WTC in 2019 and have been watching ever since (not finding value at much higher multiples), seeing this as an opportune value to get back in as well as having a favourable view of the companies direction grow and adapt.  I see issues with Richards personal life, governance and control as part of the territory for such an innovative and leading company, but would obviously prefer them to not be the issues they are.  I have no solid view or idea on near term price moves and will continue to monitor in context to it’s long term value.

Disc: I own RL+SM