Conventum - Alluvium Global Fund on H&R Block, Inc.
Thesis
Alluvium believes the market overreacted to the risk that artificial intelligence could displace tax-preparation services. Management is instead using AI to improve its products, and those products are being well received. The business generates high returns on capital and, even after a strong quarter, trades at double-digit cash-flow and earnings yields. Its physical presence also provides differentiation for tax clients, supporting the fund's view that the stock is not expensive.
“rather than AI replacing its products, it is using AI to build better products”
Key risks
- Artificial intelligence could disrupt traditional tax-preparation products more than the fund expects