Polaris Capital Management, LLC on Adobe Inc.
Thesis
Polaris added Adobe after its share price had fallen well below its 2021 peak. The manager sees substantial value in Adobe's deeply embedded professional user base, which makes its software ecosystem relatively sticky. The integration of Firefly into Photoshop and Illustrator has also been well received. Together, depressed valuation, entrenched professional usage and improving generative-AI functionality created the entry opportunity.
“We added Adobe Inc., trading well below its 2021 peak”
Key risks
- AI-related competitive pressure weakens Adobe's professional-software franchise
- Firefly adoption fails to translate into durable growth
- The valuation discount persists