The Steppe Eagle OEIC Ltd on Adobe Inc.
Thesis
Adobe is presented as a highly profitable digital-content franchise spanning design, document signing and marketing software, with the fund expecting it to use LLMs across these products. The business is described as a reliable roughly 10% grower with operating margins above 25%, while the letter cites about $24 billion of revenue and operating margins above 36%. The investment case rests on strong profitability, stability and historically compressed valuation multiples. The fund holds a 2.5%+ position with an average buying point of 237. P(1) Harry Qelm Baabsman Steppe…
“It deserves its place in the portfolio with a decent growth profile and stability.”
Key risks
- LLMs may weaken Adobe's competitive position
- Figma and Canva may pressure Adobe's growth and valuation premium