CrowdStrike Holdings Inc - Class A

CrowdStrike surged during the second quarter, with shares almost doubling, as the company cemented its position as the winner in AI-native cybersecurity. The company reported strong quarterly results, most notably from its AI Detection and Response product, whose ending annual recurring revenue grew more than 250% sequentially and provided further evidence that enterprises are rapidly adopting AI-native threat detection, as the complexity and velocity of cyberattacks continues to escalate. Free cash flow reached an all-time record, and management raised full-year guidance, reinforcing the view that CrowdStrike's platform consolidation strategy is generating durable, compounding financial returns.

CrowdStrike was the largest contributor as confidence returned to the AI-enabled cybersecurity thesis. The portfolio had meaningful exposure to AI infrastructure, yet remained less concentrated than the benchmark in the narrow group of semiconductor and memory-related winners. These are less visible parts of the AI value chain, but they possess the scarcity, technical complexity and pricing power that is increasingly rewarded.

CrowdStrike was added as an optionality position in the portfolio. The manager's strategy involves reassessing positions that outperform and determining if they should be promoted to a resilient position. The letter discusses the broader market dynamics affecting various sectors, including the impact of AI on valuations, but does not provide a specific argument for CrowdStrike's future performance.

CrowdStrike has demonstrated strong operating profit growth of over 25% in 2025, which is significant given the current market conditions. Despite the broader market's negative sentiment towards enterprise software, we believe that the fundamentals of CrowdStrike remain robust. The company is well-positioned to benefit from the ongoing AI revolution, as it continues to integrate advanced AI capabilities into its offerings. This positions CrowdStrike as a leader in cybersecurity, which is increasingly critical as enterprises navigate the complexities of digital transformation. The market's current undervaluation of CrowdStrike does not reflect its strong performance and growth potential.

We have identified firms which we believe have genuine potential in an AI world, assembling them into what we believe to be an extremely strong portfolio. Within the past 12 months we have added several companies to our Focus List, including cybersecurity software firm CrowdStrike. We look at each software company on its merits... and it involves identifying companies with strong moats and potential for AI to make their services even better.

CrowdStrike was mentioned as a holding that declined despite solid quarterly results, as investors questioned growth durability and valuation levels across the subsector. The letter discusses the broader market behavior impacting performance rather than providing a specific investment thesis on CrowdStrike.

CrowdStrike continues to capitalize on a rapidly expanding market, with its strong competitive differentiation fueling significant market share gains. This positions the company well within the information technology sector, particularly as demand for cybersecurity solutions grows in tandem with advancements in AI and other technologies.

CrowdStrike Holdings ended with a 3% gain, benefiting from optimism for software companies as beneficiaries of lower costs to implement AI, which could lead to broader AI adoption among organizations. Despite a retreat in shares following a report of better-than-anticipated results and a less-optimistic outlook due to one-time costs from last year’s outage, we believe that annual recurring revenues should reaccelerate later this year. Given this transitional nature, we began to add back to our holdings.