Software is the most hated sector in the market today.

The attached chart maps the sector:

• Y axis: the cheapest stocks

• X axis: best business scored by Rule of 40 (revenue growth + FCF margin)

The bottom right is in a sweet spot. These are high-quality compounders trading at a discount. Constellation Software (CSU) is our highest conviction name.

Microsoft and Axon don't screen as cheap here, but we think the durability of their growth justifies their valuations. Toast is the newest name on our watchlist. Its fundamentals are solid, and the multiple is finally reasonable.

Also, consumption-led SaaS stocks like DDOG, SNOW, and MDB, as well as cybersecurity names like PANW and CRWD, have rebounded sharply in the past month. Worth digging in.