Fellow investors,
In the 1st quarter, the S&P 500 returned -4.3%, the Aggregate Bond Index returned 0.0%, and assets under Upholdings’ discretion returned -6.2%. Our clients lean into growth companies that underperformed in the quarter primarily from software valuation multiple contraction.
War is Money
Wars are economic machines: they drive jobs, manufacturing, and innovation. Since the early 1800s, following the start of nearly every war, world GDP growth has been strongly positive in the ensuing 10 years. The two exceptions: the Taiping Rebellion in 1850 and the Dungan Revolt in 1862. Thanks AI.
Both events depopulated China to an extent that decades of repopulation were needed to recover. Modern conflicts have experienced significantly less loss of life, consistently measuring <2% of the global population. Crude oil prices are up 95% year-to-date and the uncertainties of war are destabilizing, but economic engines hum along so long as life persists.
Get Your Taxes Right
This is the time of year to not only ship documents to your accountant, but also to make smart decisions that can compound over time. Adjusting withholdings, exercising in-the-money options, and strategically deferring income are powerful tools.
For a recently married couple, we adjusted salary and equity withholdings to reduce IRS penalties. For a family who recently exited their ‘life’s work’, we utilized safe harbor rules to defer the primary tax payment until April 2027.
Proactive tax work helps you keep more of what you earn.
Adyen, Again
We first introduced Adyen (ticker: ADYEY) in our quarterly letter in July 2024 at $12 per share, and revisited it in October 2025 at $16 per share. Today, the shares trade at <$10 per share.
Since July 2024, payments processed are +20%, revenue is +39%, and free cash flow is +66%. The business is performing, but the stock is not. Our conviction in the company has grown due to the diversification of their customer base beyond digital-only into omni-channel (digital + physical stores). Omni-channel has expanded from 25% to 34% of payments in recent years, creating the potential for more stable growth.
The confusion over AI’s impact on the software industry is creating a rare opportunity to acquire shares of high quality software companies.
Social Impact
Expanding access to education is the best tool we’re aware of to fight against the perpetual widening of economic inequality. This quarter, we again supported Khan Academy.
Roman & Robert
p.s. As you now know, we re-platformed our quarterly letter onto Substack. Please report back any issues.
Disclaimer: this letter is for educational purposes only. It is not a recommendation to invest in any particular security or strategy, since anything mentioned herein may be unsuitable for some investors. Speak with your financial adviser before investing. Upholdings cannot guarantee investment results. All investing involves risk, including the complete loss of invested principal.