In the 4th quarter, the S&P 500 returned 2.7%, the Aggregate Bond Index returned 0.8%, and assets under Upholdings’ discretion returned 5.4%. Over the last ninety days, the expansion of AI-related investments and cuts to short term interest rates have driven equity prices.
Upholdings: 2026 Planning
We recently completed year-end planning conversations with every client focused on projecting cash inflows and outflows for 2026. If you’d like to map out the year ahead or stress-test your assumptions, email roman@upholdings.com for a quick consult.
Bots Galore
Last quarter we detailed ChatGPT’s remarkable accomplishments. But in just the last 3 months, we estimate that Google wrestled away 12% of ChatGPT’s share of searches with an improved Gemini chatbot. Google has an incredible advantage of integrating Gemini into their ecosystem of search bars, Chrome browsers, YouTube, and Android powered devices. This level of competition is great for customers, but awful for investors. We have been actively repositioning assets away from the AI due to these industry issues:
Cost of Delivery: The average chatbot search currently costs roughly 30x more to process than a traditional Google search.
Saturation: The list of firms training and delivering LLMs is now immeasurable, leading to a "race to the bottom" on pricing.
Introducing Constellation Software
Constellation has outperformed the S&P 500 in 18 of the 20 years it’s been a public company. But in 2025, its share price has underperformed the S&P 500 by 44%. Like Berkshire Hathaway, Constellation is a holding company that pursues long term acquisitions. Historically their focus has been vertical market software. The stock has been punished by two fears: that AI will automate away their software’s utility, and that the company will lose its way after founder Mark Leonard stepped down for health reasons.
To date, there is zero evidence of niche software-as-a-service (SaaS) losing customers to AI. In fact, most of these companies are using AI to make their own developers more efficient. Regarding the loss of their founder, the company has long operated as a collection of divisions, now with eight key leaders: Barry Symons (Jonas), Daniel Zinman + Bonnie Wilhelm (Perseus), Damian McKay (Vela), Michael Dufton (Volaris), Jean Soucy (Harris), David Nyland (Lumine), and Robin Van Poelje (Topicus). The retention and success of these diverse groups will determine the success of the company. We have jumped at the opportunity to become shareholders in a company we have long admired.
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
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.