Tech Stocks Have Treated Us Well – Next Up?

• Commentary: New Portfolio addition coming on Monday - Tech. Weekly gold and silver commentary.
• The other usual stuff: will be in tomorrow’s new Sunday Edition, including what we wrote about this week, quick takes, and what we are reading and watching.

On Monday at ~10AM AEDT, we are adding our first new Investment for 2025.

Our first new Portfolio addition in four months.

And it's a rare technology pick for us.

Over the last few years we have had a pretty good run with our tech stocks:

• OneView Healthcare (ASX:ONE) - At its peak it was up ~858% from our Initial Entry Price. Currently 383% above our Initial Entry Price.
• AML3D (ASX:AL3) - At its peak last year it was up ~306% from our Initial Entry Price. Currently 158% above our Initial Entry Price.
• EchoIQ (ASX:EIQ) - At its peak last year it was up ~120% from our Initial Entry Price. Currently 93% above our Initial Entry Price.

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

We are using a similar selection theory for Monday’s new tech Portfolio addition.

(seems to work well for us on small ASX tech stocks)

We Invested in ONE and AL3 because we liked that their mature, proven technology was in use by multiple, long term, paying customers...

AND we observed that long sales cycles, a stale shareholder base and lack of market awareness made them undervalued by the market...

(like we believe is the also case with our new Investment)

With EIQ - we liked that they were developing AI (artificial intelligence) way before it became the hottest investment theme in recent memory.

Companies developing genuine AI with over a decade of development efforts AND internal knowledge on how to apply AI to solve a specific and real world problem are rare on the ASX...

And in our view are the best positioned to leverage and apply the rapid recent advances in AI technology and tools to their specific sector of expertise.

(this is important - more on this in our launch note on Monday morning)

The ASX company we are adding to our Portfolio on Monday has spent 10 years developing its AI technology for giant companies to analyse and respond to in-store customer behaviours.

Think giant companies like major supermarkets, banks, retailers and food franchises.

Any massive operation with millions of customers coming in and out of their stores or buildings every day.

Our new Portfolio addition’s product is already built and mature, has over a decade of genuine AI development built in and it’s in use right now by multiple, paying and renewing customers.

(meaning the product works and customers like it enough to renew / keep paying for it)

Its two biggest clients are giant blue chip companies who have been using (and renewing) the product for many years AND expanding usage across more sites.

They have a near term sales pipeline with 10 companies in their “Advanced Pipeline” that are doing live trials... AND 25 more in “the Early Pipeline”.

Across the whole pipeline there are also “3 large multinational customers”.

So the product works, the company has paying customers, and it has a large sales pipeline which (if converted into contracts) could grow the company's revenues exponentially.

Our bet is that if a few of the big deals in the near term pipeline are signed, it will transform the ~$10M company’s valuation to multiples of where it is today.

We think that any major contract signing has the potential to multiply that market cap very quickly...

We like tech stocks because of that “hockey stick” style growth potential.

Of course, the above looks great - but also that illusive ‘hockey stick growth’ can take longer than expected or sometimes never actually eventuate.

The hard part is timing...

Obviously everyone (including us) wants to jump on just as the hockey stick growth is about to start...

... and every tech company pitch deck we see says it’s ”just about to start”.

But ultimately it’s down to whether the company actually delivers the deals and revenue growth in the near term - on which we can form an opinion and take a position, but can’t control.

Sometimes you can time an entry just right... which we hope we are doing here.

But early stage tech investing also comes with risks (which we will outline in our Investment Memo on Monday) including that deals and revenue take longer than expected.

We will be announcing our new addition on Monday at ~10:00am AEDT.

New all time high in gold again this week. Silver looks like it wants to run...

We’ve been writing a lot about gold and silver, but it’s hard not to get the precious metals bug lately.

The global political atmosphere seems to get more unpredictable every week.

Gold and silver prices are both slowly and surely moving upwards over the last couple of years...

but never really “spiking” upwards.

Like you see in a proper bull run.

Although our humble newsletter doesn’t shut up about gold and silver of late - we think the broader global attention still hasn’t fully arrived yet for these “safe haven” assets.

Gold hit another new all time high this week (yes... AGAIN).

Here is the chart for gold from Monday through to Friday:

Interestingly, something we don't see very often, was that silver was leading the gold rally during the week...

We watch silver and gold prices very closely during the week and it's usually gold leading the way with silver getting dragged along...

But silver was leading the charge and clearly stronger all week.

It was a huge week for silver, although it did a bit of a Sally Robbins at the 2004 Paris Olympics rowing in the last few hours of trading last night, it still managed to finish above $34 and at decade highs.

Last 5 days of silver trading:

While we are biased here, it looks to us like silver wants to break out and go on a serious run.

Perhaps to even test those all time highs...

(which were hit in the back in the early 80s - we’ll probably need to adjust for inflation to get a better read on this)

Here is the silver chart over the last 75 years:

Even though gold and silver prices keep hitting new highs every week, gold and silver small caps have barely reacted... yet.

Most of the smaller companies are trading as if the gold price was still US$2,000 per ounce or silver was US$20 per ounce.

We can see some FOMO starting to creep into the space, but for now it's mostly in the big cap producers, ETF’s or directly in physical gold/silver.

None of the small caps we watch have started any big, bullish rallies yet.

The question is - where is the money going to come from to drive the small end of the gold/silver market?

Big gold producers are (slowly but surely) making all the money right now from the high gold price.

And the investors who have done well in this space and are sitting on big gains from the bigger companies, may look to deploy some of this spare capital into their “next big pick”.

This week we saw another multi billion dollar M&A deal get announced - the second in two weeks.

Last week was the $4BN merger of Ramelius and Spartan.

This week it was a rejected ~$3.3BN all-cash bid by Gold Fields for ASX listed Gold Road resources.

The bigger miners are generating record cashflows, and at current gold prices, and are not shy about throwing their balance sheet strength around...

As these deals get done and money is made along the way, all that cash will need to find new homes.

For example - IF that Gold Fields/Gold Road deal gets done, it is investors' gold exposure exchanged for ~A$3.3BN in cash.

Some (or maybe most?) of that money may look to cycle back into gold in some capacity.

Which makes us think, is the trickle down into mid-small caps is getting close?

(and hopefully that is into some of the ones that we hold)

Are you a s708 sophisticated investor?

If you qualify as a sophisticated investor and would like to see “s708 only” sophisticated investor opportunities: Subscribe to Next Cap Raise.

You will need to send us a valid certificate from a qualified accountant confirming you qualify as a sophisticated investor.

Have a great weekend,

Next Investors