Here’s what you need to know today

• The Israel-Lebanon ceasefire lasted all of a few days. Who broke the truce remains contested. Lebanon claimed Israel violated the truce dozens of times and Israel accused Hezbollah of firing rockets on a disputed border zone. Israel has now re-commenced airstrikes in Southern Lebanon. (ABC News)
  
  

• The Australia-China trade war has officially ended. China has lifted its remaining bans on Australian beef, ending a 4 year chapter of tariffs and bans on $20 billion of Australian exports including wine, beef, barley, coal, timber and lobster. The trade war started after Australia called for an inquiry into the origins of COVID-19 in 2020. (AFR)
  
  

• Coles and Woolworths are preparing their defence in the ACCC’s misleading pricing case. The supermarkets have briefed the press on how they will be explaining their pricing process, using the Oreo as an example of how the price of a 375g packet moved from $3.50 to $5 and was then advertised as discounted at $4.50. The matter is next before the court on 11 December. (AFR)

  
  

• Zip’s cofounder Larry Diamond has made headlines after selling $100 million worth of shares in the company he founded. Diamond stepped down as CEO in 2023 after 10 years running the company and yesterday resigned from the Board. Zip shares are up 700% in the past 12 months and Diamond still retains ~25 million shares. (AFR)
  
  

• Larry Diamond wasn’t the only notable company leader to step down yesterday. Intel’s Pat Gelsinger resigned abruptly as the American chipmaker struggles to keep up with Nvidia (shares are down 50% this year). (Reuters) Meanwhile, Stellantis CEO Carlos Tavares also handed in his surprise resignation as the maker of Jeep and Chrysler has seen its share price fall 45% this year. (NY Times)
  
  

• Black Friday keeps getting bigger. In the US, Adobe found that $10.8 billion was spent online in one day, up 10.2% from the year before, and more than double the $5.03 billion spent in 2017. (Quartz)
  
  

• Macquarie Bank is pushing further into Australia’s agricultural sector after Macquarie Asset Management has bought a controlling stake in Fresh Produce Group. MAM is already one of Australia’s largest farmland investors with $4.7 billion invested in the sector. (AFR)
  
  

• France’s government appears set to collapse after both the left-wing and right-wing parties submitted no-confidence motions in Prime Minister Michel Barnier. The motions come after Barnier forced through a budget proposal that would see government cut spending and raise taxes to try and address France’s growing budget deficit. (SBS Australia)

What the…?

Over the past year we’ve kept an eye on the studies coming out about GLP-1 drugs that suggest Ozempic and its peers may have applications beyond diabetes and weight loss. The latest? 45% of 14,000 people surveyed reported that they were drinking less after starting the medication. (Quartz)

This builds on previous studies that suggest GLP-1 drugs may have helped patients struggling with alcohol or opioid addiction. (Addiction Journal)

Investing is a lifelong journey

Here’s what you can learn today.

This is an exerpt from our conversation with Sumit Gautam titled ‘Why AI won’t deliver in 2025’ on Equity Mates Investing podcast (Apple | Spotify)

Question: What criteria do you look for in software companies?

The most important thing in our investing criteria is a high-quality software company, and we measure quality by the ability to make sure customers find the software very sticky.

A perfect example is email - you open Outlook every day and cannot live without your email. That is an example of a very sticky product. We want to invest in companies with very sticky products, which is measured by their gross retention rates. We're looking at companies that have gross retention rates in the mid-nineties. Some companies we own go all the way up to 98-99%, which is very high gross retention.

We're dealing with companies selling their products into the enterprise side. They're very well integrated and absorbed in the ecosystem, integrated with SAP and ERP systems, and from a value-add standpoint, they're delivering great ROI to their customers.

We want to also invest in companies from the quality standpoint that have very high gross margin, which is one of the best things that software companies have is if you have 75 to 80% gross margins, then the incremental dollar of revenue that you generate flows to the bottom line.

Then we want to look at net retention rate of these companies, which is can you sell new modules? Can you improve pricing to the same set of customers?

And then finally, we want to make sure that it flows to the bottom line, which is are you able to get net incremental EBITDA per net new revenue? Are you increasing that over time?

Want to watch our full conversation with Sumit? Check out the full conversation on YouTube:

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