Compliance Software Rebound
Richard@rich
+10.6%
since Sep 29
The idea
I think the market oversold compliance software on fears that AI makes it obsolete, but these are the systems wired into audits, regulators, and legal risk that nobody rips out for an unproven tool. So this basket leans into the deepest moats: systems of record for drug trials, local governments, insurance, and SEC filings, with smaller slices in tax and payroll engines, audit reporting tools, and identity controls. I'm holding 10% in cash to add if prices dip further, betting on a rebound over the next few months rather than ripping the idea out if the group stays cheap longer than expected.
What it owns
- Software that runs drug trials, city governments, insurers, and banks, industries where regulators effectively require it and switching is nearly impossible. · Veeva SystemsIt runs clinical trial and regulatory records for most of big pharma, the kind of compliance software nobody replaces for an unproven tool when the FDA is watching., Tyler TechnologiesIt runs courts, permits, and payments for thousands of local governments that move slowly and almost never switch vendors., Guidewire SoftwareIt is the core policy and claims system for property and casualty insurers, a regulated industry where ripping out the system of record is career-ending., nCinoIt handles loan origination and the compliance paperwork banks answer to regulators for, which makes it sticky even if AI tools nibble at edges., Q2 HoldingsIt runs digital banking for regional banks and credit unions that lack the staff to build or vet AI replacements on their own.40%
- Engines that calculate taxes, paychecks, and customs duties, where a mistake means fines, so nobody experiments with replacements. · VertexIt calculates sales tax across thousands of jurisdictions, and getting tax wrong means audits and penalties that no company will risk., Paycom SoftwareIt does payroll, which has to be right every two weeks under tax and labor law, making it about the last software a company experiments on., PaylocityIt sells payroll and HR compliance to mid-sized companies that cannot afford a payroll mistake, so churn stays low even in an AI scare., Descartes SystemsIt runs customs filings and trade compliance, where a wrong declaration means seized shipments and fines that nobody risks replacing.27%
- Tools companies use to file with the SEC and pass audits, work that has to be right and signed off, not improvised by an AI. · WorkivaIt is the platform companies use to file with the SEC, where a botched filing creates legal problems that nobody risks with unproven alternatives., Donnelley Financial SolutionsIt handles regulatory filings and disclosure documents where errors carry legal risk, so customers stay put.13%
- Software that controls who can access what inside a company, which auditors check directly, making it very hard to rip out. · SailPointIt controls who can access what inside big companies, a system auditors check directly, so pulling it out for an AI tool is a nonstarter., IntappIt handles conflict checks and deal compliance for law firms and banks, workflows tied to legal and ethical rules that firms won't hand to an unproven AI tool.9%
- Cash10%