Q1 2025: AI - a gamechanger for exotic investing?

As you can imagine, the quarter was not great. I am down 11 percent in SEK for Q1 2025. The only change in the portfolio is an increase in RFM Corp. There is a lot to be said about presidents, tariffs, currency movements and predictability, but I will not. The only thing I will say is this: If you own companies with low valuation, strong financials, high profitability, operating in somewhat non-cyclical sectors - you will probably do well over time! 

So, let's move on to today's topic: AI and exotic investments.

My new process 

AI is something I have been learning more about over the last few months. I am starting to use AI in my investment process, and it has actually been a game changer. For me, investing in small, obscure companies means no company reports. You are on your own. Well, not anymore. I think AI, and the one I use most is Grok, is excellent at producing "company reports".

My process is now:

• Finding company ideas: FinChat screener, fund holdings, other investors.
• Quick impression of the company: FinChat (numbers), corporateinformation (quality, stability), Financial Times (graphs), Simply Wall street (what stands out). 
• Mini-research: Ask i e Grok about: Market, moat, competition and possible red flags.

Once this quick process is done, the classic research begins. Now we are talking about hours, days, weeks or months. With the help of AI or not. But there is no obvious reason to pass on the company.

The big change?

It all starts with the company, as before. I think I can judge whether it is a good company to invest in (valuation, quality, history, etc.) or not. The big problem for me is judging the market and the "surroundings". This is much easier now. And AI also helps to look deeper into the company.

The effects could be this: 

• For Large cap investors: None! You just read the reports as before. Pick one of the 10-20 reports out there and make up your own mind. 
• For no-coverage investors like me, there is the gamechanger. AI, like Grok, almost give coverage. In practice: I might feel more comfortable, or at least being able to process, much more unknown small caps in regions like Indonesia and Japan. Getting a grip on the surroundings (everything outside the company) really helps. You can also create decent "company reports".

Of course, AI tools cannot be trusted. But they will help, and they are already surprisingly good at digging up facts and painting a picture of a company's place in the broader market. For me, a simple search on moat, market share and uniqueness could replace 25-50 Google searches. In the same time you will "analyze" 5-10x more companies. And most importantly: You can quickly eliminate companies that do not fit your style or criteria.

I mostly use Grok, I think the results are better for analyzing companies than for Chat GPT. But the really interesting question is. Where will these tools be in 3-5 years? Comprehensive reports I guess.

What is your edge?

When almost all information is available regarding all companies. What is your advantage? It is not in deep research if AI can do that (and will evolve). If the majority of companies go from unknown to known (due to AI), is this perhaps a reason to change your investment style? 

Here is my suggestion. Your advantage in a world of information and analysis is to be able to buy companies that funds cannot. To go the extra mile, to look at small companies, to look at markets that others reject, and to use the broker that gives you the most access. There will still be hurdles and obstacles, and perhaps "Home Bias" is the most popular one. 

My edge is being able to buy small obscure companies (courage and mindset). The advantage is thinking outside the investment box.  Another effect could be that knowing something very well will always be an edge, i.e. things that AI fails to observe, gets wrong, and companies that simply screen horribly.

To summarize, my edge is:

• Not having so much money - being able to buy companies that funds cannot touch (a fact).
• Looking at smaller companies that are a bit hard to buy (a mindset).
• Looking at markets that are a bit hard to reach. This is both a mindset, getting away from home bias and a practical thing (finding the brokers with the greatest reach). 
  

For Sweden, the last one is quite simple. I think Swedish brokers have the best reach in Europe, almost. At least if you are comfortable with the old way of placing orders by phone. It's just a shame that more Swedes don't use their advantage. Living in Sweden is a double-edged sword: since investing is popular, it's hard to find hidden gems locally, and almost all companies are already well covered. You can't find both quality and cheapness. But it is easy to escape!

Opinions?

What do you think? Do you use AI in investing? And what is your edge, today and tomorrow?