Mutoro Group Partners, LP
“It doesn’t play [chess] like a human, and it doesn’t play like a program. It plays in a third, almost alien, way.”
— Demis Hassabis (2017) [1]“Suppose there was an alien invasion you could see with a telescope that would arrive in 10 years, would you be saying, ‘How do we stay positive?’ No, you’d be saying, ‘How on earth are we going to deal with this?’ If staying positive means pretending it’s not going to happen, then people shouldn’t stay positive.”
— Geoffrey Hinton (2025) [2]“Welcome to Earth!”
— Will Smith, as Captain Steven Hiller, Independence Day (1996)
|
Annual % Change |
Compound % Change |
||||
|
MGP, LP (Gross) |
MGP, LP (Net) |
HFRI Fund Index |
MGP, LP (Gross) |
MGP, LP (Net) |
|
|
2015 |
(3.5%) |
(5.0%) |
(1.1%) |
(3.5%) |
(5.0%) |
|
2016 |
24.5% |
18.9% |
5.4% |
9.6% |
6.3% |
|
2017 |
(3.3%) |
(4.7%) |
8.6% |
5.1% |
2.5% |
|
2018 |
(0.9%) |
(2.4%) |
(4.7%) |
3.6% |
1.2% |
|
2019 |
30.0% |
23.9% |
10.4% |
8.4% |
5.4% |
|
2020 |
34.2% |
25.7% |
11.8% |
12.3% |
8.6% |
|
2021 |
8.5% |
5.5% |
10.2% |
11.8% |
8.1% |
|
2022 |
(44.8%) |
(45.7%) |
(4.3%) |
2.3% |
(0.8%) |
|
2023 |
21.6% |
19.9% |
8.1% |
4.3% |
1.3% |
|
2024 |
23.8% |
22.0% |
10.4% |
6.1% |
3.2% |
|
2025 |
5.6% |
4.0% |
12.7% |
6.1% |
3.3% |
|
H1 2026 |
(3.7%) |
(4.4%) |
7.5% |
5.4% |
2.7% |
|
Aggregate |
84.0% |
36.3% |
102.7% |
||
|
Annualized |
5.4% |
2.7% |
6.3% |
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Dear Partner,
For the first half of 2026, our fund declined 3.7 percent gross and 4.4 percent net of fees. The second quarter itself was positive, up 5.3 percent gross and 4.9 percent net. We ended the period with ownership stakes in 14 companies.
I am going to share below three recent news clippings that provide some context to the discussion in this letter. Thank you for your patience.
From The Financial Times, an excerpt from an article titled “The AI Threat to India’s IT Jobs Machine,” published August 11, 2026:
It was around 1.30am by the time Rakesh, a 45-year-old Oracle employee in the Indian technology hub of Bengaluru, finally shut his laptop after a long day of calls and presentations. A few hours later, as the sun rose on a March morning, his phone started ringing incessantly. Colleagues were calling, urging him to check his emails. When he did, he discovered that his career with the US software giant was over: he had lost his job, along with about 10,000 other Indian employees, according to the All India IT and ITeS Employees Union. What made the redundancy particularly galling for the married father of two was the nature of the work they had been doing before his dismissal.
“We harnessed AI technology and built tools using that,” he says. “The tool that we gave our sweat, blood and bones to — it threw us out. After showing our loyalty, the company did not stand with us.” Oracle did not respond to a request for comment.
Rakesh, who asked not to be identified so as not to jeopardise his employment prospects, is among a growing number of Indian tech workers being laid off in the era of AI. IT services have played a crucial role in driving India’s economic growth and expanding its middle class. But many of the formulaic tasks that underpin the industry, which employs 6mn people and contributes about 7 per cent of GDP, can now be performed by generative AI. If the sector cannot pivot to higher-value work, that could spell more trouble for a government already struggling to create enough jobs for India’s huge workforce. [3]
From The Wall Street Journal, an excerpt from an article titled “Facing AI ‘Apocalypse,’ Once-Hot Software Companies Race to Reinvent Themselves,” published August 6, 2026:
Generative AI is steamrollering the once booming industry known as software-as-a-service, or SaaS, where customers access software over the internet, typically on a subscription basis. SaaS exploded in the 2010s, as companies such as Slack and Zoom raised hundreds of millions of dollars from venture-capital firms and others went public in blockbuster IPOs.
Now people in Silicon Valley are talking gloomily about the “SaaSpocalypse.” AI threatens to make some software tools obsolete, particularly those built around narrow tasks such as legal drafting, research and other repetitive work.
Shares of public SaaS companies such as Workday, Salesforce and Adobe have fallen more than 30% from their peak over the past year. IBM lost $69 billion in value in a single day in July after it issued a profit warning as customer spending shifted from software to AI hardware. Earlier this week, Italian tech conglomerate Bending Spoons agreed to acquire workflow software company Airtable for $1.3 billion, well below the company’s last private valuation of $11 billion.
SaaS companies are under immense pressure to reinvent themselves. Inside boardrooms, leaders have discussed the risk that entire businesses will amount to little more than features inside tools released by leading AI labs Anthropic and OpenAI. Investors, worried that some software bets will go to zero, are pushing startups to adapt. [4]
From Bloomberg, an excerpt from an article titled “Call Center Stocks Fall on Fear AI Makes Them ‘Uninvestible’,” published June 30, 2026:
Signs that companies are increasingly turning to artificial intelligence to handle customer service tasks has [sic] triggered a fresh selloff in shares of two call-center companies.
Concentrix Corp. and Teleperformance SE fell sharply on Tuesday. The losses started after Concentrix cut its revenue outlook and warned that some of its customers are cutting back spending, exacerbating worries among analysts that the industry faces a severe threat from new artificial intelligence tools. [5]
Growing up, I watched and read a lot of science fiction. It has always been a beloved genre. But I thought that scary tales of aliens arriving on Earth and attempting to destroy human civilization were a bit off. I suspect the biggest nightmare for humans would be something different entirely: an intelligent, interplanetary species learning of humanity, making themselves known, and then simply choosing to ignore it. I don’t think we could handle that. Knowing that beings with better technology and ways of living had crossed the universe and simply did not find us appealing enough to interact with could spark a global crisis unlike any we have ever seen. I want to think I would be fine with it, sometimes an introvert and sometimes an extrovert. But I don’t think humans as a whole would handle that well. We have too much self-adulation built into our civilization to not take it as an insult. We built the pyramids, the Great Wall, and The Wire. How could aliens ignore us?
Since ChatGPT was released in 2022, it has spurred rapid technological adoption and set off a capital investment boom in AI infrastructure. Tech giants such as Alphabet, Amazon, and Microsoft, along with leading AI labs OpenAI and Anthropic, are expected to spend nearly $1 trillion this year on it, roughly 3 percent of U.S. GDP. There are many ways in which generative AI feels as though it were a technology from outer space. But unlike my imagined alien horror for humanity, it is excessively interested in us, sucking up our history, stories, and attention, creating dependencies and redundancies in the pursuit of data and “training” and “superintelligence.” It has already altered our society, whether that be in education, creative industries, or politics. It is still too early to tell what the ultimate impact of the new technology will be on the economy, though. Some analysts think it will lead to the wholesale destruction of markets and companies, concentrating wealth for a few beyond the extremes we already know today, while others see it as likely to increase the productivity of workers and raise the value and agency of what each of us does. It’s a fascinating, ongoing discussion and probably beyond the scope of this letter. What is within scope, though, is how this new technology is affecting or might affect our investment holdings.
Already there are clear signs that the marginal participant in public equity and debt markets believes some companies are more threatened by it than others. On one end of the spectrum sit companies which one might think of as “safe,” in industries such as railroads or electrical utilities. These entities either move physical goods, so far only indirectly affected by digital changes afoot, or supply the energy necessary for the technology. On the other end of the spectrum are companies such as those in the news clippings above: Indian IT outsourcers, American SaaS companies, and call center operators. It is unclear whether their demise is inevitable or whether this is an instance of fear running ahead of reality.
As an exercise, I thought it would be helpful to briefly discuss how our holdings are affected by what we know today about AI. I want us to understand whether the market’s newest fear explains our portfolio’s prices. To make this easier to follow, and to prioritize a helpful accuracy over a false precision, we can sort our holdings into three buckets: “Lowest Threat,” “Medium Threat,” and “Highest Threat.”
It is worth noting that just because something is unthreatened does not mean it is unaffected. Railroads and power grids were once history-shifting technologies. Massive upfront capital expenditures ran ahead of revenue, bringing lower margins and leverage that led many of their builders to bankruptcy. Only after the infrastructure was built did secondary industries thrive on top of it.
For better or worse, I am responsible for the groupings below. All errors are human and mine.
Lowest Threat. Nine of our 14 holdings are in this category, or 53.7 percent of our assets. These include an American home builder that connects land, lumber, and luxury buyers. A company in the business of premium industrial fluid handling in factory settings. A European designer, manufacturer, and distributor of boxes and protective foam for e-commerce. Four global premium or luxury apparel companies (e.g., LuxExperience), and a company that designs and sells luxury technology and software, which could be threatened by the emergence of new forms of communicating with AI but has scale advantages any new entrant would take many, many years to overcome. And lastly, a giant technology company that connects humans globally.
Each of them might benefit from how AI can lower its cost structure or make its staff more productive, but none so far seem likely to be usurped by challenger brands born of AI. That said, the last of these is investing in AI as though its existence depended on it, reducing near-term free cash flow. So far the spending seems to have lifted revenue and widened its moat in social connectivity rather than narrowed it.
Medium Threat. Five of our holdings belong here, or 37.3 percent of our assets, with the balance in cash. These include two companies in the business of helping humans form relationships, which might be threatened by the emergence of AI companions and synthetic communication; I think that threat is real but overstated. A company that helps people plan travel and explore the globe; AI agents may someday do to it what this company did to travel agents, but I think that fear, too, is overstated. The dominant company for digital agreements between people and businesses, which could become less important with the emergence of AI-to-AI commerce, but, I think, still needs to exist. And lastly, an online infrastructure company underpinning much of the consumer-facing Internet. It is considered both the likeliest winner in AI among incumbents and the most likely to be disrupted by it.
Highest Threat. I don’t think any of our holdings fit here today, though some may migrate into it.
We have holdings that have been deeply underpriced since 2022, despite competitive forces moving in their favor. The advent of generative AI is not responsible for this. The perceived problems keeping their market prices from rising toward intrinsic value seem purely human.
The table below shows the composition of our portfolio as of June 30.
Portfolio Holdings
Thank you for your capital and your partnership. I am available to speak with you and with anyone you know who might be interested in joining us.
Sincerely,
Godfrey M. Bakuli
Founder & Managing Partner
[1] Knight, Will. “Alpha Zero’s ‘Alien’ Chess Shows the Power, and the Peculiarity, of AI.” MIT Technology Review (December 8, 2017) https://www.technologyreview.com/2017/12/08/147199/alpha-zeros-alien-chess-shows-the-power-and-the-peculiarity-of-ai/.
[2] Criddle, Cristina. “Computer Scientist Geoffrey Hinton: ‘AI will make a few people much richer and most people poorer’” The Financial Times (September 5, 2025) https://www.ft.com/content/31feb335-4945-475e-baaa-3b880d9cf8ce?syn-25a6b1a6=1.
[3] Kay, Chris, and Kaushik, Krishn. “The AI threat to India’s IT jobs machine” The Financial Times (August 11, 2026) https://www.ft.com/content/31feb335-4945-475e-baaa-3b880d9cf8ce?syn-25a6b1a6=1.
[4] Clark, Kate. “Facing AI ‘Apocalypse,’ Once-Hot Software Companies Race to Reinvent Themselves.” The Wall Street Journal (August 6, 2026) https://www.wsj.com/tech/ai/saas-software-as-a-service-apocalypse-ai-b9b6da99.[5] Ren, Henry. “Call Center Stocks Fall on Fear AI Makes Them ‘Uninvestible.’” Bloomberg (June 30, 2026) https://www.bloomberg.com/news/articles/2026-06-30/call-center-stocks-fall-on-worry-ai-is-makes-them-uninvestible.