Fund Performance - Bristlemoon Global Fund returned 5.0% in the September quarter and 5.6% for September 2025, net of fees [1] - Since inception, the fund has produced a cumulative return of 19.3%, net of fees [1] Investment Focus - The fund aims to compound capital at attractive rates over the long term [1] Top Holdings - The fund highlighted Synopsys, Inc. (NASDAQ:SNPS) as a key stock in its third-quarter 2025 investor letter [2] Company Overview: Synopsys, Inc. - Synopsys, Inc. is a leading vendor of electronic design automation (EDA) software tools used for integrated circuit design [3] - The company is the 2 licensor of chip design intellectual property (IP) [3] - EDA tools are critical for chip design across major companies like Nvidia, Analog Devices, Apple, and Alibaba [3] Market Position - The EDA market is characterized as a stable oligopoly, primarily dominated by Synopsys and Cadence Design Systems, with Siemens (formerly Mentor Graphics) in a distant third place [3]

Core Viewpoint - Synopsys (SNPS) stock is currently at a critical support zone, which has historically provided buying opportunities, leading to significant returns in the past [1][3] Summary by Category Price Action - SNPS is testing a price floor between $416.97 and $460.87, a level where it has previously bounced back four times in the last decade, generating nearly 30% average peak returns [1] Fundamentals - The company provides electronic design automation software and intellectual property solutions for integrated circuits, supporting various applications including USB, PCI Express, and Bluetooth [3] - Recent financial metrics show an 8.0% revenue growth over the last twelve months (LTM) and a 9.7% average growth over the last three years [7] - The free cash flow margin stands at nearly 20.2%, with an operating margin of 17.2% LTM [7] - SNPS trades at a price-to-earnings (PE) multiple of 35.2, indicating a relatively high valuation compared to the S&P [7] Market Performance - Despite strong fundamentals, SNPS has experienced significant declines during market downturns, including a 61% drop during the Dot-Com crash and a 49% decline during the Global Financial Crisis [5] - The stock also faced declines of approximately 34% during the COVID-19 pandemic and 31% during the Inflation Shock [5]

Core Viewpoint - The article discusses the divestiture of Synopsys' Optical Solutions Group and PowerArtist business to Keysight Technologies as a necessary step for regulatory approval of Synopsys' acquisition of Ansys, which was completed on July 17, 2025. The divestiture is expected to be finalized around October 17, 2025, and is not anticipated to have a significant financial impact on Synopsys [1][4]. Group 1: Synopsys' Divestiture - Synopsys has received all necessary approvals to proceed with the divestiture of its Optical Solutions Group (OSG) and PowerArtist business to Keysight Technologies, which is seen as essential for the regulatory approval of the Ansys acquisition [1][4]. - The OSG provides design tools and services for high-precision optical product simulation and visualization, including tools like CODE V, LightTools, LucidShape, RSoft, and the recently launched ImSym [2][3]. - The divestiture is expected to allow for a seamless transition for employees, customers, and partners, with OSG continuing to operate as part of Synopsys until the transaction is completed [3][4]. Group 2: Keysight Technologies' Acquisition - Keysight Technologies aims to expand its software simulation product portfolio through the acquisition of Synopsys' Optical Solutions Group, enabling support for high-performance systems beyond electronics, including optics and photonics [3][5]. - The acquisition of PowerArtist, a comprehensive RTL power design platform, is intended to enhance Keysight's position in high-performance system design and simulation software [4][5]. - Both Synopsys and Ansys believe that the sale of PowerArtist is necessary for regulatory approval, and the transition will be managed to ensure continuity of service for customers [4][5].

Core Points - Synopsys, Inc. has received approval for the divestiture of its Optical Solutions Group and PowerArtist businesses to Keysight Technologies, Inc. [1][2] - The divestitures are a regulatory requirement related to Synopsys' acquisition of Ansys, which was completed on July 17, 2025 [2]. - The expected completion date for these divestitures is around October 17, 2025 [2]. - The transactions are not material to Synopsys' financials, and specific terms of the agreements have not been disclosed [2]. Company Overview - Synopsys, Inc. is a leader in engineering solutions from silicon to systems, focusing on enabling customers to innovate AI-powered products [3]. - The company provides industry-leading silicon design, IP, simulation, and analysis solutions, along with design services [3]. - Synopsys collaborates closely with customers across various industries to enhance their R&D capabilities and productivity [3].

Core Viewpoint - Synopsys reported lower-than-expected earnings and revenues for Q3 fiscal 2025, leading to a downward trend in estimates and a potential concern for investors regarding future performance [3][4][11]. Financial Performance - Non-GAAP earnings for Q3 were $3.39 per share, missing the Zacks Consensus Estimate of $3.84 and the guided range of $3.82-$3.87, marking a 1.2% decrease year-over-year [3]. - Q3 revenues increased by 14% year-over-year to $1.74 billion but fell short of the Zacks Consensus Estimate of $1.768 billion [4]. - Time-Based Product revenues accounted for 51.3% of total revenues, reaching $892.4 million, up 11.1% year-over-year, while Upfront Product revenues increased 16.7% to $516.4 million [5]. Segment Performance - Electronic Design Automation (EDA) revenues, which comprised 68.6% of total revenues, were $1.19 billion, reflecting a 17% year-over-year increase [6]. - Design IP revenues decreased to $427.6 million from $463.1 million year-over-year, while revenues from Simulation and Analysis were $77.7 million [6]. Geographic Revenue Breakdown - North America generated $824.7 million (47% of total revenues), while revenues from China and Korea were $247.3 million (14%) and $202.1 million (12%), respectively [7]. Balance Sheet and Cash Flow - As of July 31, 2025, Synopsys had cash and short-term investments of $2.59 billion, down from $14.26 billion in April 2025, with total long-term debt increasing to $14.32 billion [8]. - Operating cash flow for Q3 was $671 million, with a total of $879 million generated in the first three quarters of fiscal 2025 [8]. Guidance and Future Outlook - For fiscal 2025, Synopsys expects revenues between $7.03 billion and $7.06 billion, with non-GAAP earnings projected in the range of $12.76-$12.80, down from previous estimates [9][10]. - The consensus estimate has shifted downwards by 59.19% since the earnings release, indicating a negative outlook for the stock [11][13].

Core Insights - Synopsys (SNPS) reported a backlog of $10.1 billion in Q3 of fiscal 2025, driven by increasing demand for its AI and advanced chip design tools [1][8] - The company anticipates fiscal 2025 revenues between $7.03 billion and $7.06 billion, reflecting a growth of 12.5% [4][8] - The acquisition of Ansys has broadened Synopsys' market reach and diversified its revenue streams, enhancing its capabilities in Simulation & Analysis [2][3][8] Industry Dynamics - Synopsys is benefiting from strong demand in Europe and North America, particularly in high-tech, aerospace, and automotive sectors [2] - The industry is experiencing heightened investments in AI and high-performance computing, which is increasing the demand for advanced chip design tools [1] Competitive Landscape - Synopsys faces competition from EDA vendors like Cadence Design Systems and Siemens, which offer similar electronic design automation tools [5][6] - These competitors may lead to increased pricing pressure and impact Synopsys' profit margins [6] Financial Performance - SNPS shares have decreased by 1.5% year-to-date, contrasting with the Computer - Software industry's growth of 22.3% [7] - The forward price-to-sales ratio for SNPS is 9.29X, which is higher than the industry average of 8.73X [9] Earnings Estimates - The Zacks Consensus Estimate for SNPS' fiscal 2025 earnings indicates a year-over-year decline of 2.8%, while the estimate for 2026 suggests a growth of 9.5% [10]

Group 1 - The article discusses the worst-performing stocks in the S&P 500 index for September, highlighting significant declines in share prices [1][8]. - CarMax experienced a 24.8% drop in stock value due to disappointing second-quarter results, with revenue and profits down by 25% year over year, reflecting decreased consumer enthusiasm for car purchases [3]. - FactSet Research Systems saw a 22.3% decline, attributed to results that fell below analyst expectations [4]. - Kenvue's stock fell by 21.9%, influenced by negative public perception regarding Tylenol's alleged link to autism following statements from public figures [5]. - Deckers Outdoor's shares decreased by 17.5%, impacted by concerns over tariffs and economic uncertainty, along with disappointing earnings reports [6]. - Synopsys experienced a 16.7% decline due to weakened demand from a major customer and previous export restrictions, which have since been lifted [7]. Group 2 - Despite the declines in these stocks, the S&P 500 index gained 3.5% in September, indicating a broader market resilience [8]. - The article suggests that while some stocks may have fallen due to temporary issues, they could present buying opportunities if the market has overreacted and the company's future remains promising [8][9]. - The Motley Fool Stock Advisor analyst team has identified ten stocks they believe are better investment options than CarMax, indicating a shift in investor focus [10].

Core Insights - Sumitomo Riko is leveraging Ansys SimAI technology to enhance efficiency and reduce time-to-solution in automotive component design and manufacturing [2][4][9] - The implementation of SimAI allows for rapid analysis of simulation data, enabling high-fidelity AI models that predict performance in under five minutes, saving over one hour per design [4][5][9] - SimAI accelerates simulation cycles by over 10 times compared to traditional methods, facilitating faster design iterations and improved workflows [5][9] Company Overview - Sumitomo Riko is a leading global manufacturer of high-performance rubber automotive components, focusing on understanding component behavior under extreme loads [3] - The company aims to implement workflow automation across the entire product lifecycle, enhancing collaboration among teams [6] Technology and Innovation - Ansys SimAI enables the generation of high-fidelity models without the need for parametrized geometries, streamlining the design-to-manufacturing workflow [4][9] - The technology addresses the challenge of balancing speed and accuracy in R&D, allowing for data-driven decisions before prototyping [7]

Group 1 - Oracle's stock surged by 40% due to high demand for cloud computing services, adding nearly $100 billion to founder Larry Ellison's net worth, making him the world's richest person [2] - Synopsys stock has declined by 23% in the past month following a disappointing Q3 report, primarily due to the loss of a major foundry customer [2][3] - Oracle is considered a superior investment choice compared to Synopsys, demonstrating stronger revenue growth, higher profitability, and a more reasonable valuation [3] Group 2 - Oracle's revenue growth over the last 12 months was 9.7%, compared to Synopsys's 8.0%, with a 3-year average revenue growth of 10.2% for Oracle versus 9.7% for Synopsys [6] - Oracle excels in profitability with a last twelve months (LTM) margin of 31.6% and a 3-year average margin of 30.3% [6] - Oracle provides a range of services including cloud software, industry-specific solutions, and enterprise databases, while Synopsys focuses on electronic design automation software and intellectual property solutions [4]

Core Insights - Synopsys experienced a significant stock decline of 18.2% in September, with a notable drop of 35% in early September due to disappointing third-quarter earnings [2] - The company operates in two segments: design automation, which includes EDA and the newly acquired Ansys, and design intellectual property (IP) [3][4] - The design automation segment saw a revenue increase of 23% year over year, while the design IP segment faced an 8% decline [4] Challenges Faced - CEO Sassine Ghazi identified three key factors negatively impacting the design IP segment, indicating that these issues are not expected to resolve in the near term [5] - Trade actions and weak demand from a major customer contributed to the company's poor performance, overshadowing the acquisition of Ansys [6] - Export restrictions imposed by the Trump administration disrupted design starts in China, affecting customer confidence [7] Future Outlook - Synopsys is currently facing challenges from a major foundry customer, potentially Intel, which has historically been a partner [9] - The stock showed some recovery following news of Nvidia's investment in Intel, suggesting potential positive developments ahead [9]