As of Q3 2025, Dennis Hong’s ShawSpring Partners portfolio declined to $673 million (down 15% from Q2’s $792M), reflecting both market movements and significant strategic repositioning across 11 holdings. The quarter showcased aggressive rebalancing with Shift4 Payments receiving massive capital allocation while several previously favored positions were substantially trimmed.

The 15.1% portfolio value decline from $792M to $673M reflects both aggressive repositioning and challenging market conditions for growth software companies. Hong’s trading activity reached unprecedented levels, with capital flowing out of real estate tech and banking software into payment processing and selective work management platforms.

The quarter showcased Hong’s active management style, with nine of eleven positions seeing significant share count changes exceeding 10%. This high-velocity rebalancing contrasts with traditional buy-and-hold approaches, suggesting either tactical trading around core positions or evolving conviction driven by changing fundamental outlooks.

Payment Processing Dominance – Shift4’s elevation to 14.40% allocation represents a major bet on payment technology, potentially anticipating integration advantages and recurring revenue strength in challenging economic environments.

Cybersecurity Infrastructure Maintained – Okta’s steady 13.50% allocation with modest additions demonstrates sustained conviction in identity management as critical enterprise infrastructure despite broader software sector weakness.

Construction/Real Estate Tech Retreat – Combined 30%+ reductions in CoStar and Procore signal diminished conviction in vertical software for construction and commercial real estate sectors, possibly reflecting macroeconomic concerns about these end markets.

Tax Technology Accumulation Continues – Vertex’s second consecutive quarter of 50%+ buying reflects growing conviction in compliance software, potentially viewing regulatory complexity as a tailwind for specialized tax technology platforms.

Banking Software Capitulation – The dramatic nCino exit combined with Blend’s modest increase suggests selective fintech exposure favoring consumer lending over institutional banking technology.

The portfolio maintains extreme concentration with 11 positions, though top-5 concentration decreased slightly to approximately 62.5% from Q2’s 64%. This modest diversification resulted from the new Liberty Media position rather than strategic deconcentration.

Position Volatility: The dramatic ranking changes demonstrate Hong’s willingness to rapidly adjust position sizes based on changing convictions or valuations. Shift4’s jump from #7 to #1 and CoStar’s fall from #2 to #5 represent unusually aggressive quarterly rebalancing.

Capital Rotation: Approximately $100M appears to have been rotated from real estate/construction tech and banking software into payment processing, work management, and tax technology, suggesting a sector rotation within the broader software universe.

Payment Processing Leadership: The massive Shift4 allocation signals conviction that integrated payment solutions with strong merchant relationships offer superior risk/reward versus other software categories in the current environment.

Essential Infrastructure vs. Vertical Software: Okta’s maintained allocation versus CoStar/Procore reductions suggests favoring horizontal infrastructure software over vertical solutions tied to specific end markets vulnerable to economic cycles.

Tax and Compliance Technology: Vertex’s aggressive accumulation reflects growing conviction that increasing regulatory complexity creates sustainable competitive advantages for specialized compliance platforms.

Work Management Platform Recovery: Monday.com’s buyback after selling suggests Hong views current valuations as attractive entry points while maintaining conviction in the long-term work OS opportunity.

Strategic Flexibility: The Liberty Media addition, while small, demonstrates willingness to consider non-software opportunities, potentially signaling more flexible mandate or special situation hunting outside core competency.