Motley Fool Hidden Gems Investing - Private Assets Are Coming to Your Portfolio…Be Ready

Episode Date: October 1, 2026

For years, Wall Street has wanted to be able to sell private assets to more individual investors. This week, the Securities and Exchange Commission just made some major rule changes that could make it possible. Lou, Jon, and Tyler break down who actually benefits from these proposed changes, and what investors need to look out for if they dabble in private assets. Plus, Accenture bucks the AI narrative (for now) and a listener question about portfolio sizing Have a question? Email us; [e-mail] Tyler Crowe, Lou Whiteman, and Jon Quast discuss: - Accenture earnings surprise - Did we sell to early? - New rules to make private assets available to everyone - Tips for investing in private assets vs. public equities - Mailbag: How much speculation is the right amount? Companies discussed: ACN, IT, TTD, SPCX, AMZN, NFLX, TSLA Host: Tyler Crowe Guests: Jon Quast, Lou Whiteman Engineer: Dan Boyd Disclosure: Advertisements are sponsored content and provided for informational purposes only. The Motley Fool and its affiliates (collectively, “TMF”) do not endorse, recommend, or verify the accuracy or completeness of the statements made within advertisements. TMF is not involved in the offer, sale, or solicitation of any securities advertised herein and makes no representations regarding the suitability, or risks associated with any investment opportunity presented. Investors should conduct their own due diligence and consult with legal, tax, and financial advisors before making any investment decisions. TMF assumes no responsibility for any losses or damages arising from this advertisement. We’re committed to transparency: All personal opinions in advertisements from Fools are their own. The product advertised in this episode was loaned to TMF and was returned after a test period or the product advertised in this episode was purchased by TMF. Advertiser has paid for the sponsorship of this episode. Learn more about your ad choices. Visit ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

The SEC says private assets are all right. Motley Fool Hidden Gems Investing starts now. Welcome to Motley Fool Hidden Gems Investing. I'm your host, Tyler Crowe. And today I'm joined by longtime full contributors, John Kwasse and Lou Whiteman. Guys, we're going to get into what has been a large theme so far in 2026, and that is bringing private assets, private capital, private equity to the masses, to the retail investors, to the people like us.

We're also going to jump into the mailbag, but we have to start today with kind of the earnings surprise numbers of the day, and that's Accenture. Shares are up about 19% as we're taping on better than expected earnings. Revenue and earnings both beat expectations and their fiscal guidance, because this was the end of their fiscal 2026 year. They said fiscal 2027 came in also slightly higher than Wall Street expectations. So this has been a company that's been on a slow glide path. down recently. And so the question to me is, what went right for a company that has been rather short on good news over the past couple of years? I'm sorry to be that guy, Tyler, but what went right was Accenture didn't die. It kind of reminds me of this scene from the Monty Python movie

years ago where they're saying, bring out your dead and they throw the guy on the wheelbarrow and he says, I'm not dead yet. This is kind of what that is. Accenture is not dead yet. But I wouldn't say that business is necessarily booming. So you look at its fiscal 2026, which is what it just completed. Revenue in local currency, which I think that's a good metric since it is an international business measuring that in the local currency, revenue only up 5% year over year. That's not exactly thriving. It's okay, but it's not anything that you're going to write home about. You look ahead to fiscal 2027, management only expects 3% to 6% growth. So it could even do. It's, it could even decelerate further into the coming year. So this isn't necessarily a great victory for Accenture,

but it is still alive. Right. And you know what? Maybe that's enough because, you know, valuation matters here. And going into earnings, the stock had dipped below 10 times expected earnings. Just two years ago, they were up in the 30s. So this was, I mean, yeah, John, I don't think you're being that guy. I think, you know, sometimes just announcing that, hey, the sky actually isn't That is enough, at least in the near term. I think John summed it up well. They beat expectations. Expectations were dismal.

If you look at what expectation, you know, like the way they've guided down. But look, three months ago, there was a debate about whether or not Accenture can survive. So, you know, these results help answer those questions. I don't know if it's a massive growth stock from here, but if it isn't going to zero, if there's signs that just, you know, it's not going, then there is a reason to bounce off of a single digit multiple, I think. And that's what we're seeing. Look, guys, if they're not going away,

it's still only 14 times earnings today, which is, you know, kind of still kind of cheap. But yeah, that's, I think, the harder question from here. Well, I think there are a couple other things that signal that maybe it is a little bit stronger than what investors were giving it credit for. You look at the operating margin. Look at the non-gap because that does exclude some one-offs that were more favorable for compared to last year, the operating margin did go up slightly year over year.

So 15.8% operating margin. That's a very respectable margin and slightly better than last year. So that is good. You also look at the cash that it's returning to shareholders, basically returning all of the cash, free cash flow to shareholders over the past year in the form of share repurchases and dividends. I suppose you could be glass half empty kind of a guy

and say management is out of ice. ideas and trying to solidify its shareholder base, but glass half full, it really does see its stock as an attractive value and it's putting its money where its mouth is by deploying that free cash flow into share repurchases. And Accenture's always been a cash return story. It has been for a long time. I'd be more nervous about that if this was a new change that that might say they've run out of ideas. But yeah, this is kind of what they do. Yeah, I was going to say when you're a consulting company and all your assets are people and, you know, your capital expenditures are on chairs and office equipment.

It's not like you have. You don't have to spend much to keep the lights on with a business like this. Now, this is the section we kind of want to eat crow, and we're going to go behind the curtain a little bit with some of our Motley Fool services, both on the hidden gems and the rule breakers teams.

Past couple of months, we've either sold Accenture in Real Money portfolios or even put it on hold in some of our recommendation services. I'm wondering, after seeing these results, if it's time to eat Crow,

I struggle whether this report was a trend or an apparition. To your point, 5% dividend or 5% revenue growth is not much, but you compound that with good buybacks at a reasonable valuation. You can get to 7 to 10% earnings per share growth. And at the valuation that you have, that's not the most unattractive proposition when you think about it in the grand scheme of things. Well, let's be careful not to read too much into the market's reaction from a single quarter, we could take a little stroll down memory lane to May of 2025 when the trade desk

stock was up about 20% to about $70 per share. And one headline from that day read, Trade Desk's Koki platform fuels stunning rebound. We're down roughly 80% since then. So a market reaction in a single day to a single quarter doesn't necessarily mean that everything is all clear, there are still some questions. I mean, AI is changing so many things out there. And I'd say that Accenture's business is still, there are still some questions that remain unanswered. I will say this. One thing that was extremely encouraging to me, and that I would be very encouraged with if I were a shareholder of Accenture, Accenture says that 65% of new bookings came from outcome-based fixed-price projects. Now, that is a very big thing.

You look at the workloads that AI is replacing. They don't have fixed costs. I'll tell you that right now. It can be outcome-based, but oftentimes AI gets stuck in these loops and it burns tokens needlessly. And it is really hard if you're trying to model what your expenses are going to be

to get the outcome you want for the price that you're paying, you don't know with AI in many cases. To me, this is counter-positioning for Accenture, saying we can actually give you a price, for the outcome that you want. That to me is huge, and it speaks in the numbers here. That is what its customers are signing up for. So I can always speak kind of hidden gems,

and I certainly wasn't making those decisions, but we're all voices in the room, and I can tell you kind of what I was thinking at the time, and I think it's still good questions for investors to ask. I mean, I never thought Accenture was going out of business. Some of these smaller consulting firms I worry about, but again, the question is, will it be a good investment,

a market beater from here. A couple of things to think about here. For one, their biggest expense is talent. This is, as Tyler says, a very asset-light business, but their product is their talent. For most of their history, they've competed for business school graduates against other MBA sources.

Now they need coders. They need AI talent. And to some extent, I don't think they're really competing against Zuckerberg for those $150 million pay packages, but the cost of their raw material is going up. On the other side, they've always billed by the hour. If as they work AI into their business, there's a case at least that if AI does what we hope it does, the hourly, the hours needed

go down. And so does that put pressure, downward pressure on revenue? Coupled that with the simple fact that, look, AI is democratizing coding. I don't think it eliminates the need for a partner in a lot of these big things, but is there even a subtle shift in what companies can do in-house versus hiring a consultant? And is that subtle shift the difference between being a market beater and just a, you know, run at a mill or keeping the lights on, but it's not a great growth story? I think those questions are still very much out there. And those would be how I would be thinking if I was going to buy this dip. Yeah, there's like three or four industries specifically where the AI question is,

the biggest question out there. Some of them are like, yeah, maybe. And, you know, it almost just feels like an obscure question at this point. But AI related to consulting in the Accenture, in the Gardner type of world, it is going to be one of the most challenging things for these businesses and the biggest question for investors going forward. So it's definitely something we want to follow up on. Coming up after the break, we're going to talk about private markets. You just found out that your sales team is at risk of missing quota. Don't panic. Just ask Rippling AI. Since it's built on your real-time people and business data, Rippling AI can pull metrics from Rippling and Salesforce into a meeting-ready dashboard showing quota attainment, headcount plan, and monthly revenue to quota by region. In seconds, you'll see exactly what's behind your quota risk and fix it before it's missed. Question answered, action taken, crisis averted. When you have critical business questions that need answers, don't just file a ticket and wait weeks for an outdated report. Describe what? what you need and have Rippling AI build it instantly from your live people and business data.

Whether it's a dashboard with detailed charts or automated workflows with the right triggers, conditions, and approvals. Ready to rule your business? Head to rippling.aI slash fool to get the only AI built to give you full visibility and take complex actions across your entire organization. That's R-I-P-P-L-I-N-G-A-I-S-O-O-L.Sign up for exclusive access today, rippling.a.ai slash fool. There has been a gradual drumbeat over the past couple of years where private assets, private capital, private equity, private credit, however you want to carve it up,

has been trying to become a part of the individual investors' choices versus just going into stocks, just going into bonds, real estate, however you want to carve it out. There has been proposals to allow private equity deals in 401Ks. There's even been some think pieces lately on Wall Street opining for the days of pensions again because pension managers were more willing to take on private capital or private assets and kind of spicy things, I think was the term that I saw relative to publicly traded things that we can put in our 401ks. And yesterday there was some big news about this.

And it's really important that investors think about this because there's going to be a lot of pressure from Wall Street in general on getting private assets into people's portfolios. And so there were some new SEC rules. And there were three core ones. And we're going to kind of go through them, guys, and what you think is the good, the bad, or how these kind of carve out. But there was basically three of them. One of them was, is that they have up the upper limit of a performance fee that a registered investment advisor can get. I think it's gone up to something like 20%, which is more or less par for the course for what, you know, that that two and 20 hedge fund fee structure that we normally see at hedge funds, mutual funds of Days of Your, things like that.

The other one was there are going to be new ways to become an accredited investor. Instead of just being how much money you have or how much money income you're making, they want to look at some professional licenses as a way to show competence to be an accredited investor. And the last one is giving more flexibility to private funds. on for redemptions related to like, you know, not having to give out so many on a certain quarter giving them a little bit more flexibility there. And these rules to me seem a lot like incenting Wall Street to go out of their way to bring retail investors to the fore here. So I,

I have some thoughts, but I want to get your guys as well, looking at all of these things, are these proposals net benefits to individual investors? Or is this kind of a pro business, pro-Wall Street sort of move. Look, Tyler, this isn't really my wheelhouse to say whether or not it's a net benefit for your regular Joe or for the financial professionals out there. What I will say, I'm 100% in favor of changing the rules here from going from a wealth-based system to a knowledge-based system. That to me makes a ton of sense. Now, maybe it's my political leanings where I don't want Washington telling me what to do. I'll collect my own rainwater, thank you. But I think that what we talk

about a lot on this show is that finances are personal. There are a number of reasons why somebody's bank account might not meet the threshold that the government requires to be able to invest in these private companies. And those individual reasons matter. You can have, in theory, someone who is quite wealthy for a variety of reasons and quite ignorant, who is allowed to do these things, and it's going to be to their harm, and vice versa. You can have someone whose bank account doesn't quite measure up, but really they are a sharp cookie, and they should be able to grow their wealth by investing in a variety of other options that aren't available to them today. So I'm in favor of changing these rules. If someone can demonstrate the competency

to be able to invest in these companies, they should be allowed. That's my view. I don't disagree with any of that. I still think this is very much a pro Wall Street. And look, the good news is people who know what they're doing will get a chance. The bad news is that human beings are very, very bad at assessing their own competence. And so there is going to be a lot of pain here. This is, I don't want to be full on cynical and say this is a private market's bailout, but it does feel like the net effect is going to be just adding to the number of bags that are available to fill at the bottom of these things. Everything is going to be marketed on the chance to get into SpaceX or OpenAI.

And yeah, but remember, for every one of those, there's at least a Theranos or a WeWork. Guess which one retail is going to get, especially in these funds where the managers are allocating for it. So, yes, John is right. The old rules are outdated and need modernizing. But I think that there's a lot of harm coming here of saying that, like, look, Why don't we private capital is growing? We need more capital to fund it.

Hey, I know a big pot of money that you guys would probably like. That's what's going on here. And I think, you know, just be careful out there. Yeah, I can certainly sympathize with that more private, more money into the private capital. And that's where the growth is. You know, one of my frustrations recently as a publicly traded stock investor is how long it's taking for those open AI in the space that company. SpaceX companies to go public.

You know, we hear things now like Series M funding rounds, you know, 12, 13 private funding rounds. We haven't seen this in decades. I'm going to contrast that with the companies that we use as like the great examples of wealth creation for individual investors, the Amazon's, the Netflix's, even Tesla. They were able for individual investors like us to create wealth because they went public at minuscule market caps relative to what they are today. Whereas you have the SpaceX in the AL-Ups are all going public at multi-trillion dollar valuations.

Public stock investors aren't getting these opportunities to watch this thing grow up in the public markets. They're just, you know, to lose point, just kind of giving the exit liquidly for the 15 private investors before them. I really hate this dynamic. I get why it's happening more and more money's rush. into private capital. I don't think there's any going back, unfortunately. It's not like we're going to reclaim all these companies back into the public markets. What I would like to see, though, is if these changes means like the Andrusine Horowitz's of the world will actually build funds that bring retail investors along, I think I can tentatively get on board because without it,

we're all just going to be stuck, hey, do you want this thing at, you know, at a valuation of $5 trillion because we've already had 17 funding rounds, that seems much less appealing. So the private markets are a harder, harder place to invest for a myriad of reasons. Like you said, Lou, some of the things are a little bit more opaque. So as you guys are thinking about this, what are, what is some advice? And I'll go to you first, Lou. What is advice you give to investors looking at private assets, perhaps for the first time? Well, two points on what you said.

And I think they both relate to the advice. For one, John, I hate to do this to you. But if in this world, we need more regulation, not yet less, because my fear is, is that it's not going to be like, let's make a fund of all these things. Let's give our limited partners that we have long-term relationships with and we're trying to recruit future millions from. Let's give them the good deals and give retail the rest. And I think we need some way to stop that. Secondly, you know, this is the old man on the lawn here. But, you know, yes, we miss out on the mega gains, and I love the megagains, but arguably we're also shielded from a lot of risk not getting in that early.

Because for every Amazon, again, there are a lot of companies that didn't become that. I am not convinced that for the average investor, it isn't better to not have access to early stage companies, but to just focus on solid 10 to 15% a year over time companies. If you do want to get involved here, just be careful what you buy. Just look carefully if it's a fund, how this fund is being allocated. If it's individual deals, look at it on a deal-by-deal basis. I hate to be so cynical, but I just don't think it's going to be the non-whales that are getting the best deals here. And the only thing I'd add to that, Lou, is with a private deal, if, I mean, if we do wind up in that place where you are,

listening to the show when you're allowed to invest in a company that is still a small private company, remember that disclosure rules are different. You don't have all of the information that you have with a publicly traded company, and that is incredibly important. We are at the end of the day business evaluators. We are buying businesses. We are not buying tickers, and you have less information to evaluate the quality of a business with a private company, and so keep that in consideration when you're moving in this space. I do want to add one extra layer to what John was mentioning there, too, because not only is it slightly more opaque,

one of the things that's also very important with private assets is the term sheet. That's something we don't really talk about with publicly traded stocks because the ownership of publicly traded stocks is pretty established, pretty well regulated. The terms are pretty well set. You buy them on a brokerage. If you're buying private assets,

they often come with terms that can be good or detrimental to who you are as the investor. So they can be much more bespoke than what we see in publicly traded equities. So might be willing to pull out a pencil and do a little bit more extra due diligence on term sheets than you normally would with publicly traded equities. Coming up after the break, we're going to hit the mailback. New from Nespresso. Blend wellness into your coffee routine with a coffee plus range infused with functional benefits.

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Hey everyone, if you want to get your email, red on air, email us at Podcasts at Fool.com. That's Podcast with an S. I've also left the email in the show description. Today's question comes from Barry. It says, Hi, Team, love the podcast, took up investing about six years ago

and wondered on a lot on advice of sticking to 20 to 30 stocks. Would you consider this more of your core holdings where 90% of your portfolio and then allow 5 to 10% to be more speculative stocks, maybe even crypto. We just had a conversation about private assets, the spicier things, I guess, if you will. I've had some small speculative items over the years and have made significant gains into my top

eight holdings. That would have helped me a lot towards beating the market. Thanks again, Barry. So, guys, when we think about, when we think about portcobligate construction, and obviously, as we say, we cannot give personalized advice here, so we're not going to be speaking directly to your portfolio, Barry. But one of the things we can do is, guys, when you think about your portfolios personally, how much do you allocate to that, you know, the spicy stuff, the speculative,

stocks, the crypto, the microcaps, maybe even a couple private assets or two. Well, as far as the spicy stuff, I mean, I got into gestion during the 2020, 2020, 2021 stock rally. I actually had some spicier investments that went to zero. And I think that cured me a little bit from taking on too much speculation. So it's very low in my portfolio, maybe only one or two positions. I would say this is a home run or nothing kind of a deal. but to the point with the question on 20 to 30 stocks, if that is coming from perhaps Motley Fool literature,

remember that that is generalized advice, and the advice was always at least 25. And so that does not preclude having a part of the portfolio that was for maybe 5%, 10%, as you point out, maybe for a little bit more speculation, where the vast majority of the portfolio is upheld with maybe 20, 30 core positions. Now, I will say that our co-founder, Tom Gardner, has actually revised us even higher recently, saying maybe you want to get to at least 50 stocks in your portfolio as kind of a way to diversify.

And the thinking behind that is that things are being disrupted so quickly that it's even harder to be able to tell which stocks are going to be the best performers over the next five to 10 years. and so you want to diversify more, not less. Now, that is always talking about the core. We're trying as a minimum diversification goal, but that does not preclude, as you point out, having some parts of your portfolio, maybe you're putting it towards crypto,

maybe it's private investment. I don't know what your case may be. Your mileage may vary, but yeah, kind of a bare minimum, this is what we're trying to get through. Get two. Now, I will say for me personally, that I diversify in the buying, but perhaps I concentrate in the holding

because statistics tell us that actually a fairly small percentage of stocks wind up being your big time winners. And really you want to hold on to those as much as you can, as much as you still see a bright future ahead. And so I'm pretty concentrated at the top, but I diversify as I'm building out that larger position in stocks on the bottom. And so I just kind of let the winners rise and allow that to take its place.

Yeah, there's no one-size answer here, but I'm team Barry. So I get what you're saying, Barry. I have a core group of about 20 stocks that are kind of boring and reliable at the top of my portfolio, and they should honestly be enough to retire on. And then I have about 50 or 60 stocks that are just smaller positions that are just rampant speculation in some regard. So if you can stomach that and you have the core taken care of, so you're not putting your retirement at risk or long-term plans at risk, I personally have no problem with

what you're talking about. We get into these conversations a lot over time. And we get a lot of questions about how to allocate portfolios, how much to speculative stuff, how much to nanocaps, how much to, you know, the big trends or how much do I a lot in cash in any given moment. But a lot of the, as much as we say we want to give like the, you know, the registered investment advisor or the, you know, the textbook CPA answer to these, a lot of these things are very emotional decisions because we're handling our personal money. It's not like we're all money managers. And so a lot of this comes down to what you as an investor is comfortable with, what it works for you. You know, Luz portfolio is very different from my.

I tend to take less speculative positions. I like to be a little bit more of a slugging, or sorry, a batting average guy than a slugging percentage kind of guy. So things like this are going to change. And what matters more than anything else is what works for you. I know that sometimes seem a little unsatisfying, but the nice thing about investing is over the years and years, you will hone that skill.

Not only will you become a better investor, but you'll also learn what you are good at versus what you're bad at. and these sort of things will be reflected in your portfolio. As always, people in the program may have interest in the stocks they talk about, and the Motley Fool may have formal recommendations for or against, so don't buy ourselves stocks based only on what you hear. All personal finance content follows Motley Fool editorial standards, and is not approved by advertisers.

Advertisements are sponsored content and provide for informational purposes only. To see our full advertising disclosure, please check out our show notes. Thanks for producer Dan Boyd and the rest of the Motley Fool team. For John, Lou and myself, thanks for listening, and we'll chat again soon. Thank you.