Kim Bolton, president and portfolio manager of Black Swan Dexteritas
FOCUS: Technology stocks
Top Picks: Oracle, Alphabet, Monday.com’s
MARKET OUTLOOK:
Black Swan Dexteritas’ investors have equalled, and in many cases, outperformed the impressive stock market rally this year. Your BSD team took a measured risk/reward approach with a fully invested stock portfolio earlier this year, and a 60 per cent short equity index hedge (on average) on the notional value of the invested stock portfolio that would incrementally grow, if the stock market were to deteriorate. December 2024 saw global equity markets navigating a complex landscape marked by cautious U.S. Federal Reserve commentary and political uncertainties, with small-cap indices experiencing notable declines amid broader market volatility.
As of Dec. 26, your BSD advised portfolios have gained over five per cent, trimming individual stocks as they approach their respective price targets, and actively managing the hedge. Expect to ride a roller coaster stock market in 2025. Prediction is about the thought process of parsing our different market scenarios, and not about being stubborn. Reaction to whatever scenario plays out is key to managing risk and seeking excellent performance.
While the market searches for the next fundamental catalyst or technical signal, your BSD team will continue to trim those securities that are achieving their respective intrinsic values, and buy those technology stocks that exhibit longer, more lucrative investment runways. The hedging overlay will always be an important tool to protect your capital in bearish markets, and an important tool to be dialed down in bullish markets.
- Sign up for the Market Call Top Picks newsletter at bnnbloomberg.ca/subscribe
- Listen to the Market Call podcast on iHeart, or wherever you get your podcasts
TOP PICKS:
Oracle Corporation (ORCL NYSE)
Oracle Corp. engages in the provision of products and services that address all aspects of corporate information technology environments.
It operates through the following business segments: cloud and license, hardware, and services. Oracle Corporation offers a comprehensive suite of enterprise IT products and services. These include cloud software applications like Oracle Fusion Cloud for enterprise resource planning (ERP), human capital management (HCM), and supply chain management. Its hardware products range from Oracle Engineered Systems to enterprise servers and storage solutions. Oracle also provides cloud infrastructure technologies such as Oracle Autonomous Database, MySQL HeatWave, and blockchain services.
Larry Ellison, Oracle’s chair and technology chief, said the company will introduce a generative artificial intelligence cloud service tied to a partnership with startup Cohere, which has agreed to using Oracle’s cloud infrastructure. Oracle said more of its cloud services had received approval for use by U.S. defense and intelligence agencies.
Alphabet (GOOGL NASD)
Google is an global powerhouse which operates through three major segments Google Services, Google Cloud and Other Bets. We see GOOGL as one of the best-positioned companies to benefit from secular trends in digital advertising, as advertisers continue to see solid returns on spend and the company continues to innovate on its search, display, and YouTube platforms. Alphabet’s revenue come from Google Advertising, which remains the primary source of income. It introduced suite of AI-powered tools for code completion and generation called Duet AI for Developers. It also launched MedLM, generative AI models for the healthcare industry, available to Vertex AI customers. Alphabet well-poised to capitalize on the growing generative AI market, with a projected market size of $667.96 billion by 2030 (CAGR of 47.5 per cent).
monday.com (MNDY NASD)
Monday.com’s focus on low-code no-code technology is a key differentiator that unlocks the platform’s true value. Platform has enabled expansion beyond the core project management to non-technical use cases across teams such as marketing, operations, human resources and finance. Provides cloud-based visual work operating system that consists of modular building blocks used to create work management tools for marketing, project management, software development, CRM, business development, consulting, and other fields.
The low-code no-code market is in the very early stages of adoption with low single digit penetration into a $40bn-$70bn opportunity. Like Monday and currently have it in our Fund and in some of our SMAs! We are optimistic on MNDY’s earnings prospects… Buy on pullbacks.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| ORCL NYSE | Y | Y | Y |
| GOOGL NASD | Y | Y | Y |
| MNDY NASD | Y | Y | Y |
PAST PICKS: December 27, 2023
Synopsys (SNPS NASD)
- Then: US$518.10
- Now: US$486.60
- Return: -6%
- Total Return: -6%
Amazon (AMZN NASD)
- Then: US$153.34
- Now: US$221.48
- Return: 44%
- Total Return: 44%
Salesforce (CRM NYSE)
- Then: US$266.72
- Now: US$334.94
- Return: 26%
- Total Return: 26%
Total Return Average: 21%
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| SNPS NYSE | Y | Y | Y |
| AMZN NASD | Y | Y | Y |
| CRM NASD | Y | Y | Y |