“This was more of a Fed-induced recession than anything else. At some point, this headwind will become a tailwind,” he said.
“We intend to maintain a strong position for the recovery. Markets posted record returns after inflation peaked in the bruised bear markets of 1973-74 and 1980-82. .”
historically cheap software
After doubling investors’ capital in 2020, the fund’s high-risk style lost $12 in 2021 and returned 61.4% in the 12 months to October 2022.
Frazis said the sharp contraction in price-to-earnings ratios into 2022 due to the Fed’s aggressive rate-hiking cycle means now is the time for investors to dive in. suggested.
“The last time Growth Software traded this low in 2016 was when the index was higher. [around] 11 times in 5 years, [around] Five times to where we are today,” he said.
“Many companies are still at their lowest lifetime valuations. Adjusted for growth, the picture looks even better. Leading companies are down 85% to 90%, trading at 25% free cash flow yields. and continues to record solid revenue growth.”
Frazis said Nasdaq-listed online shopping platform and e-commerce pioneer Shopify saw its profit multiple shrink by about 90% compared to 2022 despite revenue growth. .
“In January, Shopify broke above its major moving averages for the first time in over a year. With continued growth throughout this period, the stock is likely to hit significant new highs without approaching 2021 levels. there is potential.”
Shopify announced earnings on February 15, and a 32.3% rise in its stock price in 2023 signals a broader recovery for its growing business that was hit in 2022.
The Sydney-based funder, who studied chemistry at the University of Cambridge in the UK, said the fund won a small position in Nasdaq-listed Achieve Life Sciences in January. This biotechnology has drugs in phase III to help patients quit smoking.
“Achieve’s drug has been shown in clinical trials to be five to eight times more effective than placebo and has significantly fewer side effects than varenicline and bupropion,” Frazis said.
“There are many opportunities like this in the life sciences, and we are still recovering from the record washout of 2022, including cases like this where science has significantly reduced risk.”
Investors, including Frazis, face a week jam-packed with data and earnings involving accounts from Meta, Amazon and Apple. Consumer giants Starbucks and McDonald’s also reported, along with pharmaceutical conglomerates Pfizer and GSK. and Merck.
On Wednesday, the US Federal Reserve (Fed) is widely expected to slow the pace of interest rate increases to 0.25 percentage points, raising the benchmark borrowing rate to between 4.5% and 4.75%.
The tech-heavy Nasdaq index fell 2% on Monday, but is still up almost 10% in 2023.
