3+1 Active Investor Series

VIDEO SERIES

“3 Things You Need to Know + 1 You Don’t!”
The 3+1 Investors Series is BlackRock’s weekly investor video franchise, created to start your week with insights from the voices shaping markets. Featuring the firm’s leading investors, each episode highlights three perspectives on what’s driving markets today.

BlackRock | 3+1 Series
Episode 122: Ibrahim Kanan
Transcript 100126

The sun’s out, who’s complaining?

Good morning, I am Ibrahim Kanan. Portfolio manager, U.S. Core Equity team, at BlackRock. It's the week of October 5th. Here are three things you need to know, and one that you absolutely do not.

First up.
The S&P 500 is expected to grow earnings 30% this year. That is a really extraordinary level of earnings growth. As we head into Q3 earnings, one thing stands out: earnings are finally broadening out. Strong earnings growth is showing up across a variety of sectors and industries. And what that means for investors is that looking for opportunities outside of the mega caps is more exciting than it’s ever been.

Which brings us to.
While earnings are broadening out, the indices are not. The top 10 stocks in the S&P 500 are 40% of the index, double what it was ten years ago. More and more of our clients across the US, across Europe, are asking the question: how do we differentiate relative to our induces? A case for active management is more compelling than it's ever been. An active manager can capitalize on those opportunities of broadening earnings across the index and get you exposure to the best of the rest.

Number three.
The reality is, volatility is here to stay. And what that means is portfolio construction is more important than it has ever been. The old way of fundamental investing is dead. What matters today is having a portfolio of stocks that work well together. Volatility that we saw in July and August proved that stock selection combined with real portfolio construction allows you to weather a variety of market backdrops and a variety of market opportunities.

And finally.
People ask how do you deal with the unpredictability of the markets? Well, as a Jets fan, unpredictability is not new to me. We had the butt fumble, we’ve had a quarterback get punched, and we had a quarterback whose spleen almost exploded. Being a Jets fan is the best thing you can do to prepare for a career as an investor. My hot take? The Jets are gonna win the super bowl…and when they don't, at least I'm prepared.

To get more 3+1 make sure to follow us on LinkedIn & YouTube. We’ll see you next week.

3+1 Episode 22: Ibrahim Kanan

Ibrahim Kanan, Portfolio Manager of U.S. Core Equity at BlackRock, breaks down three areas shaping equity markets right now: broadening earnings, market concentration and portfolio construction.

Follow the 3+1 video series and never miss an episode

LinkedIn

Follow the series on LinkedIn

Follow now Follow now

YouTube

Watch the series on YouTube

Watch now Watch now

Previous episodes

BlackRock | 3+1 Series
FC Transcript 092226
Episode 121: Michael Gates

There’s actually an amazing espresso shot directly across the street from headquarters. I think I'm gonna go right after this.

Good morning, I'm Michael Gates. I run the target allocation model portfolios at BlackRock. It's the week of September 28th. Here are three things you need to know. And one you don’t.

Number one.
Despite stocks being up 13% year-to-date, by at least one important measure, stocks are actually cheaper than they were on January 1st this year. And, that is by the price-to-earnings ratio. We’ve actually seen a larger move up in earnings than the stock market price itself. The price-to-earnings ratio is actually down 14% year-to-date. By that measure it’s reassurance that things aren’t getting too far ahead of themselves.

Next Up.
We customize models for thousands of clients and one thing we see across the board is the importance of getting the AI positioning right. Now that's become more complicated this year, because the volatility of AI names has increased substantially and the weight to those stocks in the major indexes is much higher than it was at the start of the year. One of things we’re doing in models is managing the size, the positions, in AI so that we get the upside without excess volatility. It's a matter of getting positioned for AI without being over invested in the theme.

Number three.
I think there are two ways to invest in the AI theme right now that make a lot of sense. One is to invest in AI beneficiaries that are providing the compute. But the second way is to focus on AI adopters, which are firms that are employing AI to increase revenue and reduce cost. One of the measures we’re looking at: token consumption for AI has gone up 30% per month, which is compounding at a tremendous annual rate. That’s a huge increase in demand primarily coming from enterprises. For those firms, we’re seeing an increased opportunity and we’re positioning portfolios to benefit that.

And finally.
My morning routine has a number of things stacked in it. I eat 5 eggs, I drink 5 shots of espresso, and I take a cold shower. My hot take is that a double shot of espresso is a single shot…cause it comes out of the machine with two prongs, so I just count that as a single shot.

To get more 3+1 be sure to follow us on LinkedIn & YouTube. We’ll see you next week.