Oracle Corp. engages in the provision of products and services that address aspects of corporate information technology environments, including applications and infrastructure technologies. It operates through the following business segments: Cloud and License, Hardware, and Services. The Cloud and License segment markets, sells, and delivers enterprise applications and infrastructure technologies through cloud and on-premise deployment models including cloud services and license support offerings. The Hardware segment provides infrastructure technologies including Oracle Engineered Systems, servers, storage, industry-specific hardware, operating systems, virtualization, management, and other hardware-related software. The Services segment offers consulting, advanced support, and education services. The company was founded by Lawrence Joseph Ellison, Robert Nimrod Miner, and Edward A. Oates on June 16, 1977 and is headquartered in Austin, TX.
COMMENTARY
Market Review
Global equities were mixed in August, with style rotations favouring value over growth. Earnings fundamentals remained supportive, with forward 12-month revisions for the Fund well ahead of the benchmark. The Fund’s currency hedge added value during the month, offsetting some of the negative return as the US dollar weakened relative to the Australian dollar.
Inflation continued to moderate across most regions, with the US Core PCE Index stable at 2.9% year-on-year. At the Federal Reserve’s Jackson Hole summit, policymakers struck a dovish tone, raising expectations for monetary easing. US employment data released in early September also pointed to weakness, further supporting the case for rate cuts.
Regional trends diverged. In the US, consumer demand stayed resilient, with retail sales growth moderating slightly but remaining healthy in real terms. Europe continued to improve, with both manufacturing and services PMIs in expansionary territory and sentiment indicators strengthening. China was weaker, with retail sales and trade data below expectations, adding to concerns over domestic demand and external growth.
Global inflation readings are now broadly in line with, or below, central bank targets, while monetary policy remains accommodative. Against this backdrop, Axiom remains firmly committed to its dynamic growth philosophy, focusing on companies with positive earnings revisions and visibility. With valuations more attractive following recent volatility and growth fundamentals well ahead of the benchmark, including stronger earnings revisions and higher aggregate growth rates across holdings, the team views the forward investment landscape as increasingly compelling for deploying the strategy.
Portfolio Commentary
The Fund underperformed the benchmark in August, with information technology and industrials the largest detractors at the sector level. Stock selection remained the main driver of relative performance, with strong contributors offset by several weaker names.
Fujikura, a Japan-based fibre optics supplier, was a leading contributor after reporting second-quarter results that comfortably exceeded expectations and raising full-year guidance. The company continues to benefit from accelerating demand for high-speed data transmission as hyperscalers expand generative AI infrastructure. Live Nation, a US-based live entertainment company, also advanced after delivering results ahead of expectations, supported by resilient consumer demand and further gains in global market share. Regulatory pressures eased as scrutiny shifted toward ticket resellers, lowering the risk of punitive measures. Sony contributed as profitability in its Games & Network Services division remained above forecasts, with further catalysts from the planned spin-out of Sony Financial Services and new music streaming contracts.
Siemens Energy, a Germany-based energy technology group, underperformed despite reporting strong results and upgraded guidance. Order momentum in gas services and operating leverage remain robust, but performance was held back by factor rotation as investors shifted away from recent outperformers in growth and industrial names. Oracle also weakened ahead of earnings despite an increasingly positive outlook for its cloud infrastructure business. Hitachi, the Japanese industrial and technology group, detracted as growth in its Digital Services business fell short of expectations, although its Power division continues to benefit from shortages in transformers, supporting favourable pricing trends.
Portfolio activity reflected both selective additions and profit-taking. Positions in Oracle, Meta Platforms and HEICO, a US-based aerospace and electronics manufacturer, were increased. Amazon was reduced after AWS growth lagged peers, while Tokio Marine, a Japanese non-life insurer, was trimmed as moderating pricing trends limited near-term upside. A new position was initiated in AppLovin (C2), a US-based digital advertising company with a strong position in mobile gaming. The rating reflects attractive upside potential alongside solid quality characteristics, supported by its AI-driven targeting capabilities and early expansion into e-commerce advertising.
On ESG, Blackstone was downgraded by MSCI on governance and disclosure concerns. While engagement with the company has been challenging, Axiom continues to push for improvements in human capital reporting. An attempt to engage with Oracle management during the month was unsuccessful, though further discussions are planned in the second half of the year.