Polen Capital, an investment management company, released its “Polen Focus Growth Strategy” third quarter 2024 investor letter. A copy of the letter can be downloaded here. The market turned volatile in the third quarter. In the third quarter, the fund returned 3.21% (gross) and 2.99% (net) compared to 3.19% for the Russell 1000 Growth Index and 5.89% for the S&P 500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Polen Focus Growth Strategy highlighted stocks like Oracle Corporation (NYSE:ORCL), in the third quarter 2024 investor letter. Oracle Corporation (NYSE:ORCL) offers products and services that address enterprise information technology environments. The one-month return of Oracle Corporation (NYSE:ORCL) was 8.64%, and its shares gained 62.90% of their value over the last 52 weeks. On November 11, 2024, Oracle Corporation (NYSE:ORCL) stock closed at $189.13 per share with a market capitalization of $524.091 billion.
Polen Focus Growth Strategy stated the following regarding Oracle Corporation (NYSE:ORCL) in its Q3 2024 investor letter:
The top absolute contributors were Oracle Corporation (NYSE:ORCL), ServiceNow, and Shopify. Beyond these top relative contributors, it’s worth noting Oracle as a top absolute contributor, with reported quarterly profits and bookings ahead of estimates as AI demand boosted its cloud computing business. Given its recent addition to the Portfolio, please see additional detail in the Portfolio Activity section below.
Oracle is another new addition to Focus Growth. Like Apple, It’s a company we previously owned from 2005 to 2019. Its database business was dominant during this period, and they were building an applications business through several large acquisitions. We exited our position when the company’s revenue growth slowed to a low-single-digit rate as Oracle was late shifting its applications and databases to the cloud. Today, revenue growth is accelerating as Oracle has made progress in bringing its applications and databases to the cloud. An even greater impact, though, comes from the cloud service infrastructure business Oracle has built to compete with the large hyperscalers (Amazon Web Services, Microsoft Azure, and Google Cloud). Oracle Cloud Infrastructure (“OCI”) is the newest entrant in cloud services infrastructure and the company has taken a differentiated approach versus larger peers. Instead of building giant datacenters around the globe, OCI is comprised of many smaller datacenters that can act either as public or private clouds. Many of these private clouds reside onsite at customer locations for the highest data security and privacy. This approach is especially beneficial for large enterprises like banks and healthcare companies, as well as governments that are highly regulated, and must be concerned about privacy, cybersecurity, and fraud. These are also some of Oracle’s biggest database customers. Inside OCI, Oracle’s Autonomous Database is the most advanced relational database in the world, with almost zero downtime or human interaction, allowing for high reliability and far lower cost. It also allows for some of the most complicated on-premise database workloads to be moved to the cloud more seamlessly. While OCI is a lower-margin business than Oracle’s software businesses, it often pulls with it Oracle Autonomous Database revenue, which is high margin—allowing the overall corporate margin opportunity to expand. The shift to the cloud for Oracle applications and databases will likely provide a nice revenue tailwind for years to come as the Software as a Service (“SaaS”) migration of Oracle applications is still in the relatively early stages, and databases are just beginning to move to the cloud. We expect the company’s earnings growth to be in the low-to-mid-teens range with potential upside. The current mid-20s forward P/E multiple is what we consider to be reasonable for a highly advantaged company with strong and accelerating growth likely for years to come.”
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Oracle Corporation (NYSE:ORCL) ranks 27th in our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 93 hedge fund portfolios held Oracle Corporation (NYSE:ORCL) at the end of the second quarter which was 96 in the previous quarter. Oracle Corporation (NYSE:ORCL) reported a $13.3 billion in revenues in the fiscal first quarter of 2025, up 8% from last year. While we acknowledge the potential of Oracle Corporation (NYSE:ORCL) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Oracle Corporation (NYSE:ORCL) and shared the list of top stocks with improving earnings revisions, P/E ratios, EPS growth, and other indicators according to investment bank UBS. In addition, please check out our hedge fund investor letters Q3 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.