Q2 2025 Market Update

What a slow start to the year…

If you were paying attention to markets during April and May then you definitely noticed a new trade war world we were being thrown into. The S&P fell 18.9% in less than 3 weeks, but then rebounded 20% since April 8th.

At Baskets Capital, we are all for finding great buying opportunities for when the market gives you opportunities to jump on and we're glad we capitalized on some but that type of volatility was unheard of. We know that sticking with our focus on full value based investing and sticking to your individualized strategy is what works.

AI Landscape and Energy Opportunities

As the landscape for AI starts to keep moving and shifting, we will continue to monitor and take advantage of new opportunities for specific allocation even if it's outside of the big AI companies or hyperscalers: Nvidia, Amazon, Google, Meta, and Apple etc. We really have been monitoring and pushing through on new energy alternatives that have expanded and taken advantage of new presidential administration and need/desire from datacenters and hyperscalers.

We're constantly monitoring Constellation Energy ($CEG) and Nuscale ($SMR) as the use of new nuclear energy modules and structures are becoming more popular. In fact, we were excited to see CEG just sign a major 20 year contract with META as that aligns similar interests from other companies building out facilities and CEG (and hopefully SMR) will become major beneficiaries in the near future. Our stance is that the current market and TAM for AI does not come close to the growth and size it will be in just 5 years.

Datacenter Infrastructure Focus

To continue that thread we are also intrigued from other structure/operational aspects for datacenters and hyperscalers and zeroed in on a company called Credo $CRDO. This was a company that we first started tracking last year. What began as a small starter position, quickly turned into a revelation into one of the most unique companies in the AI space.

They are a great company focused on their rack up products and structure for massive hyperscalers like Amazon/AWS. Their first earnings call this year showed a big risk of customer concentration with over 80% of their revenue coming from just one client (AWS). The stock really started slipping and then with the onslaught of tariff news, it really began to drop into early May.

However, one thing that we really took away from that earnings call for Q1 was that they reported that 2 new clients would be starting soon sometime after April 1. Those new revenue streams would definitely alleviate the customer concentration and show a tremendous boost into the company for future growth. Their second earnings call confirmed just that and the stock that was at $33 in April is now trading at roughly $80. Their is a lot of growth and potential to a company like this but we really don't anticipate the same level of growth to continue.

Institutional Trading Opportunities

Finally, we also really became attracted to Marex Group ($MRX) based out of London for their excellent capacity at acquisition growth. They serve as a broker/service provider for institutional trading/hedge fund trading. Their growth strategy is so killer. They are constantly finding new acquisition targets or companies that they are getting at tremendously low multiples compared to what's average in this space. And with the volatility this year alone just from tariffs, they've really popped in revenue. They are definitely something we will continue to monitor.

Your Retirement Planning Success

These are just a couple of examples of how we will continuously focus on specific investments and allocations for your portfolio. I'm happy to report that although the majority of our work is in constant research and reading through investments, our job as planners is coming through and paying 'dividends' as we are setting up a couple for an early retirement set in December this year.

Your own Retirement Roadmap (see attached) is in great shape this year as we see the continued path to Retirement and that Distribution Schedule of $XXXXXX every year in income as more and more feasible. Please continue reading your report for that monthly retirement income breakdown.

Our Investment Philosophy

We recently went through a great exercise in social media management as our strategy of 'Focus on the Investments to Formulate the Plan' got called into question by other financial planners. Not many other firms might have the bandwidth we do for specific investing and research but to us, it's vital.

There's an example we want to continue to use where we see Financial Plans as the Car that you can use in Retirement while the Investments are the Engine of that Car. A Financial Plan that looks like a Lamborghini doesn't mean anything if the Engine inside is that of a Prius. On the flip side, nobody really wants to drive a Prius, but if you have a Prius with the engine of a Lambo, you can definitely work yourself upward. We decided that if you pay for a Lambo, then you should get a Lambo with the Engine of a Lambo.

Personal Note

On a personal note, and thank you all for the well wishes, my wife and I were so excited to welcome our sweet baby girl into the world on March 27th. Becoming a dad is my proudest achievement and having the ability to care for her and provide for her while doing the work I absolutely love will never be taken for granted.

Here's to a powerful back half to 2025!

This is informational and not investment advice. Investing involves risk and loss of principal. Past performance does not guarantee future results. We and our clients may hold positions in securities mentioned and may trade without notice. Indices are unmanaged and cannot be invested in directly. Data is believed reliable but not guaranteed. We do not provide tax or legal advice. See our Form ADV for details.