L2 Large Cap Core Trade Commentary Rebalance – October Q3 2025

Table of contents

When

October 2, 2025

Who

Matthew Malgari
Dr. Sanjeev Bhojraj
Nathan Przybylo

ACTIONS:

  • Selling 2% of our total 3.2% position in Oracle Corp (ORCL).
  • Adding 1% to our existing position in Cisco Systems, Inc (CSCO).
  • Adding 1% to our existing position in Alphabet, Inc. (GOOGL)

RATIONALE:

ORACLE CORP: ORCL

  • Oracle announced strong earnings and an enormous backlog driven by an outsized contract win from OpenAI.
  • Oracle has been a significant overweight for L2’s Large Cap Core Strategy (3.2% vs. 0.89% in
    the Russell 1000 Core ETF).
  • We have long felt that Oracle’s potential in the space was underestimated and are happy to see the market recognizing what we saw in the stock when we took the position.
  • With that said, the enormous increase in Oracle’s stock price today has sent the stock’s valuation into less forgiving territory.
  • Oracle now trades at 53x trailing and 48x forward estimates, although we acknowledge that analysts will likely be revising estimates higher in the days ahead.

CISCO SYSTEMS INC.: CSCO – USING HALF THE PROCEEDS FROM THE ORACLE SALE TO ADD TO OUR POSITION

  • L2 believes that Cisco could be the “next Oracle” in that we see significant unrecognized potential in the stock relative to other tech stocks that have benefited from the “AI bump”.
  • Through its core hardware and software technologies of switching, routing, and wireless, Cisco
    Systems, Inc. (CSCO) is the clear leader in global computer networking.
  • CSCO’s rapidly growing exposure to AI infrastructure products should prompt investors to begin
    recognizing CSCO as an “AI play.”
  • Similar to Oracle’s move today, we believe Cisco may enjoy a significant re-rating as investors realize the company’s low multiple – currently < 18x earnings – bakes in little, if any, of the optimism from AI surrounding many other tech stocks.
  • Cisco has the added benefit of generating $13.3 billion in free cash flow representing a ~5% FCF Yield, providing us with a significant margin of safety relative to many tech peers.