Market valuations are pressing against historic highs, with pockets of speculation emerging in areas such as AI, quantum and nuclear technologies. Some investors are looking for defensive positions as concerns mount over potential corrections.
BNN Bloomberg spoke with Julian Klymochko, CEO and chief investment officer at Accelerate Financial Technologies, who outlined two defensive long ideas and one short call he believes can help reduce risk in today’s overheated market.
Key Takeaways
- High valuations and emerging sector bubbles make low-beta stocks more attractive for risk-aware investors.
- Loblaw offers defensive stability through its market leadership, consistent earnings and strong shareholder returns.
- Power Corp’s diversified financial holdings provide steady growth and support from trading below net asset value.
- Investors should de-risk by avoiding speculative, high-beta names and focusing on total shareholder yield.
- MSTR trades at a premium to its bitcoin holdings, and weakening sentiment suggests that premium could reverse.
Read the full transcript below:
ANDREW: In this market, which many feel is frothy, our guest thinks investors should look to less-volatile stocks — and perhaps ones that are less speculative and vulnerable to short selling. That’s the theme today on Hot Picks. We’re joined by Julian Klymochko, CEO and chief investment officer at Accelerate Financial Technologies. Before we get going, Julian, that’s interesting. One possible thing to bear in mind is: go easy on stocks that can be driven down by short selling.
JULIAN: What we want to chat about today is defensive posturing because, as you indicated, Andrew, this market is quite frothy. If you look at valuations, they match or exceed those of the tech bubble more than 25 years ago. You’re seeing various bubbles in the market — whether it’s quantum, nuclear or AI — and whether you want to call it a financial bubble or industrial bubble, some things appear unsustainable and should give investors and allocators pause. And with that, people are searching for defensive-type positioning. So what I want to chat about today is two longs and a short idea, or an idea for investors to exit, in what we view as a riskier-than-average market.
ANDREW: Loblaw is your first idea. Obviously a classic defensive stock — we all need to eat.
JULIAN: Yeah, you nailed it there, Andrew. It is highly defensive, Canada’s largest food retailer. Even in a choppy market or an economic environment fraught with risk, we all need to eat, so we believe it will provide that consistency and stable earnings growth that really provides a good floor for the stock. Loblaw has a leading market position, attractive absolute and relative valuation, high return on capital and good shareholder yield, combining share repurchases and a dividend. And, more importantly in this market, as I indicated, defensive positioning. Loblaw has a market beta of 0.5, meaning in a drawdown scenario — if the market were to correct 10 per cent — we’d expect Loblaw to go down about half of that. In contrast, it has also provided strong upside participation and good stock momentum. So I think it’s a solid defensive holding for equity investors in the current environment.
ANDREW: Your next idea is Power Corporation of Canada, and of course it’s the parent company of the likes of IGM, the mutual fund giant, or Mackenzie or Great-West Lifeco.
JULIAN: Yes. So it’s a diversified financial-services business that’s been around for decades and decades, focused on insurance, wealth management and investment management. This is another steady-Eddy stock that provides consistent, low-risk growth in most market environments. They’ve displayed strong recent business performance, various growth initiatives and intelligent capital allocation, in addition to share repurchases and a good dividend yield. From a valuation perspective, it still trades at a discount to its net asset value, which provides good valuation support for the stock. And lastly, with a beta of 0.6 — again, reduced downside participation if we were to hit a market correction or bear market — this is a defensive stock that will really help provide that support in portfolios, or reduced downside, versus the market index.
ANDREW: The yield is about 3.5 per cent. And of course, the run-up in the shares this year — they’re up more than 54 per cent — has tended to bring down that yield. But in a market like this, Julian, should you emphasize stocks that at least pay some kind of dividend?
JULIAN: Yeah, I think it’s important for investors to look at total shareholder yield, which takes into account not just the dividend but share repurchases as well, because those represent capital returns. We like share repurchasers. Some corporations that do pay a dividend actually have a much higher yield when you take into account repurchases, which also provide that buying pressure and can support the share price, particularly in a choppy market. So yes, dividend yield is important, but I think share repurchases are even more so.
ANDREW: And then you have a short idea for us. We had a look at this stock earlier — Strategy, formerly MicroStrategy — and these days all it does is hold a bunch of crypto.
JULIAN: Yes, short idea — or perhaps, if you’re long MSTR, I’m advocating that investors take some money off the table and exit the stock. Strategy is what’s known as a digital-asset treasury company. All it does is hold bitcoin, and it gets a pretty tremendous valuation for just holding bitcoin. It currently trades at 1.2 times its net asset value — or the underlying value of its bitcoin. So either you could buy a bitcoin ETF or bitcoin straight at around US$100,000 currently, or you buy MSTR and pay US$120,000 for bitcoin. So Andrew, it seems like a fairly easy decision to make. That premium has been declining pretty significantly. It has faced a ton of copycats in the market, as entrepreneurs and executives have tried to replicate this bitcoin-treasury strategy. In addition, you’ve seen declining sentiment on that type of business model, such that I expect this stock to trade down to a discount to its net asset value, and the whole machine sort of falls apart. It’s heavily reliant on the greater-fool theory to convince more and more investors to buy this thing at a premium. I believe it’s only a matter of time before that scheme runs out.
ANDREW: And finally, are there any Canadian tech stocks you like right now? Shopify, Celestica, Lightspeed — any calling to you, Julian?
JULIAN: Yeah, I continue to like Constellation Software. It has been beaten down a little bit — not on fundamental performance but more due to this negative sentiment around AI potentially killing software. We really haven’t seen that play out yet, so its valuation has become more attractive. And I’ve previously advocated for Constellation as a longer-term hold. And then Celestica — a good sort of shadow-AI play that has had exceptional performance and seemingly a beat-and-raise quarter for the past, call it, half-dozen quarters. It has performed exceptionally well, but it’s really tied into the whole Nvidia data-centre growth story, which investors should keep a close eye on. But as long as these hyperscalers are spending hundreds of billions of dollars on AI data centres, a name like Celestica should continue to benefit.
ANDREW: Thanks very much, Julian. Really appreciate it.
JULIAN: Thanks, Andrew.
ANDREW: Julian Klymochko, CEO and chief investment officer at Accelerate Financial Technologies.
| DISCLOSURE | PERSONAL | FAMILY | PORTFOLIO/FUND |
|---|---|---|---|
| L TSE | N | N | Y |
| POW TSE | N | N | Y |
| MSTR NASDAQ | N | N | N |
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This BNN Bloomberg summary and transcript of the Nov. 18, 2025 interview with Julian Klymochko are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.