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Canada’s Largest Hedge Fund Boss David Picton Names His Stock to Watch

Prime Minister Mark Carney declared a new world order at Davos this week, what does that mean for your money? In this episode of In the Money with Amber Kanwar, Amber sits down with David Picton, CEO of PICTON Investments, Canada’s largest hedge fund, to unpack what a shifting global order means for investors.

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Top investing ideas from David Picton: 

Bullish on Rocket Companies (RKT)
Rocket Companies, a leader in online mortgage origination, exemplifies Picton’s focus on positive fundamental change and innovation in a fragmented market. He sees it as poised for growth in a $2 trillion U.S. mortgage space, with AI integration and acquisitions creating a powerful ecosystem flywheel.

  • Innovation and Market Consolidation: Rocket pioneered fully online mortgages and refinancing, capturing share in a market where the top 10 players hold less than 25%. Acquisitions like a mortgage servicer and Redfin’s brokerage arm position it for dominance, similar to Amazon in e-commerce.
  • Tailwinds from Lower Rates and Policy: With mortgage rates potentially dipping into the fives, refinancing could surge for the millions stuck above 6%, amplified by Trump-era affordability pushes like quantitative easing for mortgages via Fannie and Freddie.
  • Holding Period and Thesis Durability: Picton typically holds names like Rocket for 1-2-3-5 years or more when positive change signals persist (e.g., quarterly reports confirming earnings growth); quick turnover only occurs if the thesis fades, but Rocket’s edge in AI and data monetization supports long-term confidence.

Bearish on the Magnificent 7

Picton is cautious on the Magnificent 7 (tech giants like Nvidia, Apple, etc.), viewing their dominance as overextended amid high valuations and a broadening rally. He’s reduced exposure and is even net short tech in some portfolios, predicting a shakeout where not all survive as AI winners.

  • Overvaluation and Speculative Risks: The Mag 7’s stellar run has pushed U.S. market caps to all-time highs relative to GDP, with valuations resembling bubbles (e.g., via Shiller PE); Picton warns of a shift from “everything works” to a battle for AI dominance, where only a few champions emerge.
  • Broadening Rally and Alternatives: As economic tailwinds lift small caps, commodities, and the “other 493” S&P stocks, the Mag 7 could underperform; Picton sees speculation punishing shorts in 2025 but expects rationalization, with AI’s impact real but unevenly distributed.
  • Hedging and Portfolio Shift: In a total portfolio approach (40/30/30: equities/bonds/alternatives), Picton favors diversifiers like commodities over correlated tech; he’s willing to short the group if correlations with bonds rise, amid risks like inflation above target and bond yield pressures.

Don’t miss our next episode! We are taking your questions. Email questions@inthemoneypod.com

DISCLAIMERS: This text AI generated and should be checked against actual delivery. The content provided in this podcast is for informational purposes only and does not constitute financial, investment, or professional advice. The views expressed by the host and guests are their own and do not necessarily reflect the opinions of any organization or company. The host and guests may maintain positions in any securities discussed on the podcast. Always consult with a qualified financial advisor or professional before making any investment decisions.

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