Fresh Air, Fresh Perspectives

Tom:

Hello and welcome to our bi-weekly update. I’m Thomas Boh, joined today by my partner Alex Phillips. First, thank you for your continued support and patience. Our Boh Heppe Team was out of the office for a team retreat—a valuable opportunity to step back, reflect, and plan strategically for the remainder of 2025 and into 2026. And yes, we managed to get some fresh air between sessions, Alex.

Alex:

Thanks, Tom. One topic we want to highlight is a report available on our website.

Cash reserves in the technology sector have fallen sharply, now at their lowest level since late 1996. With companies committing heavily to AI-related capital expenditures, debt financing is expected to become a key funding source. This rising reliance on debt could increase leverage risk if growth expectations fall short.

Source: Strategas Securities, LLC

On the positive side, operating margins in the sector have surged to a record 36%, signaling exceptional profitability. This financial strength makes additional borrowing attractive and suggests a powerful growth cycle ahead, creating long-term opportunities for investors.

Expect more debt deals as credit managers look to join the AI expansion. With that, I’ll hand it back to you, Tom.

Tom:

Thanks, Alex. Looking ahead, capital gains are expected to be elevated this year. We’ve been actively harvesting losses where possible to offset those gains and will continue to do so.
Additionally, mutual fund distributions are trending high. We’ll keep you informed as we move through the final stretch of the year.

REPLAY AVAILABLE: Q4 Experts Unplugged

We were privileged to welcome Mark Keller, CEO & CIO of Confluence Investment Management, as our featured guest for the final Experts Unplugged event of 2025. Mark delivered a compelling analysis of current market and economic trends, and offered insightful projections for 2026. If you’d like access to the event replay, feel free to contact us.