Business

This star hedge fund manager says some big tech names are now value plays as he shorts a favorite meme stock

Stocks are bouncing back, at least that’s the sentiment of futures.

That comes a day after Federal Reserve Chair Jerome Powell confirmed to lawmakers what markets already knew – that an economic soft landing could be difficult while the inflation beast is tamed.

Along with average investors, hedge funds have had a rough start to this year. Managers lost about -0.56% in May, outperforming the Nasdaq by 1.49% but lagging the S&P 500 SPX.
-0.13%
up 0.57%, according to the Eurekahedge report.

But one manager has had some gains this year. That is AQR Capital Management Founder Cliff Asness, whose equity market neutral global value strategy is up 48% so far this year, while his absolute return strategy is up 35%, according to CNBC, which interviewed him late Wednesday.

In our call of the dayAsness offers a few stock picks from his quant process and challenges the meme crowd via his AMC Entertainment AMC,
+0.80%
short position. First, the star manager looked at broader markets and how he feels about hard-hit bonds these days.

“We don’t like them as much as we did six months ago,” Asness said CNBC. “If you were to force me to do so, I would say that we are anti-bonds, even in the trend-following world that doesn’t really look at value, and in the managed futures world, we are certainly short bonds.”

“I don’t think I can say bonds are a value game,” he said, and that’s in contrast to a couple of tech names he was reluctant to divulge. “That doesn’t mean there won’t be a big bond rally when we enter a recession, but in terms of the things we compare yields to, bonds are a lot less catastrophic. But that is scathing with weak praise.”

Would its value plays get in trouble if a recession hits? fitness said Its strategists aren’t as sensitive to macro factors, in part because they don’t make big industry bets. “I don’t think we have a very direct bet on recession versus no recession.”

He said they hold onto some value plays in the portfolio because they always like that exposure, and especially “when it looks very, very cheap.” While there has been a pullback for value in June, when it comes to relative prices between value and growth, the highs are so high that they are associated with the tech bubble, he said.

CNBC

In terms of value-play stocks falling into its playbook — cheap, profitable, low-risk, and with good momentum — Asness pointed to tech giants Meta Platforms META.
-0.76%
and Amazon AMZN,
+0.25%,
down 53% and 34% year-to-date, respectively.

“Both Meta and Amazon are now universally liked by our process. They’re cheap compared to their competitors… we do industry comparisons and they’re not always perfect – Meta is social media and Amazon is internet retail… but both look good with a combination of value, profitability and low-risk investment… Amazon is good on all three,” he said.

In his broader interview with CNBC, Asness challenged the memes and announced a new short position at AMC Entertainment. “It’s terrible at everything that’s important to us,” Asness said said. “It’s super expensive, super unprofitable, and has super high beta and super volatility.”

“I dare all meme stock maniacs to hurt us,” he ground out.

Judging by the Previous Twitter reactions It looks like the meme crowd isn’t backing down, while AMC is up 1.5% in the premarket.

The Buzz

“Huge money furnaces.” How Tesla TSLA works,
-0.40%
CEO Elon Musk describes the electric vehicle manufacturer’s two newest factories.

EV group Polestar will debut on the Nasdaq on Friday after completing a deal with specialty acquisition firm Gores Guggenheim GGPI.
+11.87%
was approved.

Stock at Darden Restaurants DRI,
+1.25%
is up after the board approved $1 billion in share buybacks.

Accenture stock ACN,
+1.30%
falls on a loss of earnings for the consulting company.

Warren Buffett’s Berkshire Hathaway BRK.A,
-0.53%

BRK.B,
-0.73%
announced the purchase of an additional 9.6 million shares of Occidental Petroleum OXY,
-3.63%.
These stocks are stable.

Investors have more money hidden now than they were in the early days of the COVID-19 pandemic, according to JPMorgan.

Powell heads out for his second day of testimony on Capitol Hill, beginning at 10 a.m. EST. Before that come the weekly jobless claims and US deficit, followed by the S&P Global Manufacturing and Services Purchasing Managers’ Indices.

The markets
blank

stock futures ES00,
+0.76%

YM00,
+0.51%

NQ00,
+1.04%
are higher, with bond yields of TMUBMUSD10Y,
3.130%

TMUBMUSD02Y,
3.039%
Ease back while Oil CL.1,
-0.41%

BRN00,
-0.35%
falls further a day after settling at a six-week low. bitcoin BTCUSD,
+3.93%
continues to hover around the $20,000 mark.

The graphic

Auto parts stocks have largely discounted an economic recession and “still have a strong tailwind,” says Luke Junk, research analyst at Baird. He says investors are looking for “already washed out sectors.” should be geared towards companies dealing with electrification, active safety and vehicle technology. Gentherm THRM,
-0.28%
and Aptiv APTV,
+0.30%
are two oversold names that stand out for junk.

blank

FactSet, Baird

The tickers

These were the most searched tickers on MarketWatch as of 6:00 a.m. EST:

ticker

security name

TSLA,
-0.40%

Tesla

GME,
-1.30%

GameStop

AMC,
+0.80%

AMC entertainment

NEVER,
-0.49%

NEVER

BACKWARD,
+34.32%

Revlon

AAPL,
-0.38%

Apple

MULN,
+5.26%

Mullen Automotive

AMZN,
+0.25%

Amazon

RDBX,
-12.93%

Redbox entertainment

BOXD,
+35.40%

Packed up

Random Reading

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The parents of transgender children squander their life savings trying to flee conservative states.

A quick-thinking coach saved the life of swimmer Anita Alvarez at an international competition on Wednesday:

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https://www.marketwatch.com/story/this-star-hedge-fund-manager-says-some-major-tech-names-are-now-value-plays-as-he-shorts-one-meme-stock-favorite-11655982864?rss=1&siteid=rss This star hedge fund manager says some big tech names are now value plays as he shorts a favorite meme stock

Brian Lowry

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