Trends Watch: Long/Short Active Trading Equity Investing

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.   

This week, Elana talks with Jason Lieber, Portfolio Manager, MYDA Advisors.  

What is your outlook for long/short active trading equity investing?  

I believe the market has moved from an extended period of time in which the Magnificent 7, the top large-cap technology companies, greatly outperformed the market.  Hence, we believe we are now in an environment where stock picking is key and actively traded hedge funds have the potential to outperform other hedge fund strategies.  While this may cap the upside on the S&P 500 and the Nasdaq-100, it gives traders a better opportunity to outperform. 

What are some of the greatest opportunities you see and why?  

Some of the better opportunities now exist in Europe and in value-related names that have been ignored for many years.  For those brave enough to invest in China, we were in the midst of a strong rebound before the tariffs hit. There are also a number of speculative areas of the market that have more downside in a tougher market environment. 

What are the greatest challenges you face and why?  

The greatest challenge is that the market moves so fast and irrationally.  There are so many factors that cause outsized moves for stocks.  One tweet about tariffs and the market can zoom in either direction. The short term is extremely difficult to predict. 

What keeps you up at night?  

One area of concern for me is that large increase in capital that has chased market neutral multi-strategy hedge funds.  At market turns, the significant amount of leverage and crowded nature of some investment pods can cause many unexpected consequences. If multiple funds were forced to liquidate numerous pods at the same time, there could be terrible consequences for investors. 

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.