Trends Watch: Industrials & Materials 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 Greg Royce, Founder & CIO, Maximus Long Short Equity Management, LP.

What is your outlook for alternative investments?

Our outlook for low-net exposure investing is positive. Interest rates will remain low for a long time even if tapering of Fed bond purchases occur in the next 12-18 months. We know the world is awash in liquidity: Per Goldman Sachs, “the number of 401(k) accounts with balances of at least $1 million at Fidelity Investments grew 84% year over year.” However, stocks are historically very expensive per the Buffett Indicator. Thus, stock selection is critical. We are in a market where we believe alpha will matter much more than beta for the foreseeable future, which is attractive for alternative asset investing.

Where do you see the greatest opportunities and why?

There are many important mega trends taking place in the industrials and materials sectors that we are focused on. Electrificiation, electric vehicles, near-shoring of production, automation, building modernization, transportation and logistics upgrading, decarbonization and others. Additionally, there have been numerous interesting companies that have come public via the SPAC channel that we are excited about.

What are the greatest challenges you face and why?

As with any new business, trying to grow our business during COVID-19 has been difficult without meeting investors in person. That being said, investor engagement has picked up a lot lately and we are excited about our prospects. We are also in the process of working on a new strategy to go along with our core low-net exposure strategy.   

What keeps you up at night?

What keeps me up at night is our ability to get people to understand that there are just as many interesting investments in the industrials and materials sectors as there are in other sectors and that alpha can be persistent. As per a Barron’s article in the Fall, technology is no longer just about tech stocks—and industrial companies stand to benefit.

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