Trends Watch: Long/Short 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 Amir Shaked, Managing Member, Shaked Capital Advisors.

What is your outlook for alternative investments?

The most salient recent market related development is COVID-19, and it is a game changer.  The place to be is in liquid long/short strategies that can pivot with the virus-related data and fundamentals.  Debt, commodities, and currencies asset classes are too risky because they are overly dependent on the actions of highly reactionary global monetary authorities.  Emerging market geographies are also too risky as they are highly correlated to the debt, commodities, and currencies markets.  This leaves equities in developed markets the asset class and geography of choice for optimal risk and reward. 

What are the greatest opportunities you see and why?

We always favor the health care, technology, and consumer spaces, all secularly attractive.  Currently, we want to be long the coronavirus-related solution and short the problem.  We want to be long health care companies solving the test, vaccine, cure and complication as well as technology companies enabling the shelter-in-place economy.  We want to be short consumer companies whose product and service is highly discretionary and restricted by social distancing guidelines.  This has already worked out well and we expect this will continue.

What are the greatest challenges you face and why?

We are a fund of funds and express our views via capital allocation to our third-party, independent underlying managers.  Coronavirus data could be highly volatile.  Fundamentals will be highly dependent on this data.  This requires managers with a short-term investment horizon and the willingness, agility and capability to adjust exposure frequently and quickly.  This renders capital allocation to managers unusually challenging, but we think we can continue to execute well.

What keeps you up at night?

Coronavirus has saddled developed and emerging nations with trillions in incremental national debt and raised their debt-to-GDP ratios to dizzying heights.  There is no end in sight to the stimulus programs fueling the debt increase.  Like overleveraged companies, these nations’ future likely holds consequent distress and reorganization.  It is very difficult to opine on when and how markets will react and what is discounted by markets at any point in time.  This portends unpredictable and dangerous market volatility, but we believe we are well positioned to profit.

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