In the first episode of our Sector Head Spotlight series, Robert McGroarty talks with Hedgeye Healthcare analyst Tom Tobin about everything from his beginnings as an analyst to his favorite long and short ideas heading into 2023.
Tom joined Hedgeye 15 years ago and first worked with Keith McCullough in the year 2000 at hedge fund Dawson-Herman Capital Management. While it took Tom some time to fine-tune his investing strategies to Hedgeye's Macro approach, his general interests and industry beliefs have remained the same.
“I always did healthcare, always long/shorts,” Tom explains. “I always made money for the year off a handful of ideas. I tried to minimize mistakes. It’s basically been that mantra ever since.”
Adopting Hedgeye’s macro approach has helped Tom filter out the noise and narrow his list of longs and shorts.
“Where I think I am today after 15 years at this is really having a very good macro-awareness,” Tom explains. “Because as Hedgeye’s gotten much better at the Quads, I’ve also gotten much better at integrating into that Quad framework.”
Coming out of an international pandemic, there’s perhaps no other sector with more “stories” driving investor buying or selling decisions. Tom agrees a narrative can provide an educated guess about which stocks will perform well in the future, but the foundation of his analysis lies in factor exposure analysis and Quads. In essence, NUMBERS, not NARRATIVES.
“The key theme here is decisions are rooted and based in data and numbers, then we decide the position of these stocks our list of favorite ideas,” Tom explains. “A theme will influence positioning, but it starts with a filtering process that scores my own narrative. If I’m falling in love with something, it’s best to move on. Don’t be wed to some great idea.”
In the coming weeks, Hedgeye.com will feature several other analysts on Sector Head Spotlight. Stay tuned.