Hunting for Shorts in the Tech Sector (with Nasdaq up +20% YTD) - gun

That's right. The Nasdaq is up +20.8% year-to-date and all manner of undeserving, not-so-profitable Tech companies have been swept up in the wake of this macro trade trend.

We've been all over this. Tech (XLK) has been our favorite sector for some time now as our call that U.S. growth is accelerating and inflation is slowing down continues to play out. As Hedgeye CEO Keith McCullough has written recently, investors should be high-grading their portfolios and getting long the following factors:

  1. GROWTH: Real Organic Growth
  2. SIZE: Large Cap
  3. QUALITY: Low Debt/EV 

Getting back to Technology shares, McCullough's macro parameters are particularly important, especially if you're hunting for good shorts after the sector's tremendous move to the upside. "We have had fun finding Shorts that represented the flip-side of Factors 1 + 3," writes Technology Sector Head Ami Joseph in today's Early Look.

As a starting point, below are the top winners and losers in tech year-to-date. From there, as Joseph says, investors looking for Tech company shorts should hunt for shares that "have floated higher with a greedy market, but where the market may be mis-interpreting inorganic growth as sustainable organic growth."

Now, we can't give you all of the eye-candy, short calls from Joseph's Early Look today beyond saying that he really doesn't like $6 billion Travel technology provider Sabre (SABR) and $6.8 billion software company Keysight Technologies (KEYS).

Happy hunting!

Hunting for Shorts in the Tech Sector (with Nasdaq up +20% YTD) - 6.8.17. EL chart