4 Outperforming Tech Strategies in 2017 (& 4 Stock Picks)
Editor's Note: Below is an excerpt from today's Early Look written by Hedgeye Techonology analyst Ami Joseph. Click here to learn more about subscribing.
While the Tech sector has outperformed consistently across 2016 and 1H17, within the sector itself there have been some large performance reversals during the past 6 months.
- Top-rated versus bottom-rated sellside stocks have offered strong alpha capture (over 1000bps delta) year-to-date, a complete reversal from 2016.
- Expensive tech vs cheap tech stocks are also generating alpha, with the spread of most expensive versus least expensive capturing 1400 basis points YTD, reversing the 2016 performance where cheap overtook expensive by 5300bps.
- Software is the top performing sub-sector YTD but last year was miserable, and the reverse is true of Hardware
- Lastly, if you had been long and short consensus Buyside positioning on short interest, in 2016 you would have minted 340bp of alpha, but in 2017 YTD you would be down ~200bps already
4 Stock Picks
These are not the tools we use to pick stocks On a daily basis, we use fundamental bottom-up analysis to find great longs and shorts. In the last year, our shorts have trended towards companies that are adding debt, wasting cash, and making stupid acquisitions (sometimes using equity). Intel (INTC), Sabre (SABR), Keysight Technologies (KEYS), and MicroSemi (MSCC) all fit the bill…