This year’s bear market has left many investors deep in the red, but Dan Niles says his Satori fund bucked the trend. Niles said the U.S.-focused long-short equity fund has been up this year, outperforming the S&P 500, which was down about 20% over the same period. He did not disclose the exact performance of the fund. According to Niles, the key to the fund’s outperformance is its short positions. “We made money today. We’re up in August. We’re up for the year. But it’s not because of our longs. It’s because of our shorts,” he told CNBC’s “Street Signs Asia” on Thursday. “We are counting on our shorts to make a profit by the end of the year and have more shorts than longs in the portfolio,” he added. Short selling is a strategy that sees investors betting that the price of a stock will fall. Niles said he was looking to make some short-term money by going after ‘big business’ in tech, amid what he expects to be an industry downturn as people cut back their consumption of Internet-related services after the pandemic. The Satori Fund also has short positions in advertising stocks, which it says are under pressure from competition from major streaming services such as Netflix and Disney which are “sucking up ads” that would otherwise go to ad agencies. traditional. Netflix and Disney have both announced plans to offer low-cost subscription tiers that come with ads. The Satori fund also holds several long positions, although Niles warned that these positions remain vulnerable in the current market. “No longs exist in a vacuum and all longs are likely to take another 25% decline from the S&P, so they are paired with shorts. We hope our longs will fare better than the whole market,” he said. Cash is king With market volatility expected to persist in the near term, Niles believes it’s important for investors to keep a close eye on their portfolios. “For the retail investor who is unable to manage their portfolio full time, we would recommend cash, despite the loss [about] 5-7% to inflation, rather than losing another 25% to a stock market decline,” he said, joining a chorus of other investment professionals urging investors to hold cash in their wallets. More than 20% of the Satori Fund portfolio is “We believe the economy will enter a more traditional recession in 2023 with slower growth and higher growth.” unemployment driven by higher rates, while inflation remains above the Fed’s 2% target,” he said. Niles isn’t the only market player to favor a defensive stance. A host of investment banks on Wall Street are urging investors to stay calm amid market turmoil and invest in companies with defensive characteristics – including Morgan Stanley’s chief US equity strategist, Mike Wilson. Niles likes Walmart as a defensive bet that could ‘benefit from a recession as consumers search He noted that the company gained market share during the 2008 global financial crisis, with the stock offering an 18% return while even as the S&P 500 was down 38% over the same period.”They also seem to be finally getting their inventory issues under control,” he said.Niles is also bullish on several services-related stocks.His fund recently bought shares of online food delivery platform DoorDash for the “first time. Niles pointed to the company’s “resilient consumer demand” and believes its second-half guidance was conservative. He also likes Uber as a way to play the shift in consumer spending from goods to services – as people start to travel again and Uber drivers get back on the road in a post-pandemic world. Another favorite of Niles is the sports betting industry, which he says is “one of the last big markets” to go online. The industry is finally geared towards profitability, with growth of more than 10% per year for the next decade and revenues of around $200 billion, according to Niles estimates. His top pick in this space is Massachusetts-based sports betting company DraftKings, for which he predicts revenue growth of 60% this year and 40% over the next three years. Commodities bullish Niles also likes the commodities sector. “We believe commodity prices will decline less than expected from current levels, even during a recession in 2023, given weak structural investment over the past decade limiting supply,” he said. declared. Demand is expected to improve as China tries to boost its economy with Chinese President Xi Jinping’s upcoming election to a third term in October, he said. Additionally, Niles is optimistic about copper demand as the world accelerates its transition to electric vehicles. “Electric vehicles consume twice as much copper to build and supply is expected to peak in 2024,” he said.