Seeking Alpha

Dale: Finding Opportunities Late In The Cycle

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by: Real Vision
Real Vision
Long/short equity, long-term horizon, short-term horizon, newsletter provider
Summary

For the next couple of quarters, the US will remain in an environment of slowing growth but rising inflation, says Hedgeye managing director Darius Dale.

Based upon this, he recommends an overweight position in large-cap growth paired with an underweight in small-cap value. From a sector perspective, he recommends going long energy and short materials, long utilities and short financials, long REITs and short consumer staples.

Darius sees global growth accelerating with China and Europe leading the way, so he's bearish for the US dollar and bullish for the euro.

Growth is decelerating as inflation is bottoming and starting to reaccelerate in the US, which will likely persist through the beginning of next year, Hedgeye managing director Darius Dale told Real Vision’s Investment Ideas.

In this environment, he thinks energy should pivot from a top-three short to a top-three long. He expects crude oil and energy related equities to do fairly positively. And he also expects tech growth and high-beta style factors to do well, particularly large-cap, growth-oriented securities.

“From an index perspective, we definitely think large-cap growth, small-cap value is the best alpha generation trade out there,” he said.

Darius sees a European and Chinese economic recovery that resuscitates the global economy, so he says that he's bearish for the US dollar and bullish for the euro.

The Trade

Darius recommends an overweight position in large-cap growth paired with an underweight in small-cap value. From a sector perspective, he recommends going long energy and short materials, long utilities and short financials, long REITs and short consumer staples.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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