- Mike Edwards positive on European cyclicals amid regime shift
- Region has been majorly shunned by global allocators this year
- Related: Muddy Waters launches new short campaign in London
Mike Edwards, deputy CIO at Weiss Multi-Strategy Advisers, has tipped European stocks to benefit from the unwind in US tech stocks.
Highlighting the opportunity in European cyclicals at the Sohn conference on Wednesday, he pitched a long position in Ardagh Metal Packaging, a drinks can maker.
“We are actually fairly constructive — in a contrarian sense — amid a mood of real doubt,” he said. “In particularly we are relatively constructive on Europe and European cyclicals in particular.”
He added that the “consensus inflation trade and long dollar trend has started to unwind pretty violently” in a real regime shift.
Edwards, who previously traded in special situations at DE Shaw, joined New York-based Weiss in 2019 after heading the US office for Arrowgrass. The firm currently manages $3.6bn.
“We are clearly seeing rotation out of US mega-cap tech,” with money going to “reliable cashflow” companies, he added.
“That brings European cyclicals into focus, an area under-emphasised among global allocators.” Money flows out of China will also benefit Europe in the coming months, he predicted.
“The seven largest US tech stocks had a market cap at various times of the year larger than all of capitalised Europe. You will now see flows into lots of other places not least because there is no substantial mega-cap tech, over-inflated or otherwise, in Europe.”