The Satori Fund’s Dan Niles is offering up his strategy for playing the Magnificent 7 stocks. The founder and senior portfolio manager told CNBC’s ” Squawk on the Street ” on Wednesday that he’s currently long Meta Platforms , Amazon , Nvidia and Microsoft and short Apple, Tesla and Alphabet . Short selling is a bearish position by hedge fund managers involving borrowing shares and selling them, with the hopes of buying them back more cheaply in the future. “We all know that earnings, short term, doesn’t drive stocks,” he said of his investing strategy. “It’s multiples. Over the longer term earnings always matter, and I think you’re starting to see that play out now.” NVDA YTD mountain Nvidia shares this year With the exception of Apple and Tesla , Magnificent 7 stocks have powered the market higher year to date, boosting the Nasdaq Composite and S & P 500 more than 5% and 4%, respectively. Nvidia and Meta Platforms have led the pack, jumping about 48% and 33%, respectively, while Apple and Tesla have slumped about 5% and 25%. Niles called his strategy to short certain stocks a focus on “actual earnings” and fundamentals rather than a hedge, noting that Apple’s suffered from declining earnings for several quarters now while Alphabet recently missed on its search numbers. Among his reasons for favoring Meta Platforms, the hedge fund manager highlighted the company’s price-to-earnings ratio, which is only slightly above that of the S & P 500, and strong advertising numbers. TSLA YTD mountain Tesla’s stock since the start of 2024 “It’s up again strong [in 2024], but it’s been driven by earnings,” he said. “Unlike an Apple or Tesla, Meta’s December quarter EPS, over the course of last year, went up about 90% So there’s a reason the stock almost tripled.” For Amazon, Niles expects the GAAP earnings per share to double between 2023 and 2025 , while Microsoft should benefit from Copilot and its investment in OpenAI.
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