Hedge Fund Veteran Peter Borish Talks Trading

Dec 17 2014 | 10:32am ET

Peter Borish says 2014 was “tricky” from a trading perspective. “The best investment ideas for 2014 center around strategies related to the continuing implicit deflationary expectation in the market,” Borish told FINalternatives in an email.

The founding partner and former director of research at Tudor Investment Corp. is now chief strategist at Quad Advisors, a New York-based hedge fund incubator and accelerator founded by John Guarino and Rino Ciampi.

“At Quad Group, we saw some trading opportunities in luxury goods for the upper middle class—more focused on women than in the men’s space in names like Coach, Lululemon, Michael Kors, Kate Spade and Nordstrom,” said Borish.

“We focused on shorting some of these names at certain inflection points. What was interesting was the more male-focused names like Nike and Under Armour have been holding up relatively well. We have also been very bullish on Walmart because Walmart.com is doing a tremendous job of competing with Amazon and we expect that to continue.”

Looking ahead to 2015, Borish said data from Japan and Europe suggest deflationary pressures are picking up:

“From a trading perspective, that also indicates that the stocks that have done well in 2014 will continue to do well in early part of 2015, up until options expiration or possibly as late as Washington’s birthday. After that point I would look for a convergence trade—selling some of the winners from this year and hedging them by buying the losers from this year.”

“From a valuation point of view the stocks that have done poorly this year are way undervalued and those that have done well are highly overvalued. All that said, though, I don’t expect economic activity to pick up measurably; in fact, it could surprise to the downside.”

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