Investor Dan Niles adjusted his Covid reopening positions. Here's how he's allocated now

Published Mon, Jul 19 20211:28 PM EDTUpdated Mon, Jul 19 20214:27 PM EDT

Dan Niles told CNBC on Monday he's adjusted his bets on Covid reopening stocks, highlighted by selling out of Facebook . The hedge fund manager has considered the social media giant to be an economic recovery play because the vast majority of its revenue is generated by advertising. "Remember, advertising is tied to GDP growth," he told CNBC in April , when he also made the case for Google-parent Alphabet being a reopening winner. "They get advertising from the airlines, the hotels, the malls. All those sectors have gotten killed. These two stocks have kept going up," Niles said Monday, even as investors have seemed to question the pace of the economic expansion since early June and sold out of cyclical names accordingly. "Then in addition to that you also have the IDFA stuff from Apple that's affecting advertising dollars etc., and [Facebook and Google ] were up a ton coming in," said Niles, founder and senior portfolio manager at the Satori Fund. He was referring to an iPhone privacy change Apple put into effect in the spring. "That's why we took some profits in that because we were like, 'That doesn't really make sense if all the reopening stocks are down. The guys that benefit from the reopening on the tech side are up; there's probably a little bit of catch-up that needs to be happening there, so that's why we did what we did last week.'" He noted his fund still holds "a little bit of" Alphabet, but trimmed the size of the position to take advantage of the gains. While Niles runs a tech-biased fund, "if we're looking at reopening, we're not looking at the tech names from here. What we're looking at more is things like energy or financials or materials," Niles explained, saying they've been "absolutely destroyed" since early June. The S & P 500 energy sector is down about 16% since its 52-week high on June 15, while the materials sector is down more than 10% since May 17, when it notched its respective one-year high. The S & P 500 financials sector is down a little more than 8% since its 52-week high on June 4. Tech companies that cater more toward businesses, rather than consumers directly, do look attractive right now from a reopening viewpoint, Niles said. "I think our largest position right now is actually Cisco," he said. The company's network switches and Wi-Fi access points are used by companies in offices, making it a potential beneficiary as firms shift away from mostly remote work arrangements. "We look at that and say, very little consumer and lots of enterprise," Niles said. In general, Niles said he continues to like the reopening story despite concerns about a rebound in Covid cases and the highly transmissible delta variant, which were hitting the market heavy Monday. The Dow Jones Industrial Average dropped more than 700 points. "The question you really have to ask yourself is, do I believe the world in three months from now, we get more vaccinations, more herd immunity?" Niles said. "Things are going to look better three months from now from a reopening standpoint than they do today. I think, at least from perspective, once we get through kind of this winter time period, that's what's going to end up happening." Watch the complete interview with investor Dan Niles above.

The logos of Facebook and Google apps displayed on a tablet.

Denis Charlet | AFP via Getty Images

Dan Niles told CNBC on Monday he's adjusted his bets on Covid reopening stocks, highlighted by selling out of Facebook.

NEXT PRO TALK

5 Days Remaining

Wed, July 6 2022 - 12:00pm

CNBC PRO Talks: Top tech investor and analyst Gene Munster provides stock picks and strategy for the beaten-up sector

More In CNBC TV Picks

Dan Niles sees no bottom in sight for stocks as earnings could be 'absolutely horrible'

Yun Li

Fed and other central banks experiencing a ‘great awakening,’ Allianz’s Mohamed El-Erian says

Fred Imbert

There's no bottom in sight yet, says top chart analyst as the Dow breaks below 30,000

Sarah Min