Hedge fund manager Dan Niles entered this year bearish on the stock market, but he is getting close to becoming a buyer again. The Satori Fund founder told CNBC on Monday near midday that several technical measures his fund follows were showing stocks at oversold levels, signaling that there may be a near-term relief rally around the corner. "As much as I'm going to hate to do this, I'll probably be buying some stocks today because human beings are horrible investors," Niles said on "Tech Check," pointing toward the historical tendency of investors to buy near the top and sell near the bottom. "We're still playing for the down 20% over the long-term, even though I think the next three to 5% is up in the market," he added. Niles said in December that the S & P 500 could see a 20% retreat in 2022 and that cash was one of his favorite investments. He said on Monday that the pullback was being caused by the withdrawal of fiscal and monetary stimulus from the economy and that over 30% of his fund's assets were in cash. With the S & P 500 trading more than 10% below its record high during intraday trading on Monday, Niles said he would likely put some of that cash to work. The hedge fund manager said he is focusing on companies that "make lots of money, lots of profits, market share leaders, that are profitable today, not 10 years from now." He mentioned Facebook-parent Meta and Google-parent Alphabet as potential buy candidates on Monday. Niles said that Disney had not yet fallen enough to be a buy for him, but it was on his radar. Going forward, investors should look toward companies that could benefit as the world learns to live more normally with Covid, such as travel companies, Niles said. "This is looking for real companies, and more skewed toward services versus products," he said. Markets turned around in afternoon trading with the Dow closing nearly 100 points higher after falling as much as 1,100 points. The Nasdaq Composite and S & P 500 also finished with small gains.
Hedge fund manager Dan Niles entered this year bearish on the stock market, but he is getting close to becoming a buyer again.