Dan Niles is positive on this corner of tech, names two global stocks to buy

Published Tue, Dec 13 20227:34 PM EST

U.S. tech stocks have been a minefield for investors this year, but hedge fund manager Dan Niles is optimistic on the sector elsewhere. Niles, who is founder and senior portfolio manager of the Satori Fund, told CNBC's "Street Signs Asia" Friday that his fund just bought some international tech stocks. "Given recent actions by China to relax their Covid policies following social unrest, we bought a basket of emerging market tech stocks that are down 70% or more from their highs in the internet sector with a focus on e-commerce," Niles said. He told CNBC that the stocks he bought included Southeast Asia's Sea Group , which owns online shopping platform Shopee and gaming arm Garena, as well as ride-hailing and food delivery firm Grab . According to Niles, the Satori Fund is up this year, beating the S & P 500 which has declined around 15% over the same period. He said his fund was also up in December so far, but did not disclose its exact performance. Key to its outperformance is the strategy of pairing short positions with long ones , Niles said, adding that the fund has made money due to its shorts. It has short positions in tech stocks with advertising exposure. Niles explained that he prefers global tech right now because the U.S. Federal Reserve is still tightening, whereas in a "lot of the emerging market economies they're getting close to stopping the hikes." Meanwhile, China is implementing stimulus measures. "So to some degree if ... you don't want to fight the Fed, which I've been saying all year, then you don't want to fight the fact that now we're getting away from zero-Covid," he said. Niles also suggested considering the iShares MSCI Emerging Markets ETF , which he said is a more diversified and less risky way to participate in EM for retail investors. On the flip side, he warned investors off cloud computing and software stocks with "consumption-based models that will be hurt by tech company layoffs." "During Covid, every business had to get online. So everybody needed to buy software, cloud computing resources, make sure their business survived," Niles told CNBC's "TechCheck" separately last week. "Now you fast forward three years and everybody's going out or going on vacation. And the sale of goods is slowing down as people consume more services and so now you need less cloud computing resources," — CNBC's Zavier Ong contributed to this report.