Wall Street veteran reveals how his fund beat the 2022 bear market
Last year’s bear market left many investors deep in the red, but hedge fund manager Neal Berger bucked the trend. Berger is founder and chairman of Eagle’s View Capital Management. The hedge fund’s Contrarian Macro Fund generated returns of more than 160% in 2022, using futures to short stocks and bonds whose valuations Berger said were skewed by years of easy money . He joins other hedge fund managers, such as Satori Fund’s Dan Niles, who managed to grow their money in a turbulent year by taking short positions in the market. “The fundamental fundamental thesis of the macrocontrarian fund is that the global central bank’s stance on liquidity has shifted 180 degrees from a position of liquidity injection to a position of liquidity extraction,” he told CNBC’s “Street Signs Asia” on Thursday. Berger said the injection of $25 trillion in liquidity into the global financial system over the past decade has created “massive” asset price inflation. And with central banks around the world now scrambling to unwind bloated balance sheets, the process is expected to take “many years” and negatively impact the market, he added. “The massive injection of liquidity has provided a tailwind for all asset prices for a dozen years. The reversal of this liquidity injection will now be a huge headwind against asset prices for the foreseeable future,” did he declare. “My bible is price action” That’s why the veteran fund manager sticks to his proven playbook. The Contrarian Macro Fund currently holds short positions in S&P 500 futures, US 10-year bond futures, German Bund futures and Japanese government bond futures, according to the notes Berger sent to CNBC. “As a trader my bible is price action. I am a student of price action and will trade the market in line with longer term trends,” he said. He noted that the one-year trend of all asset prices, such as stocks, bonds, and crypto, is pointing down. “I have to follow the price action in the markets and it would be arrogant of me to predict that this downward trend in asset prices will stop now,” he added. Berger said investors should be patient and watch price movements “over a period of weeks and months,” rather than days to determine if trends have really changed. And while many investors want to “catch the bottom”, Berger said he was “ok with missing the initial move”. “If we’re going to have a real upside move, and we’re going to rally some 100% like we’ve been doing for the last decade, there’s nothing wrong with missing the top 10% to be certain that trends have changed,” he added.
