Hedge fund manager David Neuhauser’s fund has beaten both the S & P 500 and the Dow Jones Industrial Average so far this year. The Livermore Partners’ “special situation” hedge fund is up over 10% in the year to date, he told CNBC on Thursday. Meanwhile, the Dow is up 1.6% and the S & P 500 is up around 7% as of Wednesday’s close. He shared with CNBC’s ” Street Signs Asia ” on Thursday some tips on what to buy and avoid in today’s volatile market. Energy and gold Neuhauser said small-cap energy stocks are behind the fund’s outperformance, naming three: Jadestone Energy , Kolibri Global Energy and Vista Energy . Of the three stocks, Kolibri has done the best, rocketing 71% this year, while Vista Energy is up nearly 50%. That comes as oil prices rose this week after a surprise OPEC+ oil production cut announced in early April. He also named gold as one of the best asset classes to own right now, given tailwinds such as a weak dollar and geopolitical issues. “We’ve seen such an under investment in the (oil) space for the past five to seven years. So to me, even withstanding a recession. I think crude prices are in a really strong band,” Neuhauser said. “If we skirt a deeper recession, then … demand is going to surprise us to the upside. And then you can see commodities actually run a fair bit much more than say 20% to the upside on a number of commodities names, especially oil, and even looking at some specific situations within the gold sector,” he added. A ‘luxury playbook’ Neuhauser said he also has a “luxury playbook.” “Because if we are wrong in terms of recessionary fears, and it’s not that deep and protracted, then I think some of those luxury sectors are going to maintain their margins and do quite good,” he said. Livermore owns luxury stocks such as LVMH, Ferrari and clothing retailer Canada Goose Holdings . Also as a hedge, Livermore is short on Tesla and the U.S. dollar , said Neuhauser. Avoid tech Neuhauser said he believes the economy is still in stagflation and a bear market is “still at play.” He pointed out that in the past three months, a number of big tech companies have had layoffs and cost-cutting initiatives. “That of course keeps the hold in margins for the next say six to nine months, and those stock prices start to react. So that’s why those stock prices are up, you know, 20%, 30% from the year start,” he said. The Nasdaq is up nearly 15% so far this year as of Wednesday’s close. The companies are “well insulated” with cash, but when investors look at the outlook for valuation and growth until 2025, they’re going to be “severely disappointed,” he said. More downside is ahead, and that’s not going to “really hit the market” for another three to six months, Neuhauser said. “In the overall index market, I would not be a long … but today that’s where the market is seeing value. And I think that’s going to prove to be an error,” he told CNBC.
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