Hedge fund manager Dan Niles is preparing for the potential of another steep decline for stocks in 2023 with a top-picks list that leans defensive. Niles said Tuesday on CNBC’s ” Squawk on the Street ” that he expects the S & P 500 to fall to 3,000, which is more than 20% below where the index finished 2022. As a result, many of Niles’ top trade ideas are those of a cautious investor, headlined by cash and short-term government debt. “Now you can get 4.3% on a three-month T-bill. I think that’s a great place to put your money, because you’re essentially getting paid to wait for the fundamentals to bottom, the Fed to stop being aggressive,” said Niles, the founder and senior portfolio manager of Satori Fund. Another area that Satori Fund is focused on is health care. The sector fell less than 4% last year, outperforming the broader market and proving itself once again a defensive option for investors. Niles said he believes the sector is also benefiting from some post-pandemic trends. “I think a lot of people, like myself unfortunately, put off going to the doctor during Covid, and now there’s a little bit of catch-up left,” Niles said. The Satori Fund’s health-care play is the Health Care Select Sector SPDR Fund (XLV) . Niles’ third pick was the Global X Uranium ETF (URA) , a fund that holds shares of many companies involved in the mining or refining of uranium. After Russia’s invasion of Ukraine put stress on oil and natural gas markets, nuclear power should be a more important source of energy production going forward, Niles said, leading to higher demand for uranium. “People are looking at nuclear as a way to get to energy independence, as well as clean,” Niles said. There were also two individual stocks on Niles’ list. One is Mitsubishi UFJ Financial Group , Japan’s largest bank. There have been growing signs that the Japanese central bank may let interest rates rise in 2023, which could boost the country’s banking sector. Satori also has a large position in Meta Platforms . Niles said he believes in the Instagram parent’s cost-cutting plans, making its cheap multiple — relative to other internet stocks — attractive.
