Slowing global growth, uncertainty on interest rate policy, and depressed commodity markets are creating short opportunities in names like Textainer (TGH) - Get Report , 2U (TWOU) - Get Report and Wynn Resorts (WYNN) - Get Report , said Andrew Ver Planck, portfolio manager of the MainStay U.S. Equity Opportunities Fund (MYCIX) - Get Report .
"January was a great period for short-selling, but now that the S&P has started to recover in February, it has become quite challenging," said Ver Planck. "We still have several names in our portfolio that we are short that we do find attractive, but you have to carefully pick your entry and exit points because there is the risk of a run-up in the market."
The MainStay U.S. Equity Opportunities Fund is down 7% thus far in 2016, according to fund-tracker Morningstar. The $930 million long/short fund has returned an average of 13.7% annually over the past three years, outpacing 91% of its peers in Morningstar's large blend category.
Ver Planck is particularly bearish on shipping container leasing company Textainer, which is down 20% year to date. He said there is less demand for moving cargo around the world and there is also increased risk in customer default.
"When we are looking for companies to short in our funds, we are looking for stocks that are expensive relative to their peers and negative sentiment," said Ver Planck. "This company has both."
He is also shorting online educational services provider 2U , which is down 32.7% year to date. Ver Planck said the company, which has posted four straight years of losses, has been seeing a rise in insider selling in the past six months, while also issuing new shares.
"They have not made money since they founded the firm, and we think it will continue to be unprofitable," said Ver Planck.
Finally, Ver Planck said he is anything but a fan of Wynn Resorts, despite the fact that the casino company's shares have shot up 15% so far in 2016. In his view, Wynn's Macau gaming revenue will continue to be under pressure due to both slowing economic growth in China and anti-corruption concerns.