Ian Winer, the head of equities at Wedbush Securities, is making a bold call: buy retail stocks.
Many investors may be fearful of stocks in the space after a rough start to 2017. The XRT SPDR S&P Retail ETF fell 14% from December 2016 to April of this year.
“The consumer discretionary group, while still subject to “headline risk” around a border tax, feels like it has bottomed to me and is going to make a slow grind move up 5% to 10% from these levels,” Winer wrote in an email to clients.
Winer says institutional investors have been pulling money out of the XRT ETF as a source of funds to put money to work in more promising sectors of the economy. Additionally, most of the buying in the last few weeks has been traders covering their short positions. However, Winer believes he has seen real institutional demand for stocks in the retail sector over the past few days.
While Winer said the Border Adjustment Tax or “BAT Tax” is the most prolific risk to retail, he does not think that the tax will come to fruition. He said:
“If the BAT was the big negative headwind when tax reform was on the front…