With “Trump trades” starting to look overcrowded – as AB Bernstein research recently suggested – Moab Partners ’ Michael Rothenberg must be smiling. The portfolio manager for the $568 million New York-based Long / Short hedge fund had established his trade on the short side of a border wall and is now tallying the results.

Moab Partners – “Holy Cow!” Wall Street consensus changes its mind on a dime

The Wall Street “consensus” over a Trump election victory was a manic event. Before the election, the concern was that a trade war would spark a worldwide recession. Magically, after the election a new world order appeared before investors eyes as sharp election night losses — stock futures were down as much as 5% — transformed into gains in the morning, with the S&P 500 ending up 6% on the day.

General euphoria erupted among market participants “that a Trump administration coupled with Republican control of the Senate and House will mean lower taxes, less regulation and greater economic growth,” Rothenberg wrote.

The October investor letter reviewed by ValueWalk and titled “Holy Cow” in deference to a Chicago Cubs win of the World Series discussed a Trump short trade with an oil kicker.

Also see Q3/Q4 hedge fund letters

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Moab Partners

Regional retailer along the Mexican / US border with weakening earnings and exposed to oil woes was Moab short

Although Rothenberg doesn’t like to talk publicly about his short exposure, this end of the portfolio has been performing significantly as of late. In October, a month the fund was -0.10%, long exposure was negative but short exposure brought performance back to near even, highlighted by an election play. The fund is up 8.33% on the year.

The subject of Rothenberg’s Trump short is a struggling retailer with stores straddling the border between the US and Mexico. Moab Partners had established the short before the election on weakening fundamentals and a bleak picture for oil, a considerable economic performance driver in the region. Then the US Presidential election bolstered this exposure.

“Trump’s election has already crushed the Peso impacting this retailer’s Mexican shoppers,” he wrote. “Additionally statistics on rig counts and jobs in the oil industry are down meaningfully versus last year and pressure this business.”

The company recently released weak earnings and guided significantly lower for the Christmas season, pushing this Trump trade even lower but not before Moab added to their exposure.

You can still find value in this market even after a stock climbs 12% in one month

Bolstering the long performance was its core long investment is Viad (VVI), a Phoenix-based small cap stock that is involved in “experiential services” such as trade shows, events and recreational travel.

On the back of a strong earnings report, the stock rallied 12% in October. Being one of Moab’s core holdings – 6% of assets – Viad’s dramatic increase in travel and recreation assets are impressive given the low level of leverage. Despite of this, the stock still trades at a “heavily discounted multiple” relative to travel industry peers.

To address the value disparity, Viad plans to split the company into two separate businesses, thoughts of which are pleasing to Moab. “A potential 2017 spin-off serves as a not too distant catalyst for continued upside and we are using a $53 one year price target based on a multiple of 7x for Viad’s trade show contracting business and a multiple of 10x for Viad’s travel and recreation business (in line with peers though we are growing faster), plus one year of free cash flow,” the letter stated. The stock is currently trading at $43.70 after touching new all-time highs last week.

Two long positions that subtracted from performance were Armstrong Flooring (AFI) and Air Transport Services Group (ATSG).

When these stock prices experienced a loss in October, Moab, sensing an opportunity, bought on a drawdown. Adding to this exposure paid off because in early November, as he was writing the letter, both positions had recaptured lost ground.