‘Big Short’ investor Steve Eisman: I don't have a problem with the market right now
Speakers
Steve Eisman
— Portfolio Manager, Scion Asset Management
Summary
Steve Eisman discusses his unchanged investment thesis centered on AI spending, tech, traditional banks, and power-related industrials. He explains why the market's high valuation is justified by tech's growing weight, and reveals he is short FICO due to pricing arrogance. He downplays systemic risks in private credit but highlights refinancing challenges for software companies.
- Eisman maintains his focus on tech and traditional banks, avoiding staples and energy.
- AI spend and credit quality remain the dominant economic narratives.
- He likes power-related industrials like GEV and Quanta for data center buildout.
- He is short FICO due to excessive price increases and competition.
- Private credit has overexposure to software but is not systemic.
- Market valuation is high but justified by tech's larger S&P weight.
Trade Ideas
AI spend unchanged; stick with tech.
The economy narrative is unchanged from last year: AI spend, credit quality fine, K-shaped economy. Tech multiples are justified because tech now makes up 35-50% of the S&P, so the market being expensive is not a compelling argument. He sticks with tech including most of the Mag-7.
Likes traditional banks, not alternatives.
He likes traditional banks but not alternatives. Traditional banks are part of his portfolio alongside tech, while he avoids staples and energy.
Power-related industrials for AI data centers.
Industrial power-related companies benefit from AI data center construction. He specifically likes GEV (GE Vernova) and Quanta Services as plays on AI infrastructure buildout.
Short FICO due to pricing arrogance.
FICO has raised prices by about 500% over many years, angering lenders. Even after cutting prices, its pricing relative to VantageScore for mortgages is still unattractive. He is short FICO because the business model is vulnerable to competition and customer backlash.
