What exactly is “cyclicals” coverage in an industry coverage model? Just trying to understand this a bit better. E.g. if a predominately l/s industrials PM at an MM switched funds and the new MM announced they are running a l/s “cyclicals” strategy - what’s the difference here?
Any examples of stocks?
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Cyclicals sector coverage focuses on industries and companies whose performance is closely tied to the broader economic cycle. These sectors tend to do well during periods of economic growth and expansion but struggle during downturns or recessions. The key difference between a "cyclicals" strategy and a more specific sector like "industrials" is that cyclicals encompass a broader range of industries that are sensitive to economic fluctuations, not just industrials.
Examples of Cyclical Sectors:
Key Differences in Strategy:
Stock Examples:
Cyclicals coverage requires a deep understanding of macroeconomic indicators, business cycles, and sector-specific drivers to anticipate how these companies will perform as the economy shifts.
Sources: Long term, concentrated, deep fundamental investing, Q&A: HF out of undergrad, ~5 years later, Bulls vs. Bears in 2018, Basic Overview of the Consumer Sector, Why do Tiger Cubs focus on Tech and Consumer Discretionary stocks so much?
Bump
While I do think FIG and Consumer are cyclical in nature, I think of that term meaning “Energy + Cyclical parts of industrials”. E&P, Refining, OFS, Machinery, Metals&Mining, Transport. These books also probably cover Utilities and Midstream but that’s not cyclical in the same way
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