Key Takeaways
- • Coda Global Opportunities, an opportunistic long/short equity fund run by Peter Andersland and Knut Børsheim, reduced its AI infrastructure short exposure in October after substantial share price declines, shifting emphasis toward businesses exposed to higher energy prices and interest rates.
- • The fund states its skepticism about the economics of the AI capital expenditure boom "has not disappeared," and it retains multiple positions in the area; the adjustment reflects risk-reward reassessment at prevailing prices rather than a change in fundamental view.
- • The team says it is short the capital cycle around AI, not AI as a technology, questioning whether the returns on rising data-center financing costs will justify the capital committed as funding shifts toward debt, private credit and equity.
- • Coda is increasingly targeting earnings disappointments in conventional sectors such as airlines and travel, industrials, building products and consumer durables, where it believes valuations do not reflect energy and interest rate shocks.
- • A sharp CoreWeave rally after quarterly revenue beat expectations and a raised 2026 sales outlook illustrated the risk of holding AI-infrastructure shorts as valuations change.
Summary
Coda Global Opportunities, an opportunistic long/short equity fund that seeks to identify winners and losers around major investment themes, which it calls "profit pools," has been skeptical of the economics of the artificial intelligence capital expenditure boom. Portfolio managers Peter Andersland and Knut Børsheim had built a basket of short positions in companies exposed to AI infrastructure spending, including data-center operators and related businesses such as CoreWeave and Caterpillar. Following substantial share price declines in the sector, they have taken profits on some positions and shifted focus to other industries, according to the article.
October brought a meaningful repositioning of both the long and short books, with the more significant changes on the short side. The team said it had moved the emphasis of the short portfolio slightly away from AI infrastructure toward businesses more directly exposed to higher energy prices and interest rates. Several of these investments have declined substantially, bringing share prices closer to the team's assessment of fundamental value and reducing the potential return from remaining shorts. The team described the change as a reassessment of risk-reward at prevailing prices rather than a change in its fundamental view.
The timing may prove significant. CoreWeave, which leases data-center capacity to major technology businesses such as Microsoft and is closely watched as a barometer of investor sentiment toward AI infrastructure, reported quarterly revenue above Wall Street expectations and raised its 2026 sales guidance, triggering a sharp rally in its shares.
Andersland and Børsheim stress that they are not short AI as a technology. "We are short the capital cycle developing around it," they said. While demand for computing capacity remains exceptionally strong, they question whether the investment required to meet it will generate adequate returns. As financing shifts from internally generated cash flow toward debt, private credit and equity issuance, they argue the economics become increasingly sensitive to long-term bond yields, and that "the higher the hurdle rate, the fewer projects can earn an adequate return."
The team is also increasingly looking for earnings disappointments in conventional businesses whose valuations, in its view, do not adequately reflect the consequences of energy and interest rate shocks. Positions in airlines and other travel-related businesses reflect concerns about higher fuel costs, limited pricing flexibility and potential weakening of discretionary demand. Coda has also increased exposure to selected industrial, building products and consumer durables businesses, where higher input and financing costs could coincide with slowing end-market demand. As the team puts it, "the investment case increasingly depends on deteriorating earnings rather than simply reconsidering an expensive valuation."
October brought a meaningful repositioning of both the long and short books, with the more significant changes on the short side. The team said it had moved the emphasis of the short portfolio slightly away from AI infrastructure toward businesses more directly exposed to higher energy prices and interest rates. Several of these investments have declined substantially, bringing share prices closer to the team's assessment of fundamental value and reducing the potential return from remaining shorts. The team described the change as a reassessment of risk-reward at prevailing prices rather than a change in its fundamental view.
The timing may prove significant. CoreWeave, which leases data-center capacity to major technology businesses such as Microsoft and is closely watched as a barometer of investor sentiment toward AI infrastructure, reported quarterly revenue above Wall Street expectations and raised its 2026 sales guidance, triggering a sharp rally in its shares.
Andersland and Børsheim stress that they are not short AI as a technology. "We are short the capital cycle developing around it," they said. While demand for computing capacity remains exceptionally strong, they question whether the investment required to meet it will generate adequate returns. As financing shifts from internally generated cash flow toward debt, private credit and equity issuance, they argue the economics become increasingly sensitive to long-term bond yields, and that "the higher the hurdle rate, the fewer projects can earn an adequate return."
The team is also increasingly looking for earnings disappointments in conventional businesses whose valuations, in its view, do not adequately reflect the consequences of energy and interest rate shocks. Positions in airlines and other travel-related businesses reflect concerns about higher fuel costs, limited pricing flexibility and potential weakening of discretionary demand. Coda has also increased exposure to selected industrial, building products and consumer durables businesses, where higher input and financing costs could coincide with slowing end-market demand. As the team puts it, "the investment case increasingly depends on deteriorating earnings rather than simply reconsidering an expensive valuation."
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