---
title: Pockets of Opportunity in Industrials
description: At Prospector we evaluate all of our investments from the perspective of downside risk mitigation above all else. Across all industries, we target companies with strong, low-leverage balance sheets, dependable free cash flow generation, owner-oriented management teams, and M&A potential.
image: https://blog.longshortadvisors.com/hubfs/LSA-PMI-Opportunity.jpg
---
[](https://longshortadvisors.wpcomstaging.com/)
[Subscribe for Updates ](https://blog.longshortadvisors.com/news-insights/pockets-of-opportunity-in-industrials#subscribe)
#### Subscribe for Updates
Receive the latest News & Insights from Long Short Advisors.
[Long Short Advisors Don't Time The Market – Invest In It ](https://longshortadvisors.wpcomstaging.com/)
[June 06, 2023](https://blog.longshortadvisors.com/news-insights/pockets-of-opportunity-in-industrials)
*Insights from Prospector Partners, Sub Advisor to the LS Opportunity Fund.*
At Prospector we evaluate all of our investments from the perspective of downside risk mitigation above all else. Across all industries, we target companies with strong, low-leverage balance sheets, dependable free cash flow generation, owner-oriented management teams, and M&A potential. The Industrials sector happens to be an area of the market that lends itself well to our style of investing. Our exposure to the Industrials group is not a function of where we think we may be in an economic cycle, but rather a constant feature of our portfolios that reflects our bottom-up, value-oriented approach to investing.
Considered by many to be the backbone of the US economy, Industrials include a vast array of products, services, and technologies supporting just about every physical need one can imagine. As a sector, Industrials is perhaps the most heterogeneous of them all, comprised of everything from aerospace & defense, building products, electrical equipment & machinery to, construction & engineering services, and environmental services, to name a few. Like Financials, which we’ve discussed in recent blogs, the Industrials sector is not the monolithic entity many make it out to be. The group should instead be considered a rich tapestry of sub sectors, each driven by its own unique dynamic and cycle.
With a growing consensus that economies are slowing across the developed world, Industrials have faced pockets of selling pressure in recent months. In some situations, the proverbial baby has been thrown out with the bathwater, and many stocks with either meaningful earnings growth potential or profits that aren’t highly correlated to GDP growth have sold off. In other cases, there are quality companies operating in sub-industries with obvious secular headwinds that have been beaten down. We seek to take advantage of valuation anomalies in both situations.
On certain occasions, we find opportunities in sectors with relatively less earnings variability, such as Defense, or in companies with meaningful aftermarket or service-based economics. Conversely, we also look to capitalize on opportunities to add exposure to more cyclical names near the bottom of the cycle when valuations have excessively discounted intermediate-term headwinds. Our favorite ideas, however, take place when we identify stocks with secular tailwinds, attractive fundamentals, and reasonable valuations.
Our objective at Prospector is to capitalize on mispriced assets using our rigorous approach to fundamental analysis. Regardless of the macroeconomic environment, we have consistent exposure in our portfolios to a diverse set of high-quality Industrials. As described above, this does not imply that every stock we own has a strong secular tailwind at its back. In our experience, some of the most compelling investments can often be found in sub sectors that are, for good reason, temporarily out of favor.
As always, there’s never a shortage of investment opportunities; there’s only a shortage of hours in the day.
Source: [Prospector Partners](https://blog.prospectorpartners.com/pockets-of-opportunity-in-industrials?utm_campaign=Prospector%20Partners%20Blog&utm_medium=email&_hsmi=260360376&_hsenc=p2ANqtz-9biK4LZqDg54-UiBsNWas7efMgFqT7vphyfg0fusqmwpWao1hL6Fwo_rWDkmW4SyDQdj6B7yZvoCGDdTf-EykW4C-rb8EIRoWpF3kzvjDTQNrMlHA&utm_content=260360376&utm_source=hs_email)
16949236-UFD-05312023
##### Recent News & Insights
[ ](https://blog.longshortadvisors.com/news-insights/lsofx-q3-2025-shareholder-letter)
###### [LSOFX Q3 2025 Shareholder Letter](https://blog.longshortadvisors.com/news-insights/lsofx-q3-2025-shareholder-letter)
[October 24, 2025](https://blog.longshortadvisors.com/news-insights/lsofx-q3-2025-shareholder-letter)
[ ](https://blog.longshortadvisors.com/news-insights/bank-ma-could-be-poised-for-a-comeback)
###### [Portfolio Manager Insights: Bank M&A Could Be Poised For a Comeback](https://blog.longshortadvisors.com/news-insights/bank-ma-could-be-poised-for-a-comeback)
[August 28, 2025](https://blog.longshortadvisors.com/news-insights/bank-ma-could-be-poised-for-a-comeback)
[ ](https://blog.longshortadvisors.com/news-insights/lsofx-q2-2025-shareholder-letter)
###### [LSOFX Q2 2025 Shareholder Letter](https://blog.longshortadvisors.com/news-insights/lsofx-q2-2025-shareholder-letter)
[July 16, 2025](https://blog.longshortadvisors.com/news-insights/lsofx-q2-2025-shareholder-letter)
##### LSOFX Quick Links
[](https://cta-redirect.hubspot.com/cta/redirect/4808633/db6299b5-cf49-40b0-9862-bd99dc7be4c6)
[](https://cta-redirect.hubspot.com/cta/redirect/4808633/2053dcc5-4dde-46af-aebf-e389c1c850a7)
[](https://cta-redirect.hubspot.com/cta/redirect/4808633/84103a14-2fa1-486e-b359-15bcceacebf6)
### SUBSCRIBE FOR UPDATES
3330 Fairchild Gardens Avenue
Suite 30428
Palm Beach Gardens, FL 33410 [info@longshortadvisors.com](mailto:info@longshortadvisors.com) [215.399.9409](tel:2153999409)
### SUBSCRIBE FOR UPDATES
**You should carefully consider the investment objectives, potential risks, management fees, and charges and expenses of the Fund before investing. The Fund's prospectus contains this and other information about the Fund, and should be read carefully before investing. You may obtain a current copy of the Fund's prospectus by calling (877) 336-6763. **
Investment in shares of a long/short equity fund have the potential for significant risk and volatility. A short equity strategy can diminish returns in a rising market as well as having the potential for unlimited losses. These types of funds typically have a high portfolio turnover that could increase transaction costs and cause short-term capital gains to be realized.
The Fund may lose money due to fluctuations within the stock market which may be unrelated to individual issuers and could not have been predicted. The price of the securities which the Fund holds may change unpredictably and due to local, regional, international, or global events. In the case of a general market downturn, multiple asset classes, or the entire market, may be negatively affected for an extended and unknown amount of time.
Past performance is no guarantee of future results. Diversification cannot ensure a profit or protect against loss in a declining market. It is a strategy used to help mitigate risk
Distributed by Ultimus Fund Distributors, LLC. Member [FINRA](https://www.finra.org/#/)
Long Short Advisors is registered as an investment adviser with the Securities and Exchange Commission. There is no affiliation between Ultimus Fund Distributors, LLC, Long Short Advisors, and the other firms referenced on this website.