Australian hedge fund Totus Capital posted one of its strongest monthly performances recently, driven by a rebound in key holdings after a challenging stretch for its investment book, according to a report by the Financial Review.

In its August update, founder Ben McGarry highlighted a 1.5% contribution from local equities, notably boosted by Capricorn, which surged 14% amid a record gold rally.

Despite drag from stocks including Light & Wonder, Hemnet, and Amazon, Totus doubled its position in Light & Wonder following legal disputes and insider buying. The fund also initiated a new stake in US analytics firm Fair Isaac after a 40% share slump, citing its strong pricing power and capital-light model.

McGarry noted that market exuberance in overvalued tech and AI-driven names presents shorting opportunities, while select small- and mid-cap stocks overlooked by the AI trade offer value. The August rebound contrasts with peers, many of which struggled through earnings season, underlining the divergences shaping long-short strategies.