Money managers under the microscope
from Global Investing:
No, not in the way you think. Tuesday marked the one-year anniversary of world stocks hitting what appears to be their post-financial crisis low. The index was the MSCI all-country world index. The low was hit on March 9, 2009.
At the time, many investors reckoned their world was collapsing. Stocks had fallen close to 60 percent in a little more than 16 months. But the low proved to be the start of a remarkable rally that brought the index back up 80 percent until January this year.
Everyone is interested in reading about someone making billions of dollars in profit, and the Wall Street Journal’s story about the Appaloosa fund making $7 bln of profit so far this year is certainly eye-catching.
Rather like London’s Crispin Odey, who earned a handy 30 mln stg this year, the fund, run by David Tepper, made its money buying bargain basement bank shares.
There’s been plenty of confusion over who exactly will be hit by the ‘supertax’ on banker bonuses.
The wording of the Treasury’s clampdown last week suggested some hedge funds and traditional asset managers could be caught — PwC’s John Terry told me that of the 20 hedge funds he had spoken to, around half may have been caught in the net.
This year’s stock market rebound has turned into a bubble, or at least that’s the view of closely-followed hedge fund manager Crispin Odey.
Odey, who called a bull market back in April, reckons quantitative easing has fuelled investors’ desire to get out of cash and government bonds and into real assets, leading to a stampede.
Some good news for the bulls.
Octopus fund manager David Crawford believes this year’s equity rally could lift the FTSE 100 to the 5,000 mark, from just over 4,600 currently, helped by energy stocks.
The call backs up that from hedge fund manager Crispin Odey, who earlier this year pointed to the start of a new bull market and then recently said there is “every reason to be hopeful that a major correction will not happen before September”.
High-profile hedge fund manager Philippe Jabre has lent his voice to the view that equity investors have more to play for.
The former GLG trader, probably better known for a record FSA fine of 750,000 pounds for market abuse than for his strong track record, thinks there is “money to be made”in bombed-out stocks in sectors such as financials, energy and industrials.
Hedge funds and other investors are shorting stocks laden with the biggest debts, according to stock lending research group DataExplorers, betting they may struggle to refinance themselves.
More good news for equity bulls from Crispin Odey.
And, having profited handsomely from his position in Barclays, which is now a 16.3 percent holding in his European fund, he sees the best opportunities in companies that were once unable to refinance but now can get credit, rather than safe-haven stocks.
Sheltering from the credit crisis in so-called defensive stocks could prove a disappointment to investors and a great opportunity for short-sellers, according to Liontrust hedge fund manager James Inglis-Jones.
Inglis-Jones, who runs a hedge fund for Liontrust and who recently took on the First Income fund after the departure of star manager Jeremy Lang, has short positions in sectors such as tobacco and pharmaceuticals and has recently added more.