Seabreeze's Kass on U.S. stocks: 'I have been wrong'
NEW YORK, March 22
NEW YORK, March 22 (Reuters) - Hedge fund manager Doug Kass on Monday said his bearish calls in recent months that the benchmark Standard & Poor's 500 Index .SPX would decline in the double-digits are proving to be wrong.
Kass, the widely followed founder and president of Seabreeze Partners Management, told clients in a note: "I have been wrong -- at least, Mr. Market has been saying so!"
In September, Kass told Reuters he was betting the S&P would end 2009 at about 920 and was shorting U.S. equities because "we are facing a period of disappointing economic and corporate growth."
But the S&P index overall rose 23.5 percent last year on signs the economic recovery in the U.S. was strengthening.
Currently, it trades at more than 1,162, while a recent Reuters poll found investors and strategists forecast a 10 percent increase from where the index ended in 2009 at 1,115.10.
Optimism about a rebound in the U.S. labor market and profits are seen to drive stocks to their second straight annual advance. Falling unemployment also could boost consumer confidence and spur a revival in spending, a key driver of corporate profits.
In fact, Fed officials said at their recent policy meeting that the overall economy is improving. In their statement, they said: "Information received since the Federal Open Market Committee met in January suggests that economic activity has continued to strengthen and that the labor market is stabilizing."
"I am fully aware that my mistakes over the past few months have been numerous and far-reaching," Kass said. "Above all, I have been steadfastly skeptical regarding the sustainability of the domestic economic recovery and in the view that the foundation for a sustained move in the U.S. stock market was on shakier ground than the consensus believed."
In a short sale, investors borrow shares in order to sell them, betting that the stock price will fall. The goal is to buy the shares back at a lower price and realize a profit on the spread between the original sale price and the cost of buying the shares back. (Editing by Chizu Nomiyama)
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