| NEW YORK, April 25
NEW YORK, April 25 There are few opportunities
for contrarian investors to make money in the current financial
markets, Steven Romick, portfolio manager at First Pacific
Advisors, said in a speech on Friday.
Romick, who manages approximately $20 billion in assets,
said he has raised cash to approximately 40 percent of his
portfolio, or nearly double the 26.4 percent of cash that he has
held on average since 1994. Record high corporate profits will
likely fall as interest rates and corporate tax rates rise over
the next five years, he added.
"We are about as bearish as we've ever been," he told the
Bel-Air Next-Generation conference in Los Angeles, a gathering
of high-net worth families and their representatives.
Romick, whose FPA Crescent Fund was named Morningstar's 2013
Asset Allocation Manager of the Year, has decreased his position
in high-yield bonds to nearly zero as spreads between them and
investment-grade bonds have fallen. He has been looking to
increase his positions in private businesses, ranging from
farmland outside of Phoenix to container ships, assets that have
not experienced the same multiple expansion as the overall stock
Among his recent equity purchases: aluminum company Alcoa
Inc, which he began adding to in the fall. He has been
attracted to the company, whose shares are up approximately 25
percent for the year to date, because it has decreased its
capacity, he said.
Romick, who has managed FPA Crescent since the fund's
inception, is known as a contrarian value investor with a
long-term view, who likes to buy what the crowd is selling and
vice versa. He looks for stocks and bonds that are undervalued
relative to their expected earnings and returns.
(Editing by Linda Stern and David Gregorio)