NEW YORK May 8 High-profile money managers
raised red flags on the loose monetary policies taking place
around the world at the annual Ira Sohn Investment Conference, a
closely watched charitable event, on Wednesday.
The event, which raises money for pediatric cancer research,
is where big-name hedge fund managers come to share their "best
ideas" with other wealthy investors.
The Federal Reserve's monetary policies, with its monthly
purchases of $85 billion in Treasuries and mortgage securities,
came in for sharp criticism. Money managers touched a wide
variety of investment topics.
Managers are gathering at a time the hedge fund industry is
again underperforming the broader market. The average fund is up
about 4.4 percent through April, compared with a 14 percent gain
for the Standard & Poor's 500 index.
Here are selected comments from the conference:
STEVEN EISMAN - Eisman, the founder and portfolio manager of
Emrys Partners, who is known for shorting securitized subprime
home mortgages, said he is positive on the U.S. housing market.
Eisman said he likes Lennar Corp, Forestar Group Inc
and Standard Pacific Corp. He said he is also a
fan of Ocwen Financial, calling it "completely
mispriced" and the "most powerful" play on housing in the entire
Eisman's short idea was Home Capital Group, which
trades in Canada. "If housing rolls over, this company is going
to have serious problems."
PAUL SINGER - Singer who founded the $21 billion Elliott
Management hedge fund and is a big contributor to Republican
political candidates, said the Fed's monetary policies are
distorting the prices of long-term bonds and the global
"Everyone wants a safe haven," said Singer. "There is no
such thing in today's markets and that's one of the elements of
He said a number of developed countries are facing
"long-term insolvency" and the monetary stimulus will not fix
that. Singer said the ultimate question for a fiat money regime
is, At what point does confidence in money disappear?
KYLE BASS - Bass, of Hayman Capital Management, called Japan
In April, the Bank of Japan also said it was likely to
purchase over 7 trillion yen ($75 billion) of long-term
government bonds a month, an aggressive monetary policy to end
years of deflation in the world's third largest economy.
Bass said he likes Dex Media Inc., a marketing
services company, because a transformation is taking place at
the company that published the yellow pages directories. Shares
of Dex Media briefly soared 27 percent after Bass spoke.
WILLIAM ACKMAN - Ackman, the founder of The Pershing Square
Capital Management, talked up the prospects of Procter & Gamble
Co, in which he took a $2 billion stake last July when
the shares were trading around $59. The stock is now trading
around $78, or roughly a 30 percent gain. Ackman said on
Wednesday that P&G could hit $125 per share in two years.
STANLEY DRUCKENMILLER-- Druckenmiller, who founded Duquesne
Capital Management, said the Fed's monetary policy is the "most
inappropriate" in history. He also said commodity prices are at
the end of a supercycle.
"We're betting that the move down there is not a correction,
that this is the end of the big supercycle in commodities that
started 10 years ago," he said.
KEITH MEISTER - Meister, of Corvex Management, who was
activist investor Carl Icahn's right-hand man prior to founding
Corvex, said he likes telecommunications companies TW Telecom
Inc and Level 3 Communications Inc, pushing up
their share prices.
The Corvex managing partner said a telecom marriage between
TW Telecom and Level 3 is likely down the road. "One day these
two companies could be together," he said.
Meister said he likes Level 3 for its accelerating revenue
growth and the direction of its chief executive, Jeff Storey.