* Some investors pouncing on Japanese equities
* Drop in GE, nuclear stocks seen overdone
* VIX-based notes used for short-term hedging
By Aaron Pressman
BOSTON, March 15 As a broad sell-off struck
world markets Tuesday amid Japan's unfolding nuclear calamity,
many professional investors were ready to pounce.
At the open of U.S. trading, the Standard & Poor's dropped
almost 3 percent led by weakness in insurance and technology
stocks along with a 7 percent plunge in industrial giant
General Electric Co (GE.N), which designed the troubled
Japanese plant's reactors.
But shares moved off the lows as investors put their money
to work and the Federal Reserve Board made encouraging
statements about the U.S. economy. The S&P and other broad
indexes closed down a little over 1 percent.
"We're looking to spend more in Japan," Alex Motola,
co-manager of the Thornburg International Growth Fund, said on
Tuesday. "You can't easily set aside the human element in a
tragedy like this but as an investor you've got to find the
best place for your capital."
KASS AND SASS, TOO
Other investors including prominent money managers Doug
Kass and Martin Sass have also said they were looking for
buying opportunities. [ID:nN14151619]
Stocks in Japan finished 10.6 percent lower on Tuesday
after falling 6.2 percent on Monday as the troubled situation
at the Fukushima reactor developed. The crisis escalated when
operators of the facility said one of two blasts had blown a
hole in the building housing a reactor, releasing spent nuclear
fuel into the atmosphere. [ID:nL3E7EF3II]
The nuclear issues come as Japanese officials are still
assessing the full extent of destruction from Japan's
earthquake and tsunami, with at least 10,000 people feared
dead. For details, see [ID:nLDE72D2FT].
Few U.S. investors saw a long-term problem for world
markets in the Japanese maelstrom.
U.S. stocks, down about 5 percent since Feb. 18, have
already priced in many risks such as the weak economic
recovery, according to Ken Taubes, chief investment officer of
Pioneer Investments in Boston.
"There is no clear reason that the U.S. ought to be weak in
the face of what's happening in Japan," Taubes said. "It's an
industrialized, sophisticated country that is going to rebuild
quickly once they get their nuclear installations under
Rebuilding might even spur some new business for U.S.
firms, he added.
Such sentiments helped shares of GE rebound from steep
losses earlier Tuesday, as investors determined the company had
little potential legal liability and nuclear-related revenues
comprise a tiny portion of its business. [ID: nN15221931]
Once the crisis passes, Japan will need to add power
capacity and GE's gas-driven turbines could benefit from
increased investment, some advisers said.
Greg Ghodsi, a financial adviser at Raymond James Financial
in Tampa, Florida, said he's still holding GE shares
accumulated last year because of its nearly 3 percent dividend
"It was hit because people don't know if there will be some
kind of liability," he said. "I'm still comfortable with it
because of the income."
VIX FOR THE NERVOUS
Still, some investors moved to hedge against further
Independent financial adviser John Fiege in Onancock,
Virginia, said he bought the iPath S&P 500 VIX Short-term
Futures exchange-traded note (VXX.P) for some clients. It
benefits from an increase in the VIX volatility index, which
tends to spike when the stock market drops quickly.
"I do not want to hold this position long-term as I expect
rising markets over time," Fiege said. But in the short-term,
the position will "capture some up if stocks go down."
In a sign of investor anxiety, the CBOE VIX volatility
index .VIX was up 13.7 percent on Tuesday.
Stock involved in the nuclear industry were, not
surprisingly, hit hard in early trading trading Tuesday, while
alternative energy companies soared. The iShares S&P Global
Nuclear Index Fund NUCL.O lost 4.7 percent while the Market
Vectors Solar Energy ETF (KWT.P) jumped 5.8 percent.
Thornburg manager Motola said he was skeptical about the
the solar bounce.
"Solar has relied on subsidies but a lot of countries have
been cutting back," he said. "Japan isn't going to be loaded
with money for them."
Motola said his fund is buying beaten-down shares of some
Japanese technology retailers with strong sales outside of
(With reporting by Ross Kerber in Boston and Joe Giannone
and Helen Kearney in New York)