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HenryTo
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Joined: 06 Aug 2004
Posts: 11260
Location: Los Angeles, California
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 Posted: Sun Oct 12, 2008 10:34 pm Post subject: |
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CGM's Ken Heebner on the current dislocation:
http://www.iht.com/articles/2008/10/12/business/12stox.php
| Quote: | Now some veteran investors, including G. Kenneth Heebner, a mutual fund manager who has one of the best long-term track records on Wall Street, say that the sell-off has gone much too far and stocks are poised to rally powerfully if the downturn is less severe than investors fear.
"The fact is, there are a lot of tremendous bargains out there," said Heebner, who manages about $10 billion in several mutual funds. Indeed, by many measures stocks are as cheap as they have been in the last 25 years.
He pointed to Chesapeake Energy, a natural gas producer that he owns in his CGM Focus mutual fund. In July, Chesapeake traded for $63 a share. On Friday, it fell as low as $11.99.
He says that investors with a stomach for risk and a long time horizon should consider following Warren Buffett, who in the last three weeks has invested $8 billion in Goldman Sachs and General Electric.
Heebner expects world economies to contract over the next year. But he said the market plunge in the last week was no longer being driven by rational analysis. Stocks are probably falling because of a combination of panic and forced selling by hedge funds that must meet margin calls from their lenders, he said. |
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HenryTo
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Location: Los Angeles, California
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Rubedo
Veteran Poster
Joined: 16 Sep 2007
Posts: 168
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| Posted: Fri Jul 25, 2008 7:15 pm Post subject: |
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| That is total speculation by that article. I own the fund so I follow it on a daily basis. I am almost 100% positive that Heebner hasn't made any drastic changes to his sector allocations. Just look at the last couple weeks. Whenever oil got bombed and financials rose, CGMFX went down big. I'm almost positive he kept his WM short as well, judging from the action of the fund. Most of the times, commodities and financials went in opposite directions. But during one day when commodities got butchered and WM got crushed by about 20%, his fund didn't really drop much. So the only explanation is that he is still short WM. Either that or he shorted something else that went down big. Just look at today. The fund is up about 2%. Most of his steel, agriculture, and commodity holdings are up nicely today while WM tanked again. |
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HenryTo
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Joined: 06 Aug 2004
Posts: 11260
Location: Los Angeles, California
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11260
Location: Los Angeles, California
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| Posted: Wed Jul 23, 2008 2:05 am Post subject: |
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Hi Odysseus,
I was trying to find his 2Q08 holdings but it hasn't been published on the CGM website yet. The most recent reference was the interview below - I am glad that he actually gives interviews and provides us glimpses of what he thinks every now and then.
There are other folks that I also respect who are overweight Russia - including Capital Guardian in their EM strategy and a credit fund who are long the bonds of Gazprom - citing the "Russian premium" as a result of the lingering concerns of the 1998 Russian default. We shall see.
We should discuss your thoughts on inflation sometime. The official energy and food inflation numbers should come down next year as the year-over-year comparison makes it very tough to match this year's numbers, unless we see crude break $200 a barrel and nat gas break $20/MMBtu. Nonetheless, I think pricing power among many other sectors will return next year as many businesses will continue to shut down going into Thanksgiving/Christmas. The leading indicator is the airlines, followed by the retail sector including casual dining restaurants.
If some kind of breakthrough occurs in the alternative energy sector and is commercialized, then this should be disinflationary/deflationary over the long-run, even though it may be inflationary in the short-run as we build out the necessary infrastructure to support this sector (e.g. solar panels, mini nuclear power plants, windmills, power lines, etc), putting further pressure on raw materials prices.
To a large extent, we have seen tremendous inflation in many of the "goods" that the most wealthy among the "global elite" consumes over the last five years, such as prime global real estate (Manhattan, London, Shanghai, Hong Kong, Los Angeles, Dubai, etc), country club memberships, investment fees (i.e. HFs and PE funds), dinners at exclusive restaurants, top-of-the-line automobiles, etc.. No doubt this was a result of:
1) The "global savings glut" that the Fed spoke of a couple of years ago as the world becomes more globalized and experienced a tremendous surge in Ricardian Growth and accompanied savings;
2) The ever continuing rise in the Gini Ratio - as the distribution of both income and wealth kept on widening across the globe;
3) The creation of a significant amount of liquidity (related to 1)) due to the spread of securitization and the tremendous appetite for these instruments.
Simply put, there was too much money chasing too much goods on the "high-end" as multi-millionaires and billionaires try to outdo each other and have too much money to spend. This wasn't captured in the CPI because these folks don't spend much of their wealth on food or energy, or for that matter, at Wal-Mart, McDonalds, or Starbucks. If US government policy tries to "manage" the Gini Ratio lower (say, by raising taxes on incomes over $500,000 and cutting taxes for the middle class) then we should see significantly higher CPI inflation over the next few years as a significant amount of spending power flows back to those who would buy stuff that are in the CPI basket. From this standpoint, the additional $50 billion stimulus that Nancy Pelosi is advocating is a bad idea. |
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Odysseus
Senior Poster
Joined: 14 Feb 2008
Posts: 109
Location: Dallas/Moscow
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| Posted: Tue Jul 22, 2008 11:07 am Post subject: |
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Thanks, Henry
Kenny H. is one of the truely honest and adaptable portfolio managers I have ever known. If you have ever seen him interviewed, you would swear he is hyperactive. The guy works 80 hours a week and a wonk down to his toes. His grocery shopping skills are legendary. You'll find him in the frozen food cases hefting TV dinners six at a time...
If you remember, he was ahead of the curve with his CGM realty fund. He was also quick to exit between 05 and 06.
I take issue with him only on his outlook for Russia but he is so quick and also diversified there is probably not much risk. Plus he might be right.
His outlook for inflation is a bit optimistic, however.
Again, thank you for the link. He is someone I would let manage my money if it were not for my vanity 
_________________
Psychic with Alzheimers. I can predict what I will forget. |
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HenryTo
Site Admin
Joined: 06 Aug 2004
Posts: 11260
Location: Los Angeles, California
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| Posted: Tue Jul 22, 2008 10:31 am Post subject: |
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Ken Heebner's latest views on the economy and stocks, of course:
http://moneynews.newsmax.com/streettalk/heebner_worst_behind_us/2008/07/09/111260.html
| Quote: | The U.S. economy “will surprise us on the upside, growing between 2 to 4 percent over the next 12 months.”
However, the story for the global economy will be the developing countries. Heebner points out that “there are 3 billion people in China, Russia, India, Brazil, and other fast-growing nations.”
There is ever increasing demand from these developing economies.
“In a nutshell, these foreign countries place a high priority on growth,” and Heebner sees investment opportunities based on that idea.
“These people don't have the roads, the airports, the infrastructure — and the building of these creates big demand for industrial raw materials and energy in all forms.”
This may fuel inflation, and within three years, he sees inflation in the United States approaching 10 percent. Yet Heebner remains an optimist. |
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HenryTo
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Posts: 11260
Location: Los Angeles, California
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