WSJ: Latest Picks and Pans from George Soros and John Paulson
Two names we like to keep our eyes on are George Soros and John Paulson (both of hedge fund world). Ironically the last piece I did on either, was a combined piece as well. (
May 16, 2009: John Paulson Continues to Pile into Gold; George Soros Sells some Petrobras and Potash) If you are not familiar with their histories we've outlined them in posts linked at the bottom of this entry. The Wall Street Journal has
a piece on some of their latest thoughts and positions, and there is also a 2 part video on this link specifically for any Soros fans.
There are 2 other fellows (I am not familiar with) who did well during this epic period in history so I put some of their comments at the very bottom.
- As the historic market collapse felled many investors, a handful set themselves apart by scoring big profits. Now, several of these money managers expect more bad times ahead, including struggles for consumers, limp earnings and a possible surge of inflation. They also see pockets of opportunity.
SOROS
- George Soros is bullish on China, India and Brazil.
- "Maybe we're making the same mistake again by thinking that China and India will decouple from the developed world," Mr. Soros says. But "China is the major beneficiary of the collapse of the financial system. For them it was an external shock," he says. "Because China is in a position to stimulate its economy, it will be a motor for the global economy," partially replacing the U.S. consumer.
- As for Brazil, Mr. Soros likes state-owned Brazilian oil giant Petroleo Brasileiro SA, for example. But the firm trimmed some of its position earlier this year in the company, known as Petrobras, which has seen a run-up in the share price.
- The renowned 78-year-old investor and philanthropist calls the current terrain a "trading market," saying in a recent interview that investors should take profits when shares surge, even if they look promising long term.
- "I'm not bearish but I don't see how we can have the kind of growth in profits that we had during the superbubble," says Mr. Soros, who these days leaves most day-to-day trading decisions at his $24 billion fund to Keith Anderson, a former BlackRock portfolio manager.
- The fund scored gains of 32% for 2007, 8% in 2008 and 17% so far in 2009. "He's the player, I'm the coach," Mr. Soros says. (translation: I'm the player and the coach) ;)
PAULSON
- John Paulson is investing in distressed debt, residential mortgages, even companies in bankruptcy proceedings.
- Mr. Paulson, who scored collective profits of more than $17 billion in 2007 and 2008 by betting against subprime mortgages and financial shares, sat a huge pile of cash at the outset of 2009 -- some $19 billion of his hedge funds' $30 billion, his investors say. (again, displaying cash is an asset class, not trash as is popular in the mutual fund world)
- But as Mr. Paulson and his team spent weeks combing through the rubble of the credit markets, they concluded that beaten-down prices assumed a rash of defaults that were unlikely to materialize. "We completely shifted our focus on the credit markets from one which had a short bias starting in 2006 to one that is aggressively long," Mr. Paulson said in a recent interview.
- The posture has its risks, especially if credit woes spread among better borrowers. But over the past four months, Mr. Paulson bought top-rated residential mortgage-backed bonds, commercial mortgage-backed securities, distressed debt and leveraged loans. Mr. Paulson even purchased shares of some big banks and financial companies, the kinds of companies he wagered against in 2008.
- As the market rebounded, Mr.
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