Friday, July 2, 2010

Latest Value Edge Newsletter Released: 15% Discount Included

The July issue of the Value Edge newsletter was just released so we wanted to remind you that Market Folly readers receive an exclusive 15% discount to this monthly publication. The Value Edge newsletter includes 12 issues and normally costs $199 per year. Our readers receive it for only $169. Click here to receive the discount and follow the steps to checkout. While the July issue has the newest up-to-date stock ideas, those of you who want to check it our first can download last month's issue for free here.

Simply put, this newsletter is an investment idea generation tool based on various stock screens to generate both long and short ideas. On the long side, you'll find screens categorized by:

- Contrarian
- Deep Value
- Cheap Franchises
- International Value
- Potential Activist Targets
- Potential Liquidations
- Merger Arbitrage
- ValueHuntr's Proprietary Screen

And then for short selling ideas, the newsletter screens for:

- Overvalued Companies With Poor Business Prospects
- Herd Mentality Picks
- Companies With High M-Score Parameters
- Companies With Low Z-Score Parameters

Whether you're an institutional investor or individual investor, these aggregated stock screens are perfect for idea generation. Prominent managers use screens just like this to source their next actionable pick. Click here to receive your 15% discount and receive the latest July issue.

Embedded below is a sample issue (last month's) for you to peruse:

You can download a free sample newsletter here. The July newsletter was just released and to get the most up to date stock ideas, be sure to receive your exclusive 15% discount to the Value Edge newsletter.

Jeff Saut: Decisively Cautious, Cites Dow Theory Sell Signal

Market strategist Jeff Saut takes a decisively more cautious tone in his investment commentary this week compared to previous notes and understandably so. The markets have seen somewhat of a precipitous decline that has many participants worried. The Chief Investment Strategist at Raymond James is currently very focused on "keep(ing) the profits accrued since the March 2009 bottom." This is definitely a defensive posture. And rather than focusing on the investment opportunities at hand on both the long and short sides of the portfolio, Saut seems solely concerned about protecting profits.

This all becomes intriguing when you consider Saut's commentary over recent weeks. Last week, Saut noted he removed market hedges during the turmoil. He was letting his protection go when he needed it most and when it was hardest to let go. Normally, that would be the right play. However, the market's precipitous decline has continued. And prior to removing his hedges, Saut argued that the market was in a bottoming process.

Now that we've come full circle, Saut highlights a few reasons to be cautious. Firstly, the market recently registered a Dow Theory sell signal (something that speaks for itself). Secondly, he cites weakening economic reports, specifically the sharp decline in the Economic Cycle Research Institute's weekly leading index. Additionally, Saut says his own proprietary indicator has registered a sell signal as well. There is one last signal he is watching for and that is the impending 'death cross' when the 50-day moving average crosses the 200-day moving average to the downside. Not to mention, a technical analysis video we recently highlighted points out a bearish engulfing pattern in the markets.

In the near-term, Saut is cautious. In the long-term, he thinks equity markets will be okay. He writes, "the yield-curve is still relatively steep, credit spreads have not leaped, the Advance/Decline Line appears steady, and earnings comparisons should remain favorable; so unless it is different this time the recent correction in the equity markets should resolve itself with higher prices."

To be honest, we're not quite sure how Saut comes to that conclusion after the barrage of negative signals and indicators he referenced earlier. Maybe he thinks the negative sentiment is overstated, who knows. Saut honestly admits he is cautious in the near-term and he's certainly not alone there as global macro hedge fund Prologue Capital outlined cause for concern as well recently. That said, Saut is still on the prowl for solid risk/reward situations. Specific stocks Saut is intrigued by currently include Chevron (CVX), Wal-Mart (WMT), and Peabody Energy (BTU). Saut in particular likes Wal-Mart under $50 per share due to strong fundamentals and Peabody for the 'supercycle for coal.'

Embedded below is Jeff Saut's market commentary for Raymond James:

You can download a .pdf copy here.

As mentioned before, you can view Saut's previous commentary including his removal of hedges and his call that the market was in a bottoming process. Overall though, his message is still clear: selectively upgrade the stocks in your portfolio. This could turn out to be a big call as the market is undoubtedly at a potential turning point here with the technicals looking bearish.

Odey European's Hedge Fund Market Commentary From Founder Crispin Odey

Today we present you the latest market commentary and current outlook from Crispin Odey, founding partner and portfolio manager at Odey Asset Management, one of the premier and widely regarded UK based hedge funds. Odey currently manages around $5 billion for institutions, endowments, private banks and individuals. Crispin founded the firm in 1991 with a focus on preserving capital and generating superior returns.

In terms of recent results, we saw in our May hedge fund performance update that Odey was down 10.96% in the month of May alone. Crispin addresses this and other topics in his most recent commentary:

"May was ugly. Markets did exactly the opposite of what I was expecting them to do. Government bonds rose by 8%, equities fell by 8%. In my hedge fund I was 100% short the bonds and 100% long these equities. Risk controls cut in and ensured that we lost only 1.5% on the bond book, but we also lost money on the currencies. We took the net equity book down to 40% at one stage and we reduced the bond short book to less than twenty percent. This was not one's finest moment.

However, do all those price moves change much? Are there lessons to be learnt? What are markets predicting?

Questions, questions, questions. Sure the ECB handled Greece badly. They should have investigated bankruptcy. Sure the Spanish Caixas need recapitalizing and some honesty needs to be brought to bear in property loans in evaluating Spain, but should this blow off course the natural reflationary policies being pursued by the authorities. The price action of May for all asset classes was only explicable on the grounds that Europe and indeed the world is going to follow Japan into deflation.

The line of argument goes. Firstly, credit cannot expand because there is a standoff between those who have the equity to buy assets and those selling the assets; over price. The equity participants are asking for a discount on the assets. The sellers, thanks to low interest rates, do not have to sell and are holding out. This presents an uneasy truce but it does not permit credit gains.

Secondly, governments are only too aware that this crisis has left government finances in an untenable position long-term. Tax revenue has rarely managed to get about 40% of GNP. Government expenditure is now universally running in excess of 50% of GNP. In Osborne's case, the need to bring expenditures into line with revenues is compounded by the fact that if he does not announce cuts immediately, he cannot blame the outgoing government.

Markets are worrying in many ways rightly, that with the corporate sitting on cash, a fall in government expenditure is not going to be met by a rise in private sector spending and employment. Thus the market in May is pricing in a double dip.

This has been compounded by the weakness in the corporate bond market of late. With the one year ECB repo of ?400 billion coming due on 1st July, every bank is nervous that the ECB may not renew it or will only renew it only quarterly. Here I remain more positive. For me the lucky thing for Europe is that Germany may have the strongest economy in Europe, but they also have the weakest banking system and that is some claim when you look at the competition in Europe. This means the 1st July is likely to bring news that the repo loan is extended and most likely for one year. Thus fear of deflation provokes further reflationary policies.

This brings me on to the future. It is highly unusual for a new bear market in equities to begin even as profit estimates are being upgraded as they are now. Equities are cheap against all other assets, pricing in a 30%-40% fall in profits.* They are also under-owned. That makes them vulnerable to changes in sentiment. That makes them volatile, but it also makes them attractive as investments.

As some stage the re-flation will result in inflation and all of these fire practices will help the fund to do well. But in the meantime it looks like returns will be allied to volatility. *Even in 2009, with the banks going bankrupt in the UK, profits only fell by 8%. Written the 28th of May 2010."

Certainly intriguing commentary from the Odey manager and for more from this hedge fund we've previously covered Odey's European Fund commentary from earlier in the year. Additionally, we often cover fund manager Hugh Hendry on the site and keep in mind that before founding his firm Eclectica, Hendry was previously a partner at Odey. As such, we recommend you also view Hendry's recent thoughts where we learned he has constructed an Asian bear portfolio.

For more market commentary from top investment managers, head to our compilation of various hedge fund investor letters.

Matthew Grossman's Plural Investments Set to Open to New Investors?

While we don't usually cover news like this on the site, this one caught our eye. It appears as though Matthew Grossman's hedge fund Plural Investments plans to accept new capital next year. If you'll recall, Grossman launched his fund with $450 million in 2009 and was already closed to new investors before they even started trading. He previously worked at Steven Cohen's SAC Capital as the Chief Investment Officer of the CR Intrinsic unit. Before that, he followed energy stocks for Julian Robertson's Tiger Management.

This was definitely one of the more notable fund launches during the financial crisis and so it's interesting that they might already open up to new investors next year. Apparently the fund has a lengthy four year lockup so they might consider becoming more lax on that policy as well. For 2009, Plural Investments finished up 7.3%. You can see how they fared compared to others in our 2009 hedge fund performances update. We haven't seen an update as to how they're faring thus far in 2010, but some reports have postulated that the fund was flat back in the first quarter.

As of the first quarter of 2010 (according to their 13F filed with the SEC), some of Plural's largest positions included: S&P 500 (SPY) Puts, American Tower (AMT), Crown Castle (CCI), Medco Health (MHS), and Schlumberger (SLB). So it definitely seems as though Grossman's fund is on the wireless tower stocks bandwagon that we've seen many hedge funds riding. In fact, almost all of Plural's top holdings are some of the most popular stocks amongst hedge funds. We'll have to see if that holds true when they reveal their second quarter holdings in a few weeks.

Phil Falcone's Hedge Fund Adds to Corn Products Stake

After market close yesterday, Phil Falcone's hedge fund Harbinger Capital Partners filed a 13G with the SEC on Corn Products International (CPO). Due to portfolio activity on June 21st, 2010 Harbinger now shows a 5.22% ownership stake in CPO with 3,930,019 shares. This marks an increase in their stake because back on March 31st, Falcone's hedge fund owned 3,483,280 shares of Corn Products when we looked at Harbinger's portfolio. They've added 446,739 more shares to their position over the past three months, a 12.8% increase in shares owned.

Just yesterday, we also detailed how Harbinger has been selling Tate & Lyle shares. This is interesting because both companies are essentially involved in the corn industry in some fashion or another so we'll have to see what Falcone has in mind here.

Taken from Google Finance, Corn Products International, Inc. "manufactures and sells a number of ingredients to a variety of food and industrial customers. The Company is a corn refiner and a supplier of food ingredients and industrial products derived from wet milling and processing of corn and other starch-based materials."

Be sure to check out the rest of Harbinger's portfolio as well as our continuing hedge fund portfolio updates.

What We're Reading ~ 7/2/10

TradeStream Your Way to Profits: Building a Killer Portfolio in the Age of Social Media [Zack Miller]

An excellent translation of Li Lu's "My Teacher: Charlie Munger" [Enoch Ko]

Congrats to Mebane Faber on the announcement of his global tactical asset allocation ETF [World Beta]

Li Lu's 2010 lecture at Columbia [Street Capitalist]

The long and short of The St. Joe Company (JOE) [Greenbackd]

An in-depth look at American Capital (ACAS) [Distressed Debt Investing]

Borrowing BP [FTAlphaville]

God and RenTech's black box [Reuters Felix Salmon]

Hedge funds face large tax [Absolute Return + Alpha]

Could now be a good time to buy some Google? [The Globe and Mail]

TheKirkReport's strategy session with options guru Adam Warner [KirkReport]

Inflation versus deflation revisited [Humble Student of the Markets]

Poker is better than chess to learn about risk management [TexasHoldEmInvesting]

A look at value investing from a momentum perspective [Ivanhoff Capital]

Value in large cap stocks [Street Capitalist]

Cash is king at Myriad Pharmaceuticals (MYRX) [TapeBeat]

A look at Ray Dalio's unique culture at Bridgewater Associates [WSJ]

So that's why investors can't think for themselves [Jason Zweig, WSJ]

John Paulson is buying plots of land [WSJ]

Paul Kedrosky's chat with Mark Cuban re: Wall Street, trading & more [Kauffman]

Amid the gulf crisis, Wall Street touted BP stock [Reuters]

PIMCO's push into equities [Bloomberg]

Crackdown on hedge fund pay in the EU [BBC]

Thursday, July 1, 2010

Warren Buffett's Berkshire Hathaway Buys More Tesco

Warren Buffett's Berkshire Hathaway recently increased its stake in Tesco, an international retailer that is traded in London as TSCO and on the pink-sheets as TSCDY. This is the first time that Berkshire has filed a regulatory disclosure regarding Tesco and we'll get into the history of the stake below because they've held a position for a few years now. The gist of this most recent transaction is that Buffett bought more and now owns 242,153,373 shares, or 3.02% of the total shares outstanding. This is the latest move from Berkshire Hathaway, the vehicle of this legendary investor and you can learn to follow in his footsteps of course by starting with his recommended reading list.

In the past, we've detailed how Buffett already owned Tesco even though he had not filed with regulators. (He originally revealed this position in one of Berkshire Hathaway's annual letters). Back then, he owned 229,070,000 shares (or around 2.9% of the company). Since the position was below a 3% threshold, he was not required to disclose it to regulators. Now, however, Berkshire Hathaway has added around 1.85 million shares of Tesco to bring their total over this trigger-point. For nitpickers like us, it was kind of comical to see Berkshire actually make a mistake on their filing as they stated their position had gone 'below 3%' when in fact it had gone *above* 3% since this is the first time they've filed.

So, the main thing to takeaway here is that Buffett's Berkshire has added 1.85 million new shares since the last time we saw a disclosure regarding their Tesco stake. And, now that they're above this threshold, we'll see future updates regarding their position. For the rest of his investments, head to Warren Buffett's portfolio. In other resources regarding the Oracle of Omaha, we also posted up a multi-decade look at Buffett's career for those interested and notes from Berkshire's annual meeting.

Hedge Fund Harbinger Capital Reduces Stake in Tate & Lyle

Phil Falcone's hedge fund firm Harbinger Capital Partners recently filed a regulatory disclosure in the UK regarding shares of Tate & Lyle (LON: TATE). While not a major change in position size, they've gradually reduced their stake over time and we now see that Harbinger owns 41,171,670 shares, or 8.95% of the shares outstanding. This disclosure was made due to activity on Thursday June 24th. We covered Harbinger's previous filing on TATE from back in October 2009 when they owned a 9.21% stake.

Let's take a historical look at their stake in Tate & Lyle: Hedge fund Harbinger started to really ratchet up their stake in early 2008. Their position then peaked at a high of 19% ownership back in July 2008. Since then, Falcone's firm has slowly decreased its position size to current levels. Over the past year or so, the press has speculated that Harbinger would completely sell out of the stake but that does not appear to be the case (at least for now).

It appears as though Harbinger's thesis with Tate & Lyle was a push for a link with Bunge (BG), the US food group which Harbinger also previously had an interest in. (Sidenote: Falcone's fund had sold out of Bunge a while back but when we looked at Harbinger's portfolio from the first quarter of 2010 we saw they re-initiated a new position in Bunge). Back in 2008, Tate & Lyle's then CEO Iain Ferguson said that Falcone's investment in the company stems from his habit of focusing on scarce assets that are hard to replicate.

Specifically in the case of Tate & Lyle, the scarce assets Falcone fixated on were its US plants, including the (then new) Fort Dodge plant in Iowa which was the first corn wet mill built in twelve years, along with the company's access to valuable slots on the US rail system. We'll have to see where this stake goes, but ever since 2008 it's been slowly and steadily reduced by the team at Harbinger Capital Partners. For more portfolio activity out of this hedge fund, check out their latest new position as well as our previous look at Falcone's portfolio.

Taken from Google Finance, Tate & Lyle "is a manufacturer of renewable food and industrial ingredients. The Company, through its subsidiaries, is engaged in developing, manufacturing and marketing food and industrial ingredients made from renewable resources. The Company operates through four divisions: Food and Industrial Ingredients, Americas; Food and Industrial Ingredients, Europe; Sugars, and Sucralose. Tate & Lyle participates mainly in four markets: food and beverage; industrial ingredients; pharmaceutical and personal care, and animal feed. The Company holds a 16.6% interest in Tapioca Development Corporation."

For more on the latest moves from prominent money managers, head to our coverage of hedge fund investments in the UK and scroll through our continuing hedge fund portfolio tracking series.

Wednesday, June 30, 2010

Stock Market Technicals: Bearish Engulfing Pattern Is Cause For Concern

It's been a while since we last took a look at the market's technical picture so today we're highlighting MarketClub's latest market analysis video. In it, they highlight a signal that has typically preceded strong market declines. They're currently cautious on the stock market and derive this stance from two signals: a bearish candlestick pattern that just emerged as well as a strong level of support that's about to be broken. You can see their latest analysis in the video.

Let's first focus on the negative candlestick pattern they've identified. MarketClub pulls up a weekly chart of the Nasdaq and notes a negative/bearish engulfing line, a pattern whereby the previous bar is completely eclipsed to the downside. This marks a temporary top around the 2,350 level in the Nasdaq. This is important because they point out this same pattern signaled a sell-off in early May. If that's not enough to elicit concern, they point out another previous time where this pattern preceded a decline. Back on October 15th, 2007, a bearish engulfing line marked the beginning of what would be a massive downtrend during the financial crisis.

Turning next to support levels, MarketClub identifies 2,200 on the Nasdaq as a key place to keep an eye on. If it closes below that on a weekly level, the market is most likely headed lower. Throughout May and June, this level has been tested to the downside numerous times and looks like it is on the verge of breaking. Lastly, they highlight that their proprietary trade triangle indicators are signaling a negative trend, thus suggesting a cautionary stance on the markets. You can view their stock market technical analysis by clicking the video below:

Paolo Pellegrini & PSQR Capital's Latest Macro Assessment

Today we present you with Paolo Pellegrini and hedge fund PSQR Capital's latest presentation from GRANT'S Spring 2010 Conference. If you're unfamiliar with him, Pellegrini instantly gained fame and notoriety when he and John Paulson discovered the housing bubble and procured a way to profit from the demise. Paulson and Pellegrini's adventure of course was cataloged in the epic story of The Greatest Trade Ever. Since leaving Paulson & Co, Pellegrini has started his own hedge fund PSQR which ended 2009 up 61.6%, largely due to a short treasuries trade they put on very early in the year. (You can see how PSQR fared against other hedge fund performance numbers here). Additionally, we have previously covered PSQR's annual letter which details some of Pellegrini's trade ideas and macro thoughts.

Turning to his recent concerns, Pellegrini's presentation is entitled 'Gold vs. Fiat Money: We can't go backwards, so we have to go forward.' (The title is a bit misleading as the slides don't specifically talk about gold). In it however, he sifts through various mounds of economic data to paint a picture of the economy. He specifically notes that GDP has started to recover but labor compensation is not encouraging and as such, the middle class is hurting. Pellegrini also highlights national net saving to showcase how 'poor' people truly are. The PSQR hedge fund manager attributes this 'poorness' to the fact that the government is mortgaging its people's future.

Pellegrini then focuses on how very few people are saving money these days. We've also examined this paradigm before and postulated back in December 2008 that the savings rate must rise in order to get out of this mess. While it is clear there has been an uptick in the savings rate during the crisis, the fear is that this is merely a reactionary move and will not be sustainable. After all, the historical trend in personal saving is trending decisively downward. Add on top of this the fact that many households saw an increase in their total liabilities as they maxed out credit cards, spent beyond their means, and bought houses they couldn't afford. Pellegrini notes that, "in fact, the crisis was precipitated by 'dissaving'."

His presentation then delves into topics of monetary policy and we'll let you read his thoughts in the presentation below. Suffice it to say, he simply believes that if we are to exit this mess (and/or prevent it from happening again in the future), four things should change:

- Interest rates should track nominal per-capita GDP growth
- Credit growth should counter the economic cycles
- The Fed should regulate credit growth through capital requirements
- Fiscal policy should address distributional issues

Embedded below is Paolo Pellegrini and hedge fund PSQR Capital's full presentation:

You can download a .pdf copy here.

It's clear that Pellegrini still has concerns regarding the macro situation, as well as monetary and fiscal policies. Currently, we don't necessarily know how he's positioned his portfolio given such circumstances. However, we do know that heading into 2010 Pellegrini advocated being short US equities, short the US dollar, and long commodities amongst other trades listed in PSQR Capital's annual letter. We'll have to see if we can glean a more recent portfolio update from the man who saw the crisis coming long before many.

For more of our coverage of prominent investment manager commentary, be sure to head to our compilation of hedge fund investor letters and scroll through them. And for Pellegrini and Paulson's epic journey of shorting subprime, head to The Greatest Trade Ever.

Latest Hedge Fund Exposure Levels: Trend Monitor Report

We've been tracking hedge fund exposure levels across asset classes for some time now. During this chronicle, we've seen hedge funds short the euro and then last week we saw them start to cover those shorts. One recent move that has been spot on has been global macro hedge funds going net short equities. So, given the recent market decline, how are hedge funds positioned now?

Bank of America Merrill Lynch is out with their latest hedge fund monitor report where they opine that hedge fund returns for the second quarter of 2010 are very likely to be negative. This shouldn't necessarily come as a huge surprise given that May was a brutal month for hedgies. Month to date for June, merger arbitrage and convertible arbitrage have been the best performers. Surprisingly, global macro has been the worst performing strategy. So even though they have been net short equities, it seems their books have been hurt elsewhere.

In terms of the latest market exposure, long/short equity funds are now on average 30% net long. This has slowly started to creep up in recent weeks as they begin to increase market exposure. In terms of specifics, it appears as though l/s funds now very much favor large cap stocks. Additionally, they continue to sell emerging markets after having higher than average exposure in this arena as of late. This comes after these hedgies have had low net long exposure through 2010. Market neutral funds, on the other hand, continued to reduce market exposure. These two strategies have seemed to move conversely of each other over the past month or so with regard to equities.

Turning to global macro hedge funds, Bank of America estimates that these funds have held their equity short position steady but have added to their net short in commodities and 10 year treasuries. Given the flattening that has occurred in regards to treasury yields as of late, it's interesting to see hedgies press toward a crowded short in 10 year treasuries yet again. This seems to be a trade they just refuse to let up on. Late in 2009, we detailed how global macro guru Paul Tudor Jones' hedge fund Tudor Investment Corp favored curve flatteners as tail risk insurance. We'd be very interested as to whether or not they still hold this viewpoint.

Embedded below is the latest hedge fund monitor report from Bank of America Merrill Lynch:

You can download a .pdf copy here.

So despite market volatility and poor performance, it seems that long/short equity hedge funds have been increasing market exposure. As more market prognosticators seem to forecast a negative future for equities, we'll watch closely to see what the 'smart money' is doing. Maybe the most prudent thing to note through all of this is that hedge funds reduced equity exposure long before the market pullback this year. Yet, despite this accurate timing, hedge funds as a whole are still are generating poor performance numbers thus far in 2010.

For the latest specific investment manager moves, head to our daily hedge fund portfolio updates.

Tuesday, June 29, 2010

Reminder: 40% Discount to the Value Investing Congress Expires Tomorrow

Just wanted to remind everyone that the over 40% discount to the Value Investing Congress we've secured for our readers expires tomorrow (June 30th!). Click here to receive the discount with code N10MF1. Take advantage of these huge savings and hear the latest investment ideas from some of the most prominent hedge fund managers out there, including:

- Lee Ainslie (Maverick Capital)
- David Einhorn (Greenlight Capital)
- Kyle Bass (Hayman Capital)
- John Burbank (Passport Capital)
- Mohnish Pabrai (Pabrai Investment Funds)
- Whitney Tilson & Glenn Tongue (T2 Partners)
- J. Carlo Cannell (Cannell Capital)
- Amitabh Singhi (Surefin Investments)
- Zeke Ashton (Centaur Capital Partners)

... with many more speakers to come. The event takes place at the Marriott Marquis in New York City on October 12th & 13th. This is the biggest discount we're able to provide readers with and the closer we get to the event, the lower the discount becomes. Definitely lock in the biggest discount now and receive the 40% discount by clicking here before it expires tomorrow (June 30th)!

Jim Rogers Sees Opportunity in Silver and Palladium

From time to time, we like to check in on investment guru Jim Rogers to catch up on his thoughts on the markets and global economy. We do so of course due to his past success with the Quantum Fund he previously ran with George Soros. Nowadays, Rogers invests his money under Rogers Holdings and he has some pretty staunch viewpoints. Rogers himself proclaims he is a poor market timer. So while he may be early on an investment theme, he often finds and rides macro trends. To some, his views seem repetitive. But you must keep in mind that he very frequently appears in the media and is seemingly asked the same questions over and over. The last time we checked in on Jim Rogers we saw that he was shorting market indices. From all of these interviews, one of his stances has become abundantly clear: he loves commodities and in particular, precious metals.

In his recent slew of interviews, Rogers has proclaimed that he is fond of gold and still owns it. However, he is not buying more nor is he selling. In the end, he actually thinks gold will be a bubble in the distant future. For some reason he tosses out the year 2019 as his estimate, and it seems he thinks gold's reign will last a decade or so. He thinks this bubble top is a ways off because governments have been debasing their currencies at a rapid rate. Historically, he points out, this has always led to higher prices for real assets and he thinks this time will be no different.

Speaking on the subject of gold, Rogers says that, "I know the old (gold) high, adjusted for inflation, is over a couple thousand dollars an ounce. I know it'll get over that in the next decade. It depends on how much they debase the currencies. It's all part of the same picture... most governments everywhere only know one thing and that's to print and spend money that they don't have. Whenever you do that, it debases currency, always has, and until I see some governments realize that they have to do something else, then I plan to own gold and other precious metals and other real assets."

This of course is not the first time we've detailed a prominent investor's fascination with gold. John Paulson's hedge fund Paulson & Co started a gold fund mainly to bet against the US dollar and the currency debasement that Rogers centers his thesis around. We've also seen John Burbank's hedge fund Passport Capital lay out the rationale for owning physical gold. Not to mention, David Einhorn's Greenlight Capital has owned physical gold for some time now. Inflation is a very legitimate future concern for some of the top minds in the investment industry. Rogers is no different.

His main rationale here stems from the fact that many long-term bull markets end in hysteria and bubbles. He doesn't like to buy things at all time highs and that's pretty much where gold is trading these days. As such, Rogers' interest has been piqued by other metals.

If he had to buy a metal right now, he said he would focus on depressed metals such as silver or palladium. Rogers points out that silver is 60-70% below its all-time high while palladium is around 50-60% below its all-time high. He already owns all four metals: gold, silver, palladium, and platinum. Throughout all his interviews, he was very adamant that he was not selling his gold, but he was not buying more either.

Shifting to Rogers' views on currencies, he is particularly fond of the renminbi. While it is not his favorite overall investment due to liquidity concerns, it is the long-term investment he is most certain of. Rogers mentioned this last week in talking with Bloomberg. And on CNBC that same week, Rogers reaffirmed that he is still long commodities and short stocks due to the withdrawal of government stimulus and his anticipation that central banks will keep the printing presses rolling. This is directly in line with what we saw from Rogers' portfolio in early May.

Lastly, we wanted to highlight that Rogers has been eyeing the events surrounding the oil spill as well. We've already detailed how Whitney Tilson's T2 Partners has bought BP, citing valuation and extreme circumstances. Rogers hasn't quite gone that far yet, but it has definitely caught his eye. On the topic Rogers ponders, "Is it the end of BP? I doubt it. Somewhere along the line I expect that I will buy BP. But I'm not buying it now - just watching to see what happens." In his experience, he notes that disasters are usually a great time to buy. On that same note, he also cautions that there's usually plenty of time to buy into the opportunity presented by the problem. For the time being, Rogers is more than comfortable to wait and watch the proverbial knife drop before jumping in the (oil coated) water.

Embedded below is one of his recent television interviews with CNN Money where he talks about various topics of interest (email readers will need to come to the site to view it):

That wraps up the latest views and portfolio positioning from investment guru Jim Rogers. For more of his thoughts and to learn from this investment guru, check out Rogers' books, Hot Commodities: How Anyone Can Invest Profitably in the World's Best Market as well as A Gift to My Children: A Father's Lessons for Life and Investing.

If you enjoyed this post and want to follow the investments of some of the top market gurus and hedge fund managers out there, receive our free updates via email or via RSS reader.

Hedge Fund Lone Pine Capital Boosts Stake in Estee Lauder (EL)

Yesterday after the market close, Stephen Mandel's hedge fund firm Lone Pine Capital filed a 13G on Estee Lauder (EL). This filing discloses activity as of June 17th, 2010 and reveals that Lone Pine has a 5.0% ownership stake in EL with 6,105,520 shares. This is a sizable increase in their position from when we last looked at Lone Pine's portfolio. Back on March 31st, Mandel's hedge fund owned 3,498,677 shares. Over the course of the past three months, Lone Pine has added 2,606,843 more shares (a 74.5% increase in their position size). In terms of other recent portfolio activity from Mandel, we noted he started a new position in Longtop Financial Technologies (LFT) a few months ago as well.

The interesting thing to note about their Estee Lauder position is that they've been gradually building it up over time. Looking from the fourth quarter in 2009 to the first quarter of 2010, Lone Pine had previously boosted their position by 14%. And before that (from the third quarter of '09 to the fourth quarter of '09) they had tripled their stake. And now, with this most recent increase, it's obvious they have conviction in this pick. This stock becomes all the more interesting when you consider some other hedge funds are bullish on shares of EL as well.

As we've covered previously, David Stemerman's hedge fund Conatus Capital owns Estee Lauder as one of their top five US equity longs. Given his concurrent investment, it should come as no surprise that before founding Conatus, Stemerman previously worked at Lone Pine. So, he has carried conviction in this stock over to his new firm which launched last year with $2.3 billion. Consumer companies are essentially Lone Pine's specialty and Estee Lauder is the perfect example of this mold. Given that Lone Pine has continued to ramp up its stake, it will be intriguing to see whether or not Conatus has done the same.

Last year, Lone Pine's main fund (Lone Cypress) was up 17.7% as detailed our hedge fund performance numbers summary. Their Lone Kauri Fund was up 12.1%, their Lone Cascade Fund was up 44.4%, and their Lone Dragon Pine Fund was up 72.9%. For other investment ideas from Mandel's hedge fund, we previously saw that they are bullish on education plays as well.

Taken from Google Finance, Estee Lauder is "a manufacturer and marketer of skin care, makeup, fragrance and hair care products. Its products are sold in over 140 countries and territories under the brand names, which include Estee Lauder, Aramis, Clinique, Origins, MzAzC, Bobbi Brown, La Mer and Aveda."

Head to Lone Pine Capital's portfolio to see what else Stephen Mandel has invested in.

Balyasny Asset Management Ramps Up InterMune (ITMN) Position

Due to activity on June 17th, 2010, Balyasny Asset Management has disclosed an updated stake in InterMune (ITMN). Dmitry Balyasny's hedge fund firm now shows a 5.49% ownership stake in ITMN with 3,040,200 shares. This is a massive increase in their position size because back on March 31st, 2010, Balyasny owned only 350,000 shares of InterMune. This means that somewhere over the course of the past three months, the hedge fund firm has added 2,690,200 additional shares (over a 768% increase in their position size).

It's impossible for us to know when exactly Balyasny Asset Management purchased their shares. This information becomes crucial, however, when you consider that InterMune precipitously dropped from $45 to around $12 back in early May. This huge decline was mainly due to InterMune's failure to receive FDA approval for one of their lung drugs. This is a stock we've seen owned by some other prominent hedge funds in our coverage. Back in early April, we noted Steven Cohen's SAC Capital disclosed an ITMN position. And previously, we detailed how Andreas Halvorsen's Viking Global started a new position in InterMune back in the first quarter.

Given the circumstances with this stock and the fact that these big-time hedgies owned shares before the FDA rejection, it's very hard to say whether or not SAC and Viking still own these positions. It's even more difficult to hazard such a guess pertaining to SAC Capital's ownership given that they are a trading oriented firm and move in and out of positions at a much more frequent rate compared to most funds. One thing is clear though: Dmitry Balyasny's hedge fund firm now owns a sizable stake in ITMN. We haven't seen much new portfolio activity out of Balyasny as of late, but we did touch on a newly disclosed position of theirs a few months ago.

Taken from Google Finance, InterMune "is a biotech company focused on developing and commercializing therapies in pulmonology and hepatology. In November 2008, InterMune together with Roche and Pharmasset, Inc. (Pharmasset) announced the initiation of INFORM-1, a dual combination clinical trial investigating the combination of two oral antiviral molecules in the absence of interferon."

For more on this firm you can head to our past Balyasny coverage.