Summary of Jim Rogers' Recent Portfolio ~ market folly

Wednesday, March 18, 2009

Summary of Jim Rogers' Recent Portfolio

Jim Rogers has been in the media a lot over the past couple weeks and we wanted to provide a summary of these thoughts. He is a noted investor and founder of the highly successful yet now defunct Quantum Fund (with George Soros). Rogers has been out providing his opinion on various topics and giving us a deeper glance at some of his portfolio plays. We've compiled a list of some of his major positions below. Firstly, we'll examine some of the plays he's revealed just over this past week.

The rally we've been seeing in equity markets is a bear market rally that can last anywhere from days to months, according to Rogers. He sees the economy as getting worse before it gets better, citing more bankruptcies to come. It might be 'a bottom,' but its not 'the bottom,' Rogers said. He's very bearish on a macro level and thinks it could take 7 to 8 years to really clean out the system. He's noted that all the bailouts have added to the risks of an economic depression. His displeasure with the US government is no secret, as he thinks they are 'throwing money' at the wrong things.

In terms of the US financials, Rogers has covered his Citigroup (C), which was a short that had paid him off handsomely. He has also mentioned that he has covered most of his short positions in stocks. But, he is now short JP Morgan Chase (JPM), as he sees negative 'off balance sheet' exposure, along with derivatives exposure, and large exposure to the credit card business. Rogers has noted something that we here at MarketFolly have been talking about for some time: credit cards as the next credit crunch. And, head of JPMorgan Jamie Dimon even acknowledges this as well. Rogers has chosen to short JPM for a myriad of reasons, but credit cards are certainly one of them. Even the 'good house' in the 'bad neighborhood' can't escape. While he has that short position in the financial space, he has no positions in the insurers. He notes that sure, financial institutions can rally back from their lows, but that they still aren't financially sound. He thinks that financials won't be an attractive investment for years to come. Additionally, while not a financial, he mentioned he was short IBM (IBM), presumably due to their large financial services exposure.

Rogers has again re-voiced his concern with government debt, which has recently expanded five-fold. He was previously short the long-dated treasuries, but had to cover back in the fourth quarter. He has been patiently evaluating for a time to re-enter this position for the longer trend he forecasts. In the midterm, he won't fight the government though, as e expects them to buy treasuries in an effort to stem borrowing costs. Governments around the world are printing a ton of money and borrowing insane amounts. Rogers cites this as the reason for his desire to short the bonds eventually. We agree with Rogers on this point, and are willing to have extreme patience before entering this trade in size. It undoubtedly will take much longer to play out than many realize, especially when the Federal Reserve is still active and busy. We laid out our basic rationale for shorting treasuries down the road as well. Again, as Rogers emphasizes, patience is key.

Additionally, he has been waiting to establish a short position in the US dollar. He has been long the Dollar, which he says is rallying artificially, and is looking for this unwind to continue before he unloads the rest of his Dollar position, as he believes the US is trying to devalue its currency. He also currently owns some Japanese Yen and has elaborated on currencies recently. Considering his distaste for some of these paper currencies, he has a small gold position. But, he prefers silver and agriculture to gold.

We already know that he is bullish on commodities, and very bullish on agriculture. He has re-hashed this view numerous times. He might be early, but he has always claimed that he is not a market timer. He feels this trend will eventually arrive and he is poised to benefit from it. Raw materials and commodities are the only sectors with improving fundamentals according to Rogers. He expects low inventories and tons of shortages in the longer term (10-20 years). You have to keep in mind that Rogers is not a market timer and instead positions himself for broad, longer-term trends. He favors the commodities themselves over commodity resource stocks. And, he has even gone out and bought physical farmland. He has active investments in Agcapita Farmland Investment Partnerships (in Canada) and Agrifirma Brazil. As we noted in our hedge fund portfolio tracking series, Rogers' ex-Quantum Fund buddy George Soros has also bought a ton of Potash. So, they definitely share a bullish stance on agriculture. Lastly, its also worth noting that respected investment strategist Don Coxe is also an ag bull.

Overall, Rogers has a bearish macro view and expects bear market rallies, as they are just part of the cycle. And, while certain toxic companies like the financials may rally, he notes that they still have big problems ahead of them. He isn't a market timer and expects rampant inflation as well as bull markets in agriculture and commodities. He has placed bets to the tune of these forecasts and will continue to monitor the investment landscape for broad macro trends he can capitalize on in the future. If you enjoyed this post, please consider getting our free updates via email or for free via RSS reader. We cover gurus like Jim Rogers as well as other prominent hedge fund managers on a daily basis.

Lastly, if you've missed them, you can also see Rogers thoughts on the topics of:

Sources: Bloomberg, (again), CNBC, and various other media appearances

blog comments powered by Disqus