Julian Robertson Interview: FANG Stocks Not Frothy At All

Tiger Management founder Julian Robertson was recently interviewed by CNBC.  Here's a summary and the full video below:

- When asked about Paul Tudor Jones' recent comments about stocks heading higher into year-end, Robertson said that, "I think there's a very good chance of that happening (in the next year) and I'm positioned accordingly."

-  He thinks it's possible that interest rates go up so high so fast that the Fed would have to ease up a bit.  But doesn't think rates will go 'wildly' up

- Says the President has done a reasonably good job, but could do with a dose of humility

- Tax cuts have helped corporate earnings but also the earnings of the middle class tremendously

- Feels a slowdown is at least 6 months and 'hopefully' 2 years away

- Tech stocks: he doesn't think FANG stocks are frothy at all, especially relative to the rest of the market. This is one area where he feels he differs in opinion from a lot of market participants.  Adds Microsoft (MSFT) to that bunch as these stocks have growth rates similar to their multiples

-  He likes the management at many of these companies, Facebook etc

-  Air Canada at 3x next year's cashflow is not an expensive stock and is 'beautifully run'.  Also likes Ryanair in Europe.  Doesn't really have any airline favorites in the US right now

-  Loves the banks, thinks they're very reasonably priced in relation to earnings.  Huge cashflow yields next year and thereafter.  Thinks they're in terrific shape, likes JPMorgan (JPM) and Bank of America (BAC)

-  Would tell grandchildren to own FB, BAC, JPM, probably Citigroup (C), which is 'reasonably priced'

Embedded below is the video of Julian Robertson's CNBC interview:

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Delivering Alpha Conference Notes 2017: Robertson, Dalio, Chanos, Cooperman & More

CNBC and Institutional Investor's Delivering Alpha Conference just took place and featured many big name speakers.  Here's notes from the event itself and summaries of television interviews as well:


Delivering Alpha Conference Notes 2017


Julian Robertson (Tiger Management)

Robertson noted that interest rates need to increase because there's a bubble forming in the stock market.  Since rates are low, stocks don't really have much in the way of competition for money.  He also predicts that Trump will ask Janet Yellen to stay on as Federal Reserve Chair.

He recently got back into Alibaba (BABA).  He previously owned it at "a very low price" (seven years ago) but sold it around $100 but now he's back in.  Says it's unbelievable how the company has seen 50% in earnings.  While other investors claim it to have accounting issues, Robertson said, "It would have to be such a giant fraud.  I mean, I can't imagine anything would be that colossal."

Argued that Apple (AAPL), Facebook (FB), and Google (GOOG) are cheaper than they would have been in the 1960's, 70's or 80's.  On Netflix (NFLX), he noted "does anyone not like it?"  He said it "might be a little out of reach" now but it's still tempting him because it's run by good people and he loves it.

He likes the cruise industry, saying that "(It) has come of age.  And older people my age are attracted to the cruise ship industry.  And they are booming right now, and all over the world they are booming.  And I think they're for the golden oldies."

Robertson still also owns Air Canada: "We got into it at around 8 or 9.  And it's now 23, approaching 24, and the multiple is about the same as when we got in, which is all of five times earnings.  So we have too much Air Canada, but I can't make myself sell it."

Also noted he doesn't think he'll ever understand Bitcoin.

He also continued to share his view that part of the hedge fund crisis is exacerbated by the fact that there's so many of them now and they compete against each other.

Robertson also gave advice to the younger generations: be sure that you love the field and let that be what guides you.



Ray Dalio (Bridgewater Associates)

Dalio's biggest concerns were the following: wealth gap, social conflict, and various financial burdens (debts and pensions).

"I think we're probably in a 2.5% type of growth environment.  I mean, the real question is, to some extent, whether you can unleash the productivity by some of the changes that a pro-business environment can produce."

He thinks tax reform etc will be a watered down version and will come later.

He likened the current environment to 1937 in terms of the early stages of a tightening.

Dalio thinks that we're in an environment with a lot of conflict: political, conflict between parties, conflict between countries.  "This is very important.  This is even more important than how the tax changes are going to take place."

The Bridgewater founder then talked about balancing alpha and beta.  He said gold is essential and part of that balance.  He called it "an effective diversifier of assets" as well as "an alternative version of cash."  He feels it should be 5-10% of everybody's portfolio.

He also thinks it'd be terrible if Gary Cohn left the administration and it'd be bad for the market too.

When asked what he's most worried about, Dalio mentioned risks like North Korea, but said his bigger worry is long-term: wealth and social gap and the conflicts that arise from that.  He's worried about the various debt and pension burdens.

We also recently posted Ray Dalio's TED talk which takes you inside a meeting at Bridgewater.  He also has penned a new book, Principles.



Leon Cooperman (Omega Advisors)

He said that "Conditions that normally lead to significant market decline are either not present or not forecastable."

"The market is in a zone of fair and full valuation.  I see very few signs of exuberance."

Stocks mentioned by Cooperman include First Data (FDC), which he's owned for some time now and called very cheap.

Also, United Continental (UAL), which he felt has solid management that's identified a lot of cost opportunities.  He thinks earnings there can see around 15% over the next few years.  Operating profits could rise by 50% over the next few years and the company has bought back 2% of its shares

He also pitched two energy ideas: Hess (HES), as well as WPX Energy (WPX).  "The solution for low oil prices is low oil prices.  These two (stocks) have growing production profiles and a net asset value well above current prices at existing oil prices."  He thinks oil is headed higher to $60.  Says the sector has been overly discounted.  Says Hess in particular will increase production.

He also likes Shire (SHPG), citing its growth, positive pipeline, and the expectation of stock buybacks.

Said bonds look like they're in a bubble but at same time notes the Fed has been 'forcing people into risk' via its monetary policies.  It will change one day he says, but not yet.



Boaz Weinstein (Saba Capital)

He warned investors to avoid junk bonds.  Argued that half or a third of junk bonds today are held by retail investors, who have a ton of exposure, partly due to the rise of ETFs.  He feels the high yield market is overheated and he's short bonds of various retailers and hospitals.  At the same time, he's long equity of some of those same companies.  "Equity is at a much more rational price and credit markets are ignoring those signals."

Noted that portfolio protection is cheap but few are buying it.  "Does everyone think they can get out on the top?"



Jim Chanos (Kynikos Associates)

He says that "what's worked will continue to work" and monetary will stay easy and investors will live with the valuations.

Chanos says it's easier to find short ideas in this environment, but those ideas "don't work" due to the underlying upward trend.  He says the market was far more correlated last year than it has been this year.

He's short Continential Resources (CLR).  "People have been looking at the industry with rose colored glasses.  This is a problem with the North American shale business.  If we don't get a pickup in the company's fortunes in the back half of the year it's going to struggle."



Jeff Smith (Starboard Value)

Pitched Perrigo (PRGO), generic drug maker.  Says a lot of these products are sold on Amazon now and the company can expand sales of its over-the-counter medicines via that channel.  Shares have been undervalued from pricing pressures.

Also mentioned Altaba (AABA) as a top idea.  This is the former Yahoo stub that is left after selling the core Yahoo business.  What's left is a stake in Alibaba (BABA) and Yahoo Japan, etc.  It's basically a holding company.



Mick McGuire (Marcato Capital)

The activist investor has taken a new stake in Terex (TEX), the company that makes construction equipment.  They started buying last year and roughly own around 1.1 million shares per a recent SEC filing as they own 6% of the company

McGuire feels the company should see a revenue boost after a strategic re-positioning.  It's in the middle of an operating turnaround and is reducing SG&A, so there's operational profit upside.  The company also switched its sourcing program which could potentially save them around $500 million annually.  Thinks shares could triple, and has already doubled since he invested in 2016.



Chamath Palihapitiya (Social Capital)

The venture capitalist who now also runs public investments, said that he's massively long cryptocurrency bitcoin.  He calls the blockchain technology disruptive.

He argued that tech investors need to look at a company's ability to innvoate: "There's just this massive trade right now between the disruptors and the disrupted."  He says there's a lot of opportunity to be long disruptors and short the disrupted.



Jamie Dimon (JPMorgan Chase)

He called bitcoin worse than Tulip Bulbs and thinks it will eventually blow up.  Said he'd fire any of his traders trading bitcoin for being stupid.  Says it could go up to $100,000 before it blows up, who knows.  His daughter bought it, it went up, now she thinks she's a genius, he said.  Thinks it could be vulnerable to government intervention.

Thinks government policies are stifling growth.  If things changed, we'd see 3% growth rather than sub 2% which we've seen annualized now.  Singled out small businesses as most impacted.

Argued banks in the US are very sound at the moment.  Says the successor to JPMorgan is inside JPMorgan.



Mary Erdoes (JPMorgan Asset Management)

When asked about US stocks or bonds, she said none of the above.  Sees enormous opportunities in Europe, Japan, and emerging markets.  Thinks that some investors are worried about emerging markets due to the US dollar as an 'anchor' currency.



Steve Mnuchin (Treasury Secretary)

He says that tax reform is too important not to be passed and that it can occur this year and might even be retroactive back to the beginning of 2017.  Said the President's number one concern is North Korea and security.  Said hedge funds wouldn't have the carried interest provision under Trumps tax proposal.



Steve Schwarzman (Blackstone Group)

He's optimistic on tax reform, saying the 'worst' we'd do is a tax cut somewhere around 25-28%.

He thinks the biggest risk to markets are geopolitical, in particular North Korea.  He said "i would not be buying office buildings in Seoul" though didn't comment further on how this would affect investment decisions.

Schwarzman also argued that he relationship between China and North Korea is not friendly as it is perceived to be.  "The Chinese do not want a nuclearized Korean peninsula, and they're very serious about that.  They also don't want to have a shooting war occur and have 20 million refugees from North Korea go into China.  So it's complicated for them as to what they do."



Barry Sternlicht (Starwood Capital)

"It feels like the ocean is full of money, but it could evaporate."  Says he's most worried about potential problems from North Korea or Syria.

Tiger Management Shows Ooma Position

Julian Robertson's hedge fund firm Tiger Management has filed a 13G with the SEC regarding shares of Ooma (OOMA).  Per the filing, Tiger now owns 6.7% of OOMA with 1.22 million shares.

This is a newly disclosed equity position for the fund and the filing was made due to activity on June 21st.

You can view other recent portfolio activity from Tiger Management here.

Per Google Finance, Ooma is "a communications platform for small businesses and consumers. Ooma serves as a communications hub, which offers cloud-based telephony, Internet security, home monitoring and other connected services. Ooma combines PureVoice high definition (HD) call quality features with mobile applications anytime, anywhere calling. Ooma is a full router capable of prioritizing voice data and directing traffic to ensure reliable phone service. Its enterprise-grade phone service built for small business includes features, such as calling features, including unlimited calling in United States and Canada, 911 service and toll-free numbers available; office features, including virtual receptionist, extension dialing and voicemail; mobility features, including call forwarding, voicemail forwarding and multi-ring, and one-touch Internet protocol (IP) phone features, including three way conference, transfer calls and call on hold."

Tiger Management Increaes T2 Biosystems Position

Julian Robertson's hedge fund firm Tiger Management has filed a 13G with the SEC regarding its position in T2 Biosystems (TTOO). Per the filing, Tiger now owns 5.68% of the company with over 1.73 million shares.

This is an increase of around 373,000 shares since the end of the first quarter. The filing was made due to activity on May 25th.

Per Google Finance, T2 Biosystems is "an in vitro diagnostics company engaged in developing a technology platform offering an alternative to diagnostic methodologies. The Company's T2 Magnetic Resonance platform (T2MR) enables detection of pathogens, biomarkers and other abnormalities in a range of unpurified patient sample types, including whole blood, plasma, serum, saliva, sputum and urine, and can detect cellular targets at limits of detection as one colony forming unit per milliliter (CFU/mL). The Company's initial development efforts target sepsis, hemostasis and Lyme disease. T2MR is a miniaturized, magnetic resonance-based approach that measures how water molecules react in the presence of magnetic fields. Its platform detects a range of targets, including molecular targets, such as deoxyribonucleic acid (DNA), immunodiagnostics, such as proteins, and a range of hemostasis measurements. The Company offers T2Dx Instrument (T2Dx) and the T2Candida Panel. "

Julian Robertson Likes Microsoft, Air Canada, Celgene

Hedge fund legend Julian Robertson of Tiger Management sat down with CNBC to talk about markets recently and what stocks he's fond of these days.

He really likes Microsoft (MSFT) and thinks its cloud exposure, new management has "brought a revival of Bill Gates' initial strategy."

Robertson also likes Air Canada and says they're doing all the right things, cheap at 3.5x earnings.  Thinks it's well-run at a very cheap price.

Looking at stocks selling at depressed levels, he pointed to biotech and particularly Celgene (CELG).  He noted the fear that Hillary Clinton would put some of these companies out of business.  Robertson says "a lot of them have a lot of promise" and he prefers ones that have sold off a lot.  He was a big holder of Gilead (GILD) but said he's basically 'given up' because the company hasn't put its massive cash pile to work.

Turning to media, he said that, "I have always regrets about selling anything of Reed Hastings."  He regrets not being in Netflix (NFLX) but says "it's not the world's cheapest stock" so he says they 'removed' themselves. 

Turning to currencies, the hedge fund manager thinks the Peso is undervalued as it has largely been a 'Trump trade' recently.

On the hedge fund industry, he said "(The shakeout) is caused by increased competition from more hedge funds."

For young people in finance, he said he'd tell them to go to an industry that's lacking people.

For more from this hedge fund manager, we also posted another recent interview with Julian Robertson as well.

Julian Robertson: Stocks & Bonds in Bubble, Especially Bonds

Julian Robertson of legendary hedge fund Tiger Management appeared on Bloomberg late yesterday in an interview with Tom Keene.  In it, they touched on a myriad of topics, including the hedge fund industry, which Robertson said was facing the most challenging time ever.  He also said a bubble is brewing in financial assets.


Here's a quick summary with the video below:


- While interest rates aren't negative in the US yet, thinks it's tragic they're down this far

- Says Janet Yellen's not willing to see the American public take pain

- Robertson said negative and near-zero rates from central banks have sped up borrowing at low costs and money is flowing into financial assets.  Thinks bubble in equities and when it bursts, will spread to real estate. 

- "I would tell them (investors) in my opinion, there's going to be chaos created by the negative and low interest rates."

- Thinks investors should have at least some money allocated to hedge funds, so that they can truly be hedged and have some protection

- That said, thinks some great companies are undervalued, cited healthcare, biotech, and technology stocks specifically.  "A company like Celgene is very reasonably priced.  The Google's, those type things, Microsoft.  They're available at very reasonable multiples."

- Invests his own money but the rest is allocated to Tiger Cub hedge funds, or funds founded by managers that used to work for him (you can see many of those funds' portfolios in our quarterly newsletter).

- Specifically called out bonds as stretched with all the bond-buying programs.  Yields at record lows has forced prices to levels that aren't sustainable

- Thinks China will come out with a strong program against hydrocarbons

- Feels there's already a lot of regulation in the hedge fund industry, especially compared to what it used to be.  But says that's normal as an industry grows.

- "It's the most difficult time I've ever seen in the (hedge fund) business.  Because there are a lot of people who are squeezing shorts and they make a business of doing that.  Furthermore, I don't quite know how the quants work, but I think they have a way of squeezing shorts that is very tough too.  At any rate, I think it's tougher to be a hedge fund investor than ever before.  Hedge funds ordinarily don't outperform the markets except when the markets go down.  But right now it's a very difficult time for them."

- "There's a distinct drift occurring in the fee structure." (2% management fee and 20% performance fee)

- Says you make every effort to avoid any areas where insider trading could be possible:  "It's very difficult to determine whether something is an excellent job of research or is in fact inside information."

- On the UK: "I think London is gonna be durable, but this gonna be tough on the UK.  I think it's gonna be very tough."

- On Europe: "I'm reasonably pessimistic on Europe.  But I think the immediate problem is probably rougher in the UK.  George Soros has written a lot about this and I have a lot of respect for him."

- On America: "I'm extremely optimistic because I think we have really great young people and I've always worked with young people."


Embedded below is the video of Robertson's interview:




You can view somewhat recent portfolio activity from Tiger Management here.

Tiger Management Increases T2 Biosystems Stake, Reduces Enzymotec Stake

Julian Robertson's hedge fund firm Tiger Management has recently submitted two filings to the SEC.


Tiger Files 13G on T2 Biosystems

First, Tiger Management has filed a 13G on T2 Biosystems (TTOO).  Per the filing, Tiger now owns 5.17% of the company with over 1.25 million shares.

This is up from the 552,255 shares they owned at the end of the first quarter.  The filing was made due to activity on June 29th.

To see the rest of Tiger Management's portfolio, head to the latest issue of our Hedge Fund Wisdom newsletter.

Per Google FInance, T2 Biosystems is an "in vitro diagnostics company engaged in developing a technology platform offering an alternative to diagnostic methodologies. The Company's T2 Magnetic Resonance platform (T2MR) enables detection of pathogens, biomarkers and other abnormalities in a range of unpurified patient sample types, including whole blood, plasma, serum, saliva, sputum and urine, and can detect cellular targets at limits of detection as one colony forming unit per milliliter (CFU/mL). The Company's initial development efforts target sepsis, hemostasis and Lyme disease. T2MR is a miniaturized, magnetic resonance-based approach that measures how water molecules react in the presence of magnetic fields. Its platform detects a range of targets, including molecular targets, such as deoxyribonucleic acid (DNA), immunodiagnostics, such as proteins, and a range of hemostasis measurements. The Company offers T2Dx Instrument (T2Dx) and the T2Candida Panel."


Tiger Reduces Enzymotec Position

Secondly, in a separate 13G filed with the SEC, the hedge fund firm also shows a 2.5% stake in Enzymotec (ENZY) with 577,407 shares. 

This is down from the 1.14 million shares they owned at the end of the first quarter.  The filing was made due to activity on July 1st.

Per Google Finance, Enzymotec is "a nutritional ingredients and medical foods company. The Company's technologies, research expertise and clinical validation process enables it to develop solutions across a range of products. The Company operates in two segments: Nutrition segment and VAYA Pharma segment. Both of the Company's segments offer a range of products that leverage its lipid-related offerings. Its product suite addresses the entire human life-cycle, from infancy to old age, and comprises ingredients in products ranging from infant formula to nutritional supplements, as well as branded medical foods, sold only under a doctor's supervision. It markets its product portfolio to established global consumer companies and physicians and target large and growing consumer health and wellness markets. The Company's clinically-validated products include bio-functional lipid-based compounds designed to address dietary needs, medical disorders and common diseases."

Julian Robertson on Greece/Europe, China & Various Stock Picks

CNBC's Kelly Evans interviewed Tiger Management's Julian Robertson and he talked about a range of topics, including Greece and Europe, China, Puerto Rico, and various stocks.

He doesn't seem too terribly concerned by the situation in Greece in and of itself, but if contagion spreads to Spain or Italy and potentially other countries, then things could get dicey.

Robertson says European equities "have been a very good place to be and may still be ... but you certainly want to hedge the currency."

His main concern now is that we're in the midst of a serious credit bubble.  Money that normally would flow into bonds has been forced into stocks.  This is something he's mentioned previously as well.

On Chinese equities, he notes, "I think the prospects for Chinese companies... some of them are very great.  I have changed from Alibaba (BABA) to JD.com (JD) ... JD has an advantage in that it's never had any knock-off problems.  We are very bullish on JD now and we have sold Alibaba for it."  Our Hedge Fund Wisdom newsletter back in May highlighted that many Tiger Cub funds were betting big on JD.

Robertson continues to like Apple (AAPL) but he's not overly concerned about the Watch.  He said, "Apple would be selling at double or triple its present price now if this was the 70's or 80's."

Additionally, he continues to like Gilead Sciences (GILD).  He's been short Assured Guaranty (AGO) as well.

On his industry, Robertson notes that, "I think the hedge fund industry is suffering from the expansion of the industry."  He says now you're competing with so many other hedge funds whereas back in the day you were competing with less managers and less sophisticated rivals.

Embedded below is the video of Robertson's interview on CNBC:



For more on this legendary investor, head to Morgan Creek's Q1 letter on learning from Robertson.

Morgan Creek Capital's Q1 Letter: Learning From Julian Robertson

Mark Yusko is out with Morgan Creek Capital Management's first quarter letter.  In it, he talks about learning from Julian Robertson, the legendary money manager from Tiger Management.

The most notable takeaway here is that Robertson has become bearish.  Yusko walks us through the previous times Robertson has been negative, why he felt that way, and what transpired. 

Yusko has titled his commentary "Not Lyin', The Big Tiger's a Bear, Oh My!"  Since Julian only turns negative at certain times, he feels it prudent to pay attention when this occurs.

This time around, Robertson is concerned that the Fed has essentially inflated asset prices and he believes that once they start tightening, there will be pain in equities.

Embedded below is Morgan Creek's Q1 letter:



You can download a .pdf copy here.


And if you missed it, be sure to view Robertson's recent interview as well.

Julian Robertson Worried About Bubbles Bursting

Tiger Management's Julian Robertson recently was interviewed by Fox Business and touched on bubbles developing, interest rates, the US Dollar and select US equities.


The thing he said he's worried about most are bubbles developing: specifically, the bubble in bonds created by the Federal Reserve's actions.  He notes it's a hard market to save in and an easy market to borrow in, and those things aren't conducive to long-term prosperity.

Robertson thinks the equity rally will be stalled by an increase in interest rates.  He expects a rate increase this year (warranted by the economy).  "I don't think it's at all ridiculous to think an '08 size (decline)."

Tiger Management's founder also sees the US Dollar strength continuing.

As to what stocks Robertson likes, Gilead Sciences (GILD) was mentioned.  He said he likes growth companies and notes that these types of plays (like Apple, Google, Facebook) used to trade for such high multiples back in the day, but nowadays are trading for cheap.

Lastly, he singled out Amazon (AMZN) as a company he finds fascinating because it doesn't have considerable cashflow and it's "wild that it gets this kind of multiple."  He acknowledges it's done well, but he's short, saying AMZN "don't care" about profitability.

Embedded below are the videos of Robertson's appearance on Fox Business:

Video 1


Video 2

Julian Robertson On What Stocks He Likes Now: Interview

Tiger Management's Julian Robertson has been making his rare yearly media tour and this time he sat down with Fox Business to talk about the markets.


On the Markets & Global Economy

On the global economy, Robertson said that: "Europe is in serious trouble and not improving much.  Japan has had a little bit of revival but at the cost of doing a lot of things that are questionable.  And I think the US is doing better than anybody.  China's got some serious problems, too."


On What Stocks He Likes

As has been the case in his other recent interviews, Robertson was again bullish on Google (GOOG / GOOGL) and Apple (AAPL).

He said that, "Apple's below the market multiple and that's true of Google."  Robertson has bought AAPL within the past 2-3 weeks and thinks it's "an extremely reasonably priced stock."  He also labeled GOOG as the "premier technology company of them all."

The Tiger man also admitted he's owned Alibaba (BABA) for four years now, long before the company came public.

He's also liked airlines, saying Delta Airlines (DAL) is the class of the industry and that they've all obviously benefited from lower oil prices.  Robertson also said he likes Netflix (NFLX).

One company he bought up that he hasn't mentioned previously was Naspers, traded in South Africa.  This has been somewhat of a Tiger Cub / Tiger Seed favorite and the company owns Tencent and various stakes in Chinese companies.  The company is basically trading at the value of these investments, but they also have television assets and a bunch of other stakes as well.


On the Hedge Fund Industry

He says the problem is that the industry has expanded so rapidly and that competition among funds has really ramped up.  Back in the day not as many people were shorting, but now it's really prevalent.  He also said that it's difficult to run a hedged portfolio in a market that seemingly only wants to go up.


For more from this investing legend, head to Julian Robertson's 3 most important things to look for in a stock.

Embedded below is Robertson's interview with Fox Business:



And here's the second video of his interview:



And here's the third video:

Julian Robertson's 3 Most Important Things To Look For in a Stock

Tiger Management's Julian Robertson made his rare yearly media appearance recently on Bloomberg.  There, he talked about what the most important things are that he looks for in a stock:


Julian Robertson's 3 Things To Look For in a Stock

1) Good management:  This was the first thing he mentioned and is something you'll see strongly emphasized at most of the Tiger Cub hedge funds these days.

2)  Good product line:  This one is kind of obvious as you need to sell a product/service that people/companies need or desire.

3) Shareholder oriented:  This kind of ties back-in with #1, but he wants a company that's very stockholder friendly (presumably returning capital to shareholders, etc).


Robertson On Current Markets

Robertson also touched on some other topics during the interview.  Interestingly, he said sometimes it's good to move away from stocks and to look at currencies, saying they're "very interesting" to analyze and that there's a lot of volatility in them.  He also noted it's a "race to cheapen currencies everywhere."  

He also said there's a big bubble with bond yields being so low, causing people who would otherwise be in bonds to be in stocks.

Turning back to stocks, the Tiger man called Apple "awful cheap" and also made similar comments about Google (GOOGL / GOOG).

Robertson went on to say that Asia is the "golden place for hedge funds to be."  He says there's a ton of competition among hedge funds in the US this day and he said Asia isn't quite as competitive.  

Embedded below are the videos of Robertson's Bloomberg interview:

Video 1
 

Video 2
 

Video 3

Julian Robertson Likes Google, Gilead Sciences: Interview

Tiger Management's Julian Robertson made his rare yearly media appearance on CNBC and talked about why investors have piled into stocks and some of his favorite equities these days.

Robertson noted that, "Bonds are so unattractive that people have no alternative to put their money... so they're jamming them into stocks.  I wonder what will happen when the bond market turns?"

Robertson continues to hold a large position in Google (GOOG) and thinks the company has such a great moat that "no one can breach it."

He also mentioned he likes Uber and uses it often.  He said he'd invest in Uber at twice the price that Google initially bought in at.

The Tiger Management founder also likes Gilead Sciences (GILD), citing their various drugs and management's ability to buy companies at good prices.  He sees cashflow ramping up from their Hepatitis C drug.

Robertson was also asked who he thinks is the best investor these days.  He replied:

"The man I respect the most in the business is probably Stan Druckenmiller.  He's just so smart and so good and so up on everything.  I think he's a fantastic investor."

Embedded below is a clip of Robertson's interview:

Julian Robertson Calls Environment 'Precarious,' Likes Ulta Salon, Delta & Others

Tiger Management's Julian Robertson was on CNBC last week and we wanted to highlight some of his comments from the transcript.  Stocks Robertson mentioned in the interview that he likes include Ulta Salon (ULTA), Delta Airlines (DAL), WuXi Pharma (WX), DigitalGlobe (DGI) and Norwegian company Schibsted,


On the economic landscape: "Well, I would-- characterize it as precarious. And-- I think everyone knows that. And-- I think that-- rather than just sitting back and-- saying, "What if this happens or that happens"-- we go ahead and find good companies and invest in them and-- bad companies and-- them."


On Ulta Salon (ULTA): "But I do see sweet stocks that I really love and like and-- think are going to do well. And-- one is-- a company that-- probably makes that beautiful toenail polish you've got on. A company called Ulta. And it has just beautiful beauty salons all over the country.  And it sells all the great products. And it's growing-- probably at 25%-- or so, will grow that way over the next three or four years. This year won't be quite that good. But-- it is just amazing what's happened. And-- how well they've caught this great movement. And-- we've interviewed a lot of women and Ulta is where they're going."


On what he looks for when picking stocks:  "Well, I-- one of the things that I'm particularly interested in is-- stocks and who's already picked them. And-- we've had some really good people here who have excelled in certain fields and-- I love to see really what they had bought recently. And-- Ulta is one of those stocks. And-- I think it's going to be a real good one for next year, so."


On the market: "That's really the way I'm looking at stocks primarily now. I think we're in the middle of a kind of a bubble market, where it's going to take something-- bubble-like to happen. And-- prick the bubble and we'll probably have pretty bad-- reactions to the breaking of the bubble. But-- probably not right now. And somehow I think we'll wallow through the political and fiscal crisis we have in front of us. And then we'll sort of see what happens ... I think the market is reasonably -- yes, is fully valued."


On DigitalGlobe (DGI):  "Digital Globe is I think a really great company. And it's had its virtual monopoly in the area where it is. And-- I think they're really these satellites that are up flying around are-- it's a great business to be in."


On WuXi Pharma (WX): "This year one of our best stocks has been-- a Chinese company which-- disintermediates-- PhDs. In other words, instead of getting a U.S. PhD for maybe-- $20,000 a month, you get a Chinese PhD for-- $3,000 a month.  And-- it's a company that's named Wuxi that supplies the really good Chinese researchers. And-- I've been in that stock for several years and it's just been lately that it's started to do anything. And I don't know why that is or was or anything. But it's been a really good performer of late-- Wuxi.  you're buying-- something at a fifth the price you were paying before. And-- you figure that's going to work at some time. And these Chinese PhDs are really well-trained and very, very good and-- Wuxi is able to come up with good ones."


On Twitter's IPO: "I don't plan to be (a buyer of the IPO).  That isn't to say that I won't.  But I don't expect to at this point.  I think social media is very long-lasting.  I just don't know the particular thing with Twitter."


On the airlines:  "Well, we're beginning to put some money in the airlines. And-- I mean, Delta airline, the airlines have been weeded down. And-- Delta Airlines (DAL) a very good story. I mean, it's at a very reasonable price and it's a good airline. I've talked to you about Ryanair (RYAAY), which is a low-cost producer in the world. I think that-- area is something to look at. And there-- they-- there have been-- I think some really interesting moves made in that industry.  Seems so much (consolidation) that I think it will slow down from here."


On Europe:"I think a lot of smart Europeans think that Europe has bottomed. And I-- I've been hearing that increasingly. And-- I-- I'm not completely sure of that. But-- it's certainly better than it was."


On Schibsted: "Schibsted is a very interesting company. We came upon-- Schibsted-- it was-- we had-- a model we were setting up on-- newspaper stocks. And Schibsted had come out as being wildly overpriced. And then we went into it in thorough detail and-- although it's true that-- Schibsted had still had its papers, it had gone tremendously into internet products.  And-- it is really an internet-- producer-- media producer of internet products-- throughout the world now and-- is going to grow at very rapid rates for the next several years. And-- so I think Schibsted is quite a terrific-- Norwegian company."


On his success: "(What) I've done is-- hired really good people and never been self-conscious of hiring people that were smarter than I am. And-- it's been fun for me to work with them and-- to play with them in all that we've had together. And-- so that's the secret sauce."


On being long or short this market:  "Well, I think you have to have kind of-- a little more--sort of lean towards-- being conservative in a market like this. It's just-- gotten a little too -- I would say raising cash or going short."

Interview With Julian Robertson & Nehal Chopra of Tiger Ratan

Tiger Management founder Julian Robertson made his rare yearly media appearance today on Bloomberg Surveillance.  Here are the highlights of the interview with the hedge fund titan:


Julian Robertson's Interview

On the hedge fund industry's overall performance:   "Hedge funds do better than the markets in bad markets because they are hedge funds. And the, the ideal for hedge fund is a vigorous active market that doesn't move a whole lot. There they can make it in both the long and short basis….In '07, hedge funds, I know ours, just blew it out….It was just unbelievable. And then in '08, we lost, you know much of that."

This isn't the first time he's touched on this as we've highlighted Robertson's thoughts on why hedge funds were underperforming.


On whether he sees the hedge fund industry as a group of top performers and everyone else or whether he bundles performance together:   "I don't think you can bundle everyone together. But I do think one of the things that's affected hedge fund performance over the last, well, really since it started really getting big around the '80s, is the increase in size of hedge funds. It was so much easier to compete with Bank Trust departments, with individual investors, with mutual funds than it is with other hedge funds. And I think the success of hedge funds in general has probably hurt the performance of individual hedge funds…Because the competition is tougher."

Robertson also noted that he's not constructive on Apple (AAPL) anymore and he likes Google (GOOG) more.  For more from the Tiger man, we've posted up notes from Robertson's talk at the Virginia Investment Symposium.


Nehal Chopra of Tiger Ratan Capital

One of the managers Robertson has seeded also joined the interview, Nehal Chopra of Tiger Ratan Capital.  While everyone will be focused on Robertson's soundbites, Chopra actually offered more points on investment process.

She focuses on change-driven opportunities.  She looks at corporate change, CEO change, transformational measures, bankruptcy emergences, and spin-offs.

Chopra's 3 things she looks at when looking for investments: a great management team (really in-depth look at the person's ability to drive results), a good business that is very cheap, and all of it is focused on change.

She says "it's a very targeted process that's repeatable ... change creates confusion.  Confusion creates dislocation of value."

Robertson again touched on how he focuses on competitiveness when looking for new managers to seed and noted Chopra has that.


Embedded below is the video of Julian Robertson's interview with Bloomberg Surveillance:

Notes From Virginia Investment Symposium 2013: Julian Robertson, Paul Tudor Jones & John Griffin

The University of Virginia's McIntire School of Commerce recently held its 2013 Spring Symposium entitled "Investing in Markets, Society, and Ourselves: Views from Investment Masters."  The panelists included hedge fund legends Julian Robertson of Tiger Management, Paul Tudor Jones of Tudor Investment Corp and John Griffin of Blue Ridge Capital.

Market Folly obtained access to a recording of the event through a Freedom of Information Act request and we wanted to highlight some brief notes and pearls of wisdom from these great investors.


Notes From UVa's Spring Investment Symposium 2013


Julian Robertson (Tiger Management)

On starting his fund:  He founded the firm with $8 million and at its peak managed $22 billion.  He noted how there wasn't as much short selling going on when he started.  He also said shorting is much harder today and back then you essentially had interest rate arbitrage on your shorts because interest rates were so much higher than dividends.  

Julian says he learned from Bob Wilson, who he labeled as one of the first hedge fund managers out there.

On traits he looked for in making hires at Tiger:  "We found out subsequently some real personality traits: competitiveness is right up there with brains and honesty."

As our Hedge Fund Wisdom newsletter drew attention to, Robertson recently sold out of Apple (AAPL) and he mentioned that at the event.  He says it's because he went back and re-read the book on Steve Jobs and realized his importance to the company as an innovator.

On the other hand, Robertson continues to like Google (GOOG) and thinks it's a great company.  He joked he can't wait to get some Google Glasses.  He also mentioned he still owns Daiwa Securities (TYO:8601) and has for a long time.

He says he feels you have to be playing Japan now given the policies there and notes that someone he knows is starting an all-Japan hedge fund.

Robertson called the hedge fund business 'a lifesaver' after losing his wife as he's been re-energized seeding managers and looking at businesses/investment ideas.


Paul Tudor Jones (Tudor Investment Corp)

He emphasized his focus on technical analysis as that's the method he learned for trading commodities originally.  He said, "I have one strong rule and that is when it comes to a stock if it's above the 200 day moving average, I'm gonna be long it, and if it's below it, I'm either not gonna own it or I'm gonna be short it, period end of story and I just let that govern every single thing that I do."

On crashes/financial crises:

"The crash of 1987 was a 100% derivatives inspired event.  So someone from my background, that came from trading futures, it was very easy for me to see what was about to transpire, because I understood that at that point in time, the tail was going to wag the dog.  If you look at the biggest financial crises of the past three decades, generally speaking they've been derivatives inspired.  Because that's the easiest way to bring knowingly and unknowingly a huge amount of leverage into any kind of particular instrument and it's the leverage that brings the volatility."

On Japan: Jones says to watch late next year for verification if Japan has been able to reduce their debt-to-GDP.   He said, "If it doesn't work, and all of a sudden they have a debt crisis, I would think you could just take 35% off all equity markets, including this one, by the time that one unwinds."

He also thinks Europe is pretty interesting with all the central bank action over there.

On when he might retire: He originally planned to potentially retire when his last child graduated from college, but he really enjoys the business and sees it as the biggest game in the world.  He wants to hang around to see how the Japan situation plays out. He said, "I think the next few years are gonna be, I think some of the most exciting times for macro in the last couple of decades."

On long/short strategies:  "When I think of long/short business, to me there's 5 ways to make money: 2 of those are you either play mean reversion, which is what a lot of long/short strategies do, or you can play momentum/trend, and that's typically what I do.  We've seen cheap companies get cheaper many, many times.  If something's going down, I want to be short it, and if something's going up, I want to be long it.  The sweet spot is when you find something with a compelling valuation that is also just beginning to move up.  That's every investor's dream."

Tudor Jones also noted that it's hard for a macro trader to not be perpetually long the US dollar against the South African Rand.

On short selling:  "I spent 20 years doing it, it's not the right way to make a living trading.  It's simply not.  And I've done really well on the short side.  There's nothing more exciting than a bear market.  But it's not a wonderful way for long-term health and happiness."


John Griffin (Blue Ridge Capital)

Griffin moderated the panel, though he also added some anecdotes of his own.

On Tiger's hiring practices: "Julian was always willing to take a risk on people who knew nothing if he felt they had characteristics of integrity, competitiveness, smart, and would be interested in the business.  And I think in someways that was a breakthrough back then."

Griffin impersonating Robertson after he initially met Andreas Halvorsen (who worked at Tiger and eventually founded Viking Global):  "Well, I mean, he may be one of the smartest people I've ever met, that's number one.  Number two, he's one of the most aggressive person I've ever met."

Griffin cited mentoring and having the open office layout at Tiger as some of the biggest reason for its success and the success of people who left to start their own funds.

Adding on to Jones' comments about Europe, Griffin said that if Draghi follows actions of other banks then "Europe stocks would fly because they're half the valuations."

Griffin also basically confirmed what everyone largely knew already: that Tiger alums often talk and share ideas.  He said Julian would call him and ask him for his favorite short idea then joked that after he told him the idea Julian would take off before Griffin could get Julian's best idea.

On investing: "In stock investing, the way I do it, because I'm not an activist, you're completely helpless.  You buy the stock, and if you don't like what the company's doing, you can sell the stock ... In investing, the only way to be really good at it, you have to accept the fact that everything is greater than yourself.  If it ever becomes anything to do with your action, unless you're an activist, you're smoked.  You're a taker.  The markets are like the ocean... you can't be in a boat and say 'bring it on' to the ocean."  


Investment Pitches

Two current students and one former student pitched investment ideas to the panel:

1. Long ADT (ADT): They highlight ADT's position as the market leader in a fragmented industry and cited their dealer network as compelling.  The main part of the thesis centers around the company's new Pulse product where people can turn off lights and control other household functions in addition to home security from their smartphones.

While the street is seeing 30% adoption rate of this system, dealers they spoke to are seeing 80% installation rates.  They think concerns from competition from cable companies like Verizon (VZ) and AT&T (T) is overblown as they've tried to enter the business in the past and haven't been as successful.


2. Short Canon (CAJ): Melting ice cube short as the company faces lower unit sales & average selling prices, as well as increased competition.  They think that smartphones are replacing 'point and shoot' cameras and that mirrorless cameras will be favored over DSLR cameras.

They also cite the company's weak printer market and think the conservative management team is a drag on the stock.  Julian Robertson said he thinks it's a very good idea.


3.  Short Truworths:  Additionally, a former UVa student and former analyst at John Griffin's Blue Ridge Capital, Hoda Alibair, came up and presented a negative view on South Africa's lenient consumer credit policies.

She highlighted that 66% of the GDP is from household expenditure and there's been a significant growth in unsecured lending and 76% of households are running at a 76% household debt to income ratio.  So what's the best way to play this?

She noted how the tendency would be to short the banks exposed to this (and we highlighted how Conatus Capital's David Stemerman said to short African Bank at the Ira Sohn Investment Conference).

She instead looked for other plays on this in the consumer sector and she laid out the case to short TruWorks.  She says the company has peak margins that just aren't sustainable.  Zara, a big retail competitor, is just now moving in to the country as well.  Over 60% of Truworths' growth came from a brand called Identity, and these consumers are truly low-income consumers.

Julian Robertson On Why Hedge Funds Are Underperforming

Tiger Management's Julian Robertson seems to be making his yearly media rounds.  Last week we highlighted his thoughts on what stocks he likes now.  Today we're posting up his interview with BloombergTV where he talks about why hedge funds are underperforming.


On Why Hedge Funds Have Had a Challenging 2012

The Tiger Management founder said that, “They are having a challenge because a lot of people in the hedge fund business have become so disenchanted with the economies of the world. Europe is a mess and we see the fiscal problems of the United States. Hedge funds -there are a lot of them that really are disaster funds now. In other words, they are really only going to be profitable in the event of a big disaster.”


On Hedge Funds That Are Underperforming

Robertson argues that, “I think right now they are really scared. They have made a mistake. They are now unhedged because they are so scared. They really will succeed only if we have rather disastrous period…We have to assume that a black swan event is very unlikely…They have gotten so bearish that some of them that that is what has happened. They will not get out of it without a black swan type event.

This is still the best place to run money. One reason the hedge funds are not doing as well as they used to is the competition is more hedge funds. And that the competition is so much better than any other form of competition.”

The latter comments he made are something he's expanded on previously where we highlighted Robertson on the hedge fund industry past & present.


Embedded below is the video of Robertson's interview with Bloomberg:



Be sure to also check out the other recent interview on what stocks Robertson likes now.

Julian Robertson on What Stocks He Likes Now: Interview

Tiger Management founder Julian Robertson made his rare television appearance for the year on CNBC yesterday and talked about how now is a time to put money to work in the market.

He thinks the economy and overseas worries are having a big effect on investors.  So many investors are frightened about Asia and Europe that they've almost "lost their way" without realizing that many great companies are trading at great prices.

He feels that this market is good for hedge funds because their namesake allows them to hedge against uncertainty and these potential risks.  However, he worries that some managers have hedged too much and they won't benefit unless there's a big fallout in the world economy.


What Stocks Robertson Likes

Robertson cited Apple (AAPL) as great company trading at a great value, something he says rarely happens.  He said, "Apple is now probably somewhere around 14-15 times next year's earnings, it's very, very reasonable for the kind of growth you can get."

Facebook (FB) was another stock Robertson mentioned as he likes the social media exposure and admires Mark Zuckerberg.  However, he does not "really know enough about the stock" to own a position.  He cited "younger people" that he's in partnership with as having owned Facebook early on back when it was private.  We'd assume he's referring to Chase Coleman's Tiger Global.

Robertson says he's looking for great companies and he's invested in a European airway company: Ryanair (RYAAY) as they're the low-cost provider.  He also likes Rolls Royce (LON:RR or RYCEY on the pink sheets) because many people see it as a luxury automobile when in reality it is a great supplier to the aerospace and other industries.  Steve Mandel's Lone Pine Capital has been an owner of Rolls Royce.

In terms of financials, Robertson cited Capital One (COF) and Ocwen Financial (OCN).  The latter, he says,  is a mortgage servicing company that he thinks has a lot going for them.

Robertson argues that steel companies AK Steel (AKS), US Steel (X), etc are overvalued and we'd need to see the economy really takeoff to warrant those multiples.


Embedded below is the video of Julian Robertson's interview:



For more on this legendary investor, head to Julian Robertson's thoughts on the hedge fund industry past & present as well as his past extensive interview with Columbia Business School.

Julian Robertson on the Hedge Fund Industry Past & Present

Tiger Management founder Julian Robertson made a rare media appearance with Tom Keene on Bloomberg Television we wanted to highlight.


On How Hedge Funds Differ Now Versus Then

Robertson says, "the hedge fund business is tougher today than it was 15 years ago... there's more hedge funds in the business.  And hedge funds are the toughest competition for other hedge funds."

He also points to borrowing costs going up for shorting.  In terms of management fees, he feels that it's really a self-fulfilling prophecy based on performance.  Funds that perform well will be able to charge high fees while lower performance could lead to lower fees.

Robertson argues that the problem with hedge fund performance has been stock selection, rather than macro issues.


On How He Invests

In investing, he says he focuses on management and you have to give them a long period of time.  He's a long-term investor of course and doesn't focus on short-term gyrations.

He notes he still has a position in Sherwin Williams (SHW).  We've posted an in-depth resource on his investment philosophy with a recent interview with Robertson by Columbia Business School.

On where he sees value, the Tiger Management man says you can probably find some in Europe right now, even though there are obvious problems (though he didn't mention any specific names).  We've also highlighted Avenue Capital's Marc Lasry on opportunities in Europe.


Embedded below is the 12-minute interview with Julian Robertson:



For more on this legendary manager, we've posted a profile/biography of Julian Robertson.

Interviews with Julian Robertson & Jim Chanos: Columbia Business School Newsletter

We wanted to highlight the latest version of Columbia Business School's newsletter: Graham & Doddsville.  In their latest edition, they publish interviews with Tiger Management's Julian Robertson and Kynikos Associates' Jim Chanos,


Below are some excerpts we found insightful from the Tiger Management founder:

Julian Robertson on his investment philosophy: "I believe that the best way to manage money is to go long and short stocks.  My theory is that if the 50 best stocks you can come up with don't outperform the 50 worst stocks you can come up with, you should be in another business ... For my shorts, I look for a bad management team, and a wildly overvalued company in an industry that is declining or misunderstood."

Robertson on evaluating an initial idea: "The first thing is, is the management decent and honest?  A lot of people don't really care about that.  The way to look into that is to do some diligence."

On qualities he looks for in seeding funds: "Competitiveness.  Is he a competitor?"  He references that he often likes athletes due to their will.

Robertson's favorite plays (aside from Google and Apple): "I love WuXi (WX) which is a Chinese-based employment agency for PHDs, primarily in the drug industry ... the company's earnings are certainly increasing beautifully at about 20% a year and it still sells at 10x earnings."



Good insight from the interview with the Kynikos founder:

Jim Chanos on his early experiences in investing and lessons learned: "I recommended a short position in Baldwin-United at $24 ... the stock promptly doubled on me.  This was a good introduction to the fact that in investing, you can be really right but temporarily quite wrong."  (He started Kynikos with $16 million, $1 million of which was his own money.)

Chanos on long versus short: "I've learned there's a big difference between a long-focused value investor and a good short-seller.  That difference is psychological and I think it falls into the realm of behavioral finance ... if you're a short-seller, that's a cacophony of negative reinforcement.  You're basically told that you're wrong in every way imaginable every day.  It takes a certain type of individual to drown that noise and negative reinforcement out and to remind oneself that their work is accurate and what they're hearing is not."

On skills essential to succeed: "Start first with the SEC filings, then go to press releases, then go to earnings calls and other research. Work your way out.  Most people work their way in."

Chanos' current positions: Short natural gas industry in the US, betting against the coal industry.  He also thinks for-profit education business is flawed.  In his Opportunity Fund, he's currently short Chinese property companies and long Macau casinos.  We've also posted some of his other short positions.



The newsletter also features write-ups from MBA students on Avon Products (AVP), Ingersoll-Rand (IR), Legg Mason (LM), and H&R Block (HRB) as well as interviews with Tom Russo and Alexander Roepers.

Embedded below is the full Graham & Doddsville Spring 2012 issue:




For more on these particular investors, we've posted up:

- Jim Chanos on short selling: the power of negative thinking

- Charlie Rose's 1998 interview with Julian Robertson