Bloomberg’s Hedge Fund Summit 2012 begins with a panel discussion consisting of Caglar Somek, Partner and Global Portfolio Manager, Caravel Management LLC, a long only equity hedge fund, it is a global fundamental fund. Thomas E. Sandell, Founder, Chairman and CEO, Sandell Asset Management Corp. runs a special situations, activist hedge fund. Finally, Abby Joseph Cohen needs no introduction to regular readers.
All times are EST:
8:45AM: Thomas E. Sandell talks about his investments in equities, where he looks to at least a 30% upside, as opposed to credit, because of equity volatility risk. One of the companies he bought was taken over by carl Icahn.
8:48AM: Abby Joseph Cohen asks whether concerns are reflected in price? She believes that equities were dangerous a year ago, but the risk was priced in. The US economy is recovering, consumers are starting to spend as debt levels come down. Large corporations have really strong balance sheets, yet many companies are issuing debt due to low rates. But smaller companies face trouble. Nonetheless, she predicts GDP of 2% for this year.
8:51AM: Using the CBO estimates for this fiscal year, deficit to GDP ratio should go down to 4%. We are slowly growing our way out of the debt problems, even though we need to deal with longer term issues.
8:52AM: If we have a high unemployment rate and have a 2% GDP growth, we need to be careful about employing austerity.
8:53AM: Caglar Somek says when the market crashed in July/August, it was hard to do any merger arbitrage. Now there is three trillion on corporate balance sheets, for which they earn nothing in the bank. These companies will deploy capital, and it will be accretive to stock values. There is a lot of value in Europe. The macro picture in the US and Europe is not great. But companies can buy revenues, from many Asian companies or emerging markets.
8:58AM: Pimm Foxx, a Bloomberg anchor mentions that in the 1930s, Argentina had the fourth highest GDP per capita.
8:59AM: Thomas E. Sandell is bottom up, but does not like Argentina securities. The Government is going backwards not forwards. He does not like GCC or other small countries, he invests in countries like Turkey, where he is from.
9:01AM: Thomas E. Sandell takes a contrarian outlook on Vietnam. All the negative headlines are positive for the long term. The people in jail for fraud, would have been in jail five years ago in the US. The Vietnamese Government is restructuring SOEs, and they are no longer backed by the Government.
9:03AM: Vietnam has a young population, which is good for consumption. Even with lower short term GDP, the Government is taking a long term outlook.
9:04: Abby Joseph Cohen thinks the US S&P 500 could grow 10-15% in 12 months, and Europe to grow more due to low valuations.