Will the U.S. Treasury market fall? Money manager Ken Heebner is counting on it. In fact, Bloomberg reports that Heebner bet 21 percent of his stock fund on it. U.S. Treasuries have been all over the place in the past few years, and for investors who have bet big one way or the other on them, times have been tough. Short sellers have mostly lost over the past few years, and we termed treasuries “the new widow makers”. We detailed our reasoning here, and it looks like Ken Heeber could be the latest victim.
Heebner uses his $1.44 billion CGM Focus Fund to place bets on various stocks. A regulatory filing this week shows the fund sold $300 million in U.S. Treasury bonds short toward the end of 2012. Heebner’s fund has been trailing similar funds in recent years.
The following is our rough coverage of the 2021 Sohn Investment Conference, which is being held virtually and features Brad Gerstner, Bill Gurley, Octahedron's Ram Parameswaran, Glenernie's Andrew Nunneley, and Lux's Josh Wolfe. Q1 2021 hedge fund letters, conferences and more Keep checking back as we will be updating this post as the conference goes Read More
According to Bloomberg, Heebner isn’t the only one who thinks betting against U.S. Treasury bonds is a good idea; Jim Rogers and Nassim Taleb agree with him (he didn’t mention that they likely lost money on the bet). However, the problem is timing exactly when it’s a good time to bet against them because the market has been especially volatile recently. Additionally, the Federal Reserve can effectively control the yields.
Treasuries rose as the economic climate in Europe worsened and investors looked to the U.S. economy as a safe haven for their money. Pierpont Securities’ chief economy told Bloomberg that betting against bonds now is good for investors who are investing for the long term rather than the short term.
Heebner’s fund has lost almost 10 percent of its value every year for the past five years, which is worse than the largest majority of funds which follow similar strategies. However this time he believes shorting U.S. Treasury bonds is a good move because he believes the U.S. economy will strengthen.