Why hedge funds are buying Teletubbies
HEDGE fund bosses revealed bets on everything from Tesla to Teletubbies at a millionaires’ gathering in New York this week.
The Sohn Investment Conference saw 3,000 traders discuss where prices would rise and fall – and how much cash they could make in the meantime.
It was a chance for rivals to outdo each other in taking contrarian gambles, and a rare window into the minds of these so-called masters of the universe. So if you want to emulate some of the richest investors in the world, these are what five of the best money managers believe are going to be the biggest risers and fallers this year. THE US STOCK MARKET America’s blue-chip S&P 500 index has surged to all-time highs since the election of Donald Trump as president, as investors bet that he will slash taxes, cut red tape and splurge on infrastructure. But Jeffrey Gundlach of DoubleLine Capital believes prices will soon fall. He even produced a slide showing a hellish painting by Expressionist artist Max Beckmann called The Night to explain what he thought of traders betting on continued rises. Gundlach, a former drummer in a rock band, is said to have referred to himself as ‘ the Godfather’ and ‘the Pope’ in emails to colleagues.
The 57-year- old – who predicted Trump’s shock victory at last year’s Sohn meeting – had a falling out with former employer TCW Group when it sacked him for plotting to start a rival company in 2009.
It accused him of stealing data and said it found bags of marijuana, 34 hardcore pornographic magazines and 36 sexually explicit DVDs and videocassettes in his former offices.
The two sides reached a settlement at the end of 2011. TELETUBBIES Debra Fine, who manages a £1bn fund, Fine Capital Partners, believes that old children’s TV shows are significantly undervalued.
She threw her weight behind Canadian business DHX Media, which buys programmes that were popular a decade ago. Its portfolio includes Teletubbies, Bob The Builder and Inspector Gadget. She argued that unlike adults, children would watch the same shows over and over. And if Teletubbies achieves just half the success it had in the Nineties, this alone would double DHX’s profits. CRISIS-HIT AIRLINE United Airlines has had a disastrous month after security guards were filmed dragging a bloodied passenger off an overbooked flight.
But keen amateur pilot Brad Gerstner, 46, who runs £310m fund Altimeter, still believes the stock could double or triple in the next few years as a raft of mergers have reduced the fierce competition which previously drove down ticket prices. VISIONARY’S CAR FIRM Chamath Palihapitiya of Social Capital is a strong believer in the hype around Silicon Valley’s electric car maker Tesla. He suggested founder Elon Musk was ‘ our generation’s Thomas Edison’.
Palihapitiya, 39, became a Facebook employee when it was less than a year old and then set up his £930m venture capital business in 2011. He argued the best way to back Tesla was by buying corporate bonds due to mature in 2022. BELEAGUERED BANK Italian Davide Serra of Algebris Investments has long been keen on assets in his home nation. And he said troubled lender UniCredit was an excellent buying opportunity.
Last year the bank said it would slash 14,000 jobs, shut a quarter of its 3,800 branches and raise £10.9bn on the markets in a battle back to health. But he believes it will be boosted by consolidation and its exposure to the strengthening German economy.
The father- of- four, who spends several weeks each year yachting with wife Anna, a former Gucci model, is also gloomy on the UK economy, insisting Brexit will have an effect in coming months.