Go long US, Japan and short China, EM
Japan and the US are the markets that both Stateside institutional investors and hedge funds are looking at, while certain China stocks may prove good short-selling opportunities, according to panelists at Salt Las Vegas, which wrapped up on Friday.
Some delegates strayed slightly from the conference proceedings to take part in extra-curricular activities. We overheard one man invite a fellow delegate to a yoga studio in the city where the bulk of the membership comprises women from an industry that specialises in, shall we say, diminishing returns when measured in clothing.
A few other delegates were seen skipping the lunchtime speakers to take a seat at one of the Bellagio hotel’s many gaming tables.
We stayed on course to provide some key takeaways from various panels.
Hedge fund managers eye US inflows
“Money's going into the US, away from emerging markets,” says John Bader, chief investment officer of Halcyon Asset Management, a $12 billion multi-strategy hedge fund. “It's going into multinational leading companies, away from commodities.”
Rivulet Capital chairman Oscar Schafer, a fellow speaker on the ‘Inside Access’ panel on manager viewpoints, concurs with Bader. “The stock market is going to do really well [and the] US is the best place to invest,” says Schafer, a hedge fund veteran and noted stock-picker.
China plays might be better on the short side
Carson Block, founding partner of Muddy Waters Research, says he’s betting against Standard Chartered’s loan book through five-year credit-default swaps. He believes the bank’s focus on emerging markets will be reflected in its loan books, making it vulnerable to mainland China.
“China is a massive investment bomb... and we don't know when it unwinds," he said, speaking on a panel focusing on the best ideas for the coming year. “China really is the keystone of the emerging markets, so if China eats it, a lot of [emerging markets] will, also.”
He also reiterated his stance that mainland internet company Qihoo 360 Technology is “a fraud”, although he hasn’t shorted the stock, as “you also need a catalyst for the fraud to blow up”.
Institutions are still investing in hedge funds
“If you follow the insurance industry, you’ll see that a number of insurance companies are increasing their equity exposure because of the low [interest] rate environment, and we're seeing a trend toward an increase in hedge fund assets,” says Michael Mazzola, head of alternative investments at MetLife.
“We're looking for diversification [and] access to managers and strategies that are otherwise difficult to execute on our own balance sheet," he said during a panel on institutional investor insights. “In particular, on the hedge fund side, [we seek] the ability to be both long and short, which is much more difficult to do from an insurance company framework.”
Corporate cabanas
A special mention goes to the service provider-sponsored poolside cabanas at the Bellagio hotel, which were a new feature introduced this year and provide a chilled out, aquatic equivalent of Rugby Sevens corporate boxes.
We stopped by Standard Chartered’s cabana to set down our briefcase and rest on a deck chair during a coffee break. Despite the presence of swimsuit-clad sunbathers just a few metres away, the fact that we were in business attire didn’t seem terribly odd, as the friendly StanChart hosts were similarly dressed and offering chilled beverages and fresh fruit platters. So welcoming was the atmosphere that Carson Block probably wouldn’t have been turned away.
It’s not certain as to whether sponsored pool pleasantries will be offered during Salt Singapore this autumn. However, we have been reliably informed that it was moved up the calendar by a month to September 24-27 to coincide with Formula One weekend in the Lion City.