AP ImagesIt’s been about a month since the Sohn Investment Conference took place in New York City, and one hedge fund manager’s presentation is already standing out to us — Stanley Druckenmiller’s.
The Sohn Conference is known for attracting ideas from the biggest players in the world of investing, but their presentations vary in terms of precision. Some investors focus on a specific company (Bill Ackman’s presentation was solely a long thesis for Procter and Gamble) while others tend to give their macro overview of markets and the world at large (like Jeff Gundlach).
Stanley Druckenmiller’s presentation sat in a kind of middle ground between the two. His ideas were actionable, individual calls, but also quite prescient on a macro scale.
That said, (as many presenters mentioned when they had the floor) the investment ideas presented at Sohn aren’t things that you’re going to wake up and see running markets the day after the conference. They take time.
So we’ve been keeping some salient themes in mind, watching markets for some good calls etc., expecting results in a few months.
That’s why one of Druckenmiller’s salient themes won’t get out of our heads. He was majorly bearish on China and commodities, and told listeners to short the Aussie dollar, and that’s being played out magnificently right now.
We’ve seen a ton of bad data from China since the Ira Sohn conference a month ago (remember PMI?), and according to Druckenmiller, that spells doom for commodities as well. The asset class enjoyed a brief respite from the sad end to its supercycle when China had a huge stimulus in 2008 — now that help isn’t coming.
That crunch on commodities and China has resulted in the beautiful execution of one of Druckemiller’s most clear, actionable ideas — short the Aussie dollar. It has fallen 94 cents against the dollar.
And look at that ugly slump since May, when the conference took place — actually it’s not really a slump, it’s more of a dive.
A few of Druckenmiller’s other ideas remain to be seen — he’s short the market long term, thinks the end of QE will result in terror for U.S. markets, long Google (low exposure to China), and thinks the Bank of Japan is doing the right thing with its Abenomics stimulus. Obviously, all those things are up for debate.
But when we see something work, we have to say something.
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