In a somewhat odd interview at Barron’s, hedge fund managers Kevin Duffy and Bill Laggner of Dallas-based hedge fund Bearing Asset Management lay out their view on what they’re shorting and going long.
What’s strange is that the fund is super tiny — just $60 million under management. But they’ve done well, so for now they get to be experts.
Two years ago, they were shorting Fannie Mae, Freddie Mac, money-centre banks and brokers, builders, mortgage insurers, etc. Here’s what Duffy and Laggner are thinking today.
Bearing is long on:
- gold (they think it could rise in value to as much as four times the S&P 500)
- consumer staples, discount retailers and pharmaceuticals
Bearing is short on:
- S&P 500
- Japanese and U.S. government long-term bonds (“heavily short”)
- Goldman Sachs
Why short Goldman? “We’re essentially short the political economy, and the most politically connected firm is Goldman Sachs.”
At the heart of our instability, they say, is fractional-reserve banking. They say the government has essentially socialized risk and prevented the bank run, which used to impose discipline on an unstable system.