Hedge Fund Manager Michael Hintze On Why There Isn't Any Inflation Yet

Michael Hintze’s next bets are on the Euro, gold, and oil.

Hintze was one of the most successful hedge fund managers of 2010, after his $1.15 billion Directional Opportunities Fund rose 31%, but he’s been around for a while.

For 2011, here’s what he’s predicting, from Bloomberg‘s account of his latest investor letter.

It’s good to read because it’s not hyperbolic about any one thing, like some people tend to get:

“Euro weakness, especially via currency, is an opportunity.”

“Some European exporters will “benefit dramatically” from a weakening currency in their home markets in 2011.”

He doesn’t think inflation is an immediate risk.

“There is no immediate inflation because the velocity of money is, I believe, low in most Western economies.”

“There is also “excess capacity in the system.”

But he’s still hedging against it.

“Inflationary trades, which include going long commodities, such as gold and oil, via options structures are also useful additions to the portfolio.”

Overall, he’s bullish on 2011.

From Bloomberg:

Hintze predicted that stocks and bonds will “generally produce positive returns” in 2011 because the Fed’s actions will stimulate global markets, companies are repairing balance sheets and “emerging economies” such as India and China are growing.

Despite all this talk about commodities and currencies, currently, Hintze’s biggest long investments are in BHP Billiton (his biggest holding), Six Flags, Comcast, Discovery Communications, and Mead Johnson Nutrition (as of the end of 3Q according to his latest 13F filing) – and God.

The hedge fund manager told the Wall Street Journal earlier this year:

“Is it Luke 12:48?,” he asks. “‘Unto whomsoever much is given, of him shall be much required.’ I have been very fortunate, so much is expected of me. Religion is not unimportant. I do believe in Christ, but I would not hold myself up as any paragon of virtue at all—far from it, really.”

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