Interesting read. Note the SaxAngle has nearly 50% of its portfolio in cash although dare say we know anywhere near as much as legendary Seth Klarman. I’d like to short more but the crap keeps rising. Our rationale is simpler. We can add a few things that trouble us too.
Insider buying has come to a halt yet selling remains unabated. It’s hard to find much if anything insider’s are buying and when you do it doesn’t seem to attract much interest and performs rather dismally. The stuff that insiders are dumping continues to rise. Contrary to common past arbitrage practice both companies stock rise in an all stock acquisition. The Chinese market, 2nd largest economy in the world, is at 2007 levels yet Chinese Internet stocks are on fire.
With 40% of the portfolio in cash and having returned $4 billion to clients at year-end, Seth Klarmans Baupost Group has “drawn the line in the sand” as they reflect on the diminished opportunities in the so-called “Truman Show” market we see today. In the face of mixed economic data and at a critical inflection point in Federal Reserve policy, Klarman notes, the stock market, heading into 2014, resembles a Rorschach test – “what investors see in the inkblots says considerably more about them than it does about the market.” From “born bulls” to “worry genes” and from Bitcoin to flash-mob-speculation, “there is a growing gap between the financial markets and the real economy…and the overall picture is one of growing risk and inadequate potential return almost everywhere one looks… as every Truman under Bernanke’s dome knows the environment is phony.”
via Seth Klarman On “Born Bulls”, Bitcoin, & “The Truman Show” Market | Zero Hedge.