Quick summary:
Andy Redleaf and Jason Cross participated.
WBMIX up 5.13% for 3Q and 11.99% through 3Q.
AUM now $356M, incredible rush from when Scott first alerted us to this "
tiny fund" about a year ago.
The PMs have turned cautious on the market. Beta was only 0.2 at end of 3Q. They've gone from 54% net equity exposure end of 2Q to 6% currently.
"Not saying there is a collapse imminent..." Rather, uncomfortable with broad equity exposure and PEs at 17, when Fed still has to unwind its experiment.
Instead, they are focused on specific equities. Both long and short, targeting so-called "story stocks" for the latter. The market, they relayed, is driven by "fear and fear." Fear of losing money, for sure. But also fear of missing the boat...and that's where shorts may pay-off.
For 2014 they will be looking to CAP_EX to see if industry starts to invest. If private industry does not, they will remain skeptical on the economy "...cause it ain't gonna come from public sector." If CAP_EX does increase, then they will be more bullish.
While recognizing EM has relatively "better" valuations, they have a hard time getting too excited about it..."wary of macro drivers." On the last call, they admitted EM is a little out of their circle of competence. That said, Mr. Redleaf imposes a threshold question each time they think about an EM investment: "If things turn problematic, how will we get paid?"
As always, I found their comments open and insightful.
Here's link to their 3Q
commentary.
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