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<table border="0" cellpadding="3" cellspacing="1" width="100%" class="forumline"> <tr> <th class="thCornerL" width="22%" height="26">Author</th> <th class="thCornerR">Message</th> </tr> <tr> <td width="22%" align="left" valign="top" class="row1"><span class="name"><a name=""></a><b>Guest</b></span></td> <td class="row1" height="28" valign="top"><table width="100%" border="0" cellspacing="0" cellpadding="0"> <tr> <td width="100%"><img src="templates/subSilver/images/icon_minipost.gif" width="12" height="9" alt="Post" title="Post" border="0" /><span class="postdetails">Posted: Thu, Jul 10 2008, 3:44 pm EDT<span class="gen"> </span> Post subject: Re: America's Hottest Investor</span></td> </tr> <tr> <td colspan="2"><hr /></td> </tr> <tr> <td colspan="2"><span class="postbody">Here is a recent interview of Ken Heebner: <br /> <br />Portfolio manager casts an optimistic eye on economy <br /> <br />July 6, 2008 <br /> <br />Ken Heebner, a portfolio manager at Capital Growth Management in Boston, has delivered some of the best investment performances of any manager in America. He often operates as a contrarian, avoiding technology stocks in the late 1990s and betting early against mortgage companies several years ago. Heebner, 67, spoke last week to Globe reporter Ross Kerber on where the economy is heading. <br /> <br />There's a lot of pessimism about the economy. What's your take? <br />My view of the world is quite different. I think people are very concerned about our economy, they're starting to realize there could be higher inflation to come. The consensus is that we'll bring the rest of the world into our recession. But my view is we've probably seen the weakest period of economic activity. The economy may not be robust in the next year, but it's seen its low point and at some point will move higher. <br /> <br />That's reassuring, but how can this be? <br />I understand how serious the housing problem is. But it's not as broad a problem as widely perceived. It's reduced everyone's sense of financial well-being, but a third of homeowners don't have a mortgage, and the vast majority of people made down payments and have fixed-rate mortgages, so there's no financial strain. For them, the only impact is the psychological impact of declining housing prices. So therefore I don't think this is as big a deal as everyone else does. We've passed the point of maximum distress. <br /> <br />What evidence is there for that? <br />First, on manufacturing, the Institute for Supply Management's index seems to have reached a low of 49, and when this gets to 45, that's a recession. Additionally, the Fed started aggressive ly easing interest rates, and the impact of those eases will start to be felt. But I think the driver of the global economy is the developing countries, with a population of 3 billion. China, Russia, India, Brazil, and a lot of smaller countries. If you add up Japan, Europe, and the US, you're talking about a little less than 1 billion people, and you have 3 billion people going strong. <br /> <br />But those 3 billion have less money and less GDP. How will that drive the world economy? <br />These people don't have the roads, the airports, the infrastructure - and the building of these creates big demand for industrial raw materials and energy in all forms. In a nutshell, these foreign countries place a high priority on growth. The broad pattern is they're more concerned about maintaining growth than other factors, be it pollution or inflation. <br /> <br />Globe columnist Steven Syre has twice named you fund manager of the year, and Fortune magazine recently dubbed you "America's hottest investor." So can you talk about what you are buying and selling? <br />The only two stocks I've made references to [owning] in the last few months are Petrobas [Brazil's Petroleo Brasileiro SA] and Schlumberger [an oil-services company]. I'm changing the portfolios so frequently. <br /> <br />What do you expect US growth rates to be? And inflation? <br />Our economy will surprise us on the upside, growing between 2 to 4 percent over the next 12 months. I'm a bull on the US economy. Clearly housing has been a negative, but there's only four states where they walked housing prices to Never Never Land, and now it's coming back to a realistic level. Because of increasing demand from these developing economies, I can see, three years from now, inflation approaching 10 percent. <br /> <br />How can you be such a bull on the economy and say inflation could be such a potentially big problem? <br />I didn't say it's a big problem. In the 1970s and 1980s, when inflation was high - we made good money investing in stocks in that period. I'm running a portfolio. I'm not running the country. The challenge inflation presents is that price-to-earnings ratios tend to decline. So when you invest money, you want to have enough growth to offset that compression. <br /> <br />What impact will the outcome of the US elections have on the market? <br />[Barack] Obama says he wants to eliminate the Bush tax cuts and take the maximum marginal tax rates to 39.6 percent, then institute some Social Security taxes - and says he'll increase the capital gains rate, now 15 percent. That would tend to be a negative factor. It's hard to quantify, but when I think what effect the election could have on the investment world, taxation is where there's a clear difference [between the candidates]. But it would probably be easier for Obama to say, let's drill offshore for oil. That would be a huge benefit to oil-services company stocks. . . . I do think Obama's going to be elected president of the US, and the Democrats [will] win a huge victory in November. <br /> <br />... <br /> <br /><a href="http://www.boston.com/business/articles/2008/07/06/portfolio_manager_casts_an_optimistic_eye_on_economy/" target="_blank">http://www.boston.com/business/articles/2008/07/06/portfolio_manager_casts_an_optimistic_eye_on_economy/</a></span></td> </tr> </table></td> </tr> <tr> <td colspan="2" height="1" class="spaceRow"><img src="templates/subSilver/images/spacer.gif" alt="" width="1" height="1" /></td> </tr> <tr> <td width="22%" align="left" valign="top" class="row2"><span class="name"><a name=""></a><b>Fortune</b></span></td> <td class="row2" height="28" valign="top"><table width="100%" border="0" cellspacing="0" cellpadding="0"> <tr> <td width="100%"><img src="templates/subSilver/images/icon_minipost.gif" width="12" height="9" alt="Post" title="Post" border="0" /><span class="postdetails">Posted: Tue, May 27 2008, 9:01 pm EDT<span class="gen"> </span> Post subject: America's Hottest Investor</span></td> </tr> <tr> <td colspan="2"><hr /></td> </tr> <tr> <td colspan="2"><span class="postbody"><span style="font-weight: bold">"Just how good has Heebner been? We may well be witnessing the most dazzling run of stock picking in mutual fund history. Since May 1998, Focus has an average annualized return of 24%, the best ten-year record of any U.S. mutual fund, compared with only 4% for Standard & Poor's 500.</span> <br /> <br />America's hottest investor <br /> <br />Never mind the rocky market. After a string of supersmart calls, mutual fund manager Ken Heebner is putting up the best numbers of his sterling career. <br /> <br />By Jon Birger, senior writer <br /> <br />(Fortune Magazine) -- The best mutual fund manager around - a.k.a. Ken Heebner of Capital Growth Management - looks restless. He is sitting in a conference room at Goldman Sachs's Boston office, listening to a young analyst pontificate about all the trends he thinks will sweep the markets in coming years. Oil demand outpacing supply. The rapid growth of agriculture. The increased sway of sovereign wealth funds. And on and on. <br /> <br />Heebner couldn't care less. His flagship fund, CGM Focus (CGMFX), has already made a killing on energy and agriculture, and Heebner has no patience for the pet theories of this or any other analyst (or economist or strategist). "I want information, not opinions," Heebner will later tell me. Then, just as the meeting is looking like a washout, Goldman analyst Marc Fox lets something slip that starts Heebner's brain whirling. <br /> <br />Fox mentions that sovereign wealth funds are diversifying out of bonds and bank bailouts and into broad portfolios of common stocks. Coming from Goldman, the world's top trading house, this is valuable information. Heebner is one of the few fund managers who routinely engages in short-selling, and the prospect of a couple of trillion dollars flooding the equity markets should be enough to give any short-seller pause. <br /> <br />Immediately Heebner is peppering Fox with questions about where all this sovereign dough is going, wondering, for instance, whether Goldman is now recommending "short-busting" strategies to its worldwide clientele. (Short-busting involves trying to drive up the prices of stocks that a lot of investors have sold short.) "All I can say," Fox replies, looking a tad overwhelmed, "is you're multiple steps ahead of me." <br />... <br /><a href="http://money.cnn.com/2008/05/23/magazines/fortune/birger_americas_hottest_investor.fortune/index.htm" target="_blank">http://money.cnn.com/2008/05/23/magazines/fortune/birger_americas_hottest_investor.fortune/index.htm</a></span></td> </tr> </table></td> </tr> <tr> <td colspan="2" height="1" class="spaceRow"><img src="templates/subSilver/images/spacer.gif" alt="" width="1" height="1" /></td> </tr> </table>
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