The Return Of Bill Miller

Bill Miller, who beat the S&P 500 for a record 15 straight years before his portfolio was decimated in the financial crisis, has returned with a vengeance, with his fund in the top 1% of those in its class over the past three years and the top 7% over the past five years. And now Miller is loading up on stocks from two sectors that pounded him in the crisis.

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Forester: More than Meets the Eye in Housing

Fund manager Tom Forester, who was the only equity fund manager to make money in 2008 when the housing and financial crises rocked markets, says issues still lurk beneath the surface of the rebounding housing market.

While foreclosures and delinquencies have declined quite a bit, Forester tells Investor’s Business Daily that many foreclosed homes have been bought in recent years by hedge funds or wealthy investors, who wanted to rent out the properties to make money. But an oversupply of rental properties is curtailing their efforts. “Many hedge funds paid full price and more, leading to a price spurt,” Forester said. “Many of the early funds are getting out.”

Forester also says many home loans that have been reworked to create lower monthly payments are in trouble. “Most of those loans are likely to default within three years,” he said. And he says that rising interest rates have led to slowing refinancing activity, hurting lenders.

One lender that Forester does own: U.S. Bancorp. “We own (USB) because they have a strong balance sheet and good underwriting,” he said. “Loans in their portfolio don’t have credit problems. But their mortgage component is a (potential) head wind for them.”

Forester appears to have his Forester Value fund portfolio very defensively positioned, with healthcare and consumer staples being his two largest sector holdings at the end of the third quarter and about 25% of his portfolio in cash.

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Shiller Sees Housing Rising In Short Term, Unsure About Long Term

Yale Economist and housing guru Robert Shiller says that he doesn’t think the U.S. housing market is in “boom territory”, but he does compare the current environment to the start of the late 1990s/early 2000s housing boom . Shiller tells FOX Business Network that he thinks home prices will probably keep going up for another six to 12 months. But after that, he says he’s not sure, as he’s worried that an environment of housing shortages and record-low rates, which were driving prices higher, is ending.

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Rosenberg Doubtful Of Housing Recovery’s Legs

The U.S. housing recovery has encouraged many investors in recent months, but Gluskin Sheff & Associates Chief Economist David Rosenberg isn’t sure the rebound has legs. Rosenberg tells CNBC that, while “we’ve certainly had a housing recovery,” the recovery has been in large part a result of housing starts — which plummeted during the Great Recession — catching up to underlying demographic demand. To keep improving, Rosenberg says more first-time buyers need to be involved. Right now, they make up only about 30% of buyers; if that number crosses 40%, Rosenberg says he’d be a believer in the recovery continuing. Rosenberg also says he thinks the stock market is “fully valued”, though he sees opportunities in non-cyclical dividend stocks.

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