ValueAct’s Jeff Ubben Is Selling On “Overextended Valuations”, Builds $3 Billion Cash Pile
by Tyler Durden
ZeroHedge.com
Feb 23, 2017
The market’s relentless, grinding levitation to daily all-time highs without a pause, has some of the most prominent investors reacting in very different ways.
Last week we reported that Prem Watsa, considered by many as “Canada’s most famous investor”, threw in the bearish towel, when he announced that his investment fir, Fairfax Financial was covering its firm’s equity hedges after suffering a $1.1 billion net loss on its investments in Q4, and $1.2 billion for all of 2016.
Still, despite folding on his well-known bearish stance, Watsa said he expects further volatility in the year ahead during the conference call, telling investors 20-30% fluctuations in stocks prices are “very much possible,” warning that quarterly income will fluctuate “wildly” and investment income “will only make sense in the long term”, but highlighting opportunity in volatile markets, so long as investors are extremely selective stock pickers.
Then, overnight Reuters reported that another prominent hedge fund manager, ValueAct’s Jeffrey Ubben, said that his firm had been taking money out of the capital markets as valuations have become overextended, leaving it with $3 billion in cash.
“I really feel that the large-cap activist plays are very treacherous with high PEs (price-to-earnings) and not a lot of growth,” Ubben said, speaking at the Reuters “Future of Shareholder Activism” event in New York. He told Reuters that he was not focusing on any particular sector but instead looking for bets on idiosyncratic, mid-sized companies such as spin-offs and “weird” corporate structures.
The Rest…HERE
