Sunday, February 26, 2012

Hussman Annual Report

Hussman has published the 2011 annual report for his funds. I thought this was notable:

As of December 31, 2011, Strategic Growth Fund had net assets of $5,772,828,014, and held approximately 150 stocks in a wide variety of industries. The largest sector holdings as a percent of net assets were health care (33.5%), consumer discretionary (23.9%), information technology (22.0%), and consumer staples (12.4%). The smallest sector weights relative to the S&P 500 Index were in energy (2.8%), telecommunications (2.3%), financials (2.3%), materials (1.2%), and industrials (less than 0.1%).
Why is Hussman underweight energy? I understand being underweight financials, but a huge consumer position and next to no energy exposure?

I really do not like his stock selection. He owns a lot of hopeless failing businesses (value traps) like Best Buy and newspaper companies. And none of the good energy values that are on sale right now!

He is really good at macro and index valuation, but I think that being long-biased and his security selection hurts returns.


Walter said...

Looks like his stock picks are beating the market though according to the graph on pg 2.

Mark said...

What are the good energy values?

Mark said...

P.S. I agree with you. His commentary seems to be of much higher quality than his portfolio decisions.

CP said...

1. He is beating the market because he has world-class macro sense regarding valuation and sentiment. That's what I said in the post. I wouldn't bother reading or mentioning his letter if I didn't think he was incredibly competent at this. It's why we link to his market commentary virtually every week.

However, his stock portfolio was shockingly bland and uninspired. Pepsi AND Coke? Three newspaper stocks? Starbucks?

Huge pharma overweight (very troubled sector; probably the next subprime).

Solar stocks (come on!)

Microsoft (tired, dying monopoly).

No oil *services*, period.

He is something of a frustrated academic - as Mark mentions.

2. Mark, we write about energy fairly extensively. Clearly there are values developing in natural gas. Also, oil services is pretty cheap.