Tuesday, February 25, 2014

Hussman Annual Report

Hussman has published his 2013 annual report showing year end portfolio. Some highlights:

  • 19% Consumer Discretionary sector (Even though he's super bearish?)
  • 6% Energy sector (Finally bought some E&P and services, probably at the top of the market for oil though.)
  • 26% health care including 6.6% pharma!
And a GIGANTIC short call position - 47% of NAV! They are in the money calls.


John said...

I am at an utter loss to understand why Hussman doesn't restrict his hedging to the "aunt Minnies" as he calls them. The 6 or 7 discreet times over the past 50 years in which his research shows preceded major tops.

I also fail to understand why one would hedge long positions rather than simply going to cash and waiting. Going to cash is much cheaper than the time value you pay when buying hedge protection.

Inability to go to cash is the signature of an "asset gatherer" as opposed to a true investor looking to maximize returns and minimize risk for his clients, and sad to say Hussman is just another asset gatherer.

misha said...

Tax efficiency? Going to cash triggers cap gains

John said...

"Tax efficiency? Going to cash triggers cap gains "

Beats the hell out of 50% losses in the major bear markets.

The cost and losses associated with Hussman's hedging vastly exceed the tax liability that his investors would have incurred had he not hedged and gone to cash at those two or three points at which his data reached extremes.

I am well aware of the reason why asset gatherers refuse to go to cash at extremes - distributions to fund investors equal to 15% of gains realized gains by going to cash would reduce their AUM.