Paul Singer, founder and president of Elliott Management Corp.
Jacob Kepler | Bloomberg | Getty Images
Paul Singer, founder and president of Elliott Management Corp.
Billionaire investor Paul Singer thinks stocks are way overvalued."By all measures, the U.S. stock market is currently frothy," the founder of $24.8 billion hedge fund firm Elliott Management wrote in a letter to investors Monday.
Singer repeated his long-held view that central banks are creating asset bubbles through their market stimulus programs.
"Investors are pushing out the risk curve and once again piling on leverage to juice returns, while short-term interest rates in Europe are actually negative," he said. "Although the levitation of financial assets has not yet spread to gold, we will grit our collective teeth on that score and await either 'asset price justice' or the 'end times,' whichever comes first."
In his typically cantankerous fashion, Singer warned of what could happen if the printing of money spurs substantial inflation.
"We believe that if and when inflation passes from a phenomenon that affects only a certain list of assets (a growing list, presently a combination of things owned by the well-off plus a number of things that are basic necessities) to a widespread 'in-your-face' phenomenon affecting the cost of living of almost the entire population, then the normal yardsticks of risk, return and profit maybe thrown into the garbage can," he said.
"These measures may be replaced by a scramble by citizens and investors to preserve value on a foundation of shifting sand, together with societal unrest that may make the current politically-useful 'inequality' riffs, scapegoating of the '1%' and complaining about those 'millionaires and billionaires' who are not 'paying their fair share,' look like mere warm-ups for real class warfare."
The flagship Elliott Associates fund is up 4.6 percent this year through June 30. It has produced a net annualized return of 13.9 percent since inception in February 1977.
A spokesman for Elliott declined to comment.
Singer didn't add much on his contentious stake in Argentinean debt despite the country potentially being days away from default.
"The path forward is uncertain. No matter what happens, thousands of bondholders, including Elliott, will continue to pursue our rights, attempting to generate a rational discussion with someone on the other side and trying to forge a solution," the letter said.
Singer said the fund is finding new investment opportunities in activist equity positions, arbitraging corporate events, and global real estate in Europe and Japan.
Bruno J. Navarro |
@Bruno_J_NavarroLink:
http://www.cnbc.com/id/101875542
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