Jul 27, 2009
Jean-Marie Eveillard on Bloomberg
I managed to catch a panel featuring First Eagle’s Jean-Marie Eveillard on Bloomberg today. Here is what he had to say:
The American consumer is tapped out. Modest recovery that levels out. Then you get 2 more stimulus because its an election year for Congress.
Pay attention to HK and Singapore rather than just China. Accounting is taken more seriously there than mainland China. East is rising, west is declining from a long term standpoint. As an investor be in asia outside of Japan. We would rather by HK or Singapore listed stocks than mainland China listed stocks.
There may be bumps along the road.
The Banks in Japan are better shape than Europe. Consumer is in better shape than in the US. Problems in Japan but problems in Europe and America too. Japanese companies sit on a ton of cash, so the return on equities aren’t great but it’s a good thing to have at on of cash.
Early this year investors were selling and pushing the market down because of forced selling or deleveraging would result in deflation and a return to the Great Depression. I never believed that deflation would lead to the Great Depression because politicians want to be re-elected. So they chose to stimulate. There may come a time when the Fed wont have ammunition but not for now.
Eveillard talked about 3 companies which he thought were undervalued: Paragesa – a European holding company with a number of non-controlling interests in companies. Essilor – a maker of eyeglasses from Spain. Berkshire Hathaway – the only really attractive company he sees in the United States. Eveillard is much more of a global value investor than most, which probably accounts for his limited US exposure, besides his own pessimistic view about the future.
Bloomberg has a brief article about the panel as well:
“The east is rising and the west is declining,” said Eveillard, a senior investment advisor to the $7.42 billion First Eagle Global Fund that he managed from 1979 through March. “One wants to be in Asia outside of Japan.”
Eveillard said he favors stocks traded in Singapore, where accounting is “taken more seriously,” or those in Hong Kong over Chinese equities.
Japan’s Topix index traded at an average 41.2 times estimated earnings last month, the highest level among the 40 largest markets, data compiled by Bloomberg show. The nation’s economy is forecast to contract twice as much as the U.S. this year.
Eveillard’s fund, which beat the Standard & Poor’s 500 Index every year this decade, topped 99 percent of competitors last year by hoarding cash instead of borrowing it. He seeks shares trading at discounts to measures such as assets and cash flow and follows the principles of value investing espoused by billionaire Warren Buffett, chief executive officer of Berkshire Hathaway Inc.
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