Hedge fund legend Robertson likes plastic not gold

Date: Tuesday, October 20, 2009
Author: Reuters.com

Hedge fund pioneer Julian Robertson, whose Tiger Management once oversaw $22 billion in assets, told a conference of money managers on Monday he is bullish on credit card companies, but would steer clear of gold as an inflation hedge.

Speaking at the New York Value Investing Congress, a private event where hedge fund managers share trading ideas, Robertson reaffirmed his positive view on the shares of Visa Inc (V.N) and MasterCard Inc (MA.N), citing their growth potential.

Robertson also recommended that other investors buy shares of Intel Corp (INTC.O) and Google Inc (GOOG.O), which he said are attractive given their prospects.

The veteran bargain hunter said value stocks are not just cheap, but are low priced relative to the expected earnings. Intel, for example, is trading 16 or 17 times next year's earnings.

"That's not bad for a company with its intellectual superiority," Robertson said. "Google is another one that appears over the moon, but is still growing rapidly."

Yet shortly after fellow manager David Einhorn of Greenlight Capital described at the same conference his purchases of physical gold as the best way to protect against inflation, Robertson told attendees shorting bonds was the better bet.

Robertson recommended that investors buy ProShares UltraShort 20+ Year Treasury ETFs TBT.N, but not the SPDR Gold Trust GLD.N an ETF of gold futures.

Robertson dismissed gold bugs as "certifiably crazy." Gold trades for nearly the same price as it did 30 yrs ago and the market does not reflect any actual supply or demand fundamentals, he said.

Asked about the Galleon Group insider trading case, in which the fund's principal Raj Rajaratnam and others have been accused of making up to $20 million in illegal profits, Robertson said he was "delighted" about the arrests.

"I think the crooks should be weeded out," he told Reuters. (Reporting by Joseph Giannone; editing by Andre Grenon)