Value Investing Congress

Why the housing bulls are wrong

November 22, 2010: 1:59 PM ET

Hedge fund manager Bill Ackman is the latest prominent investor to jump on the housing bandwagon. But here are four reasons by housing is still not a good investment.

By Daryl G. Jones, Hedgeye

A number of notable investors presented thoughtful and well-researched ideas at the Value Investing Congress last month. The one idea that we would take the other side of, though, was one from Bill Ackman of Pershing Square Capital, which was unveiled in a presentation titled "How To Make a Fortune": to go long U.S. housing. To state it bluntly, we think Ackman is wrong on housing.

According to several reports, his thesis on U.S. housing focuses on a few key points. First, affordability is at its highest level in decades due to low mortgage rates. Second, household formation will rebound and go back to long-term trends, which suggest growth in demand. Third, supply of housing, which Ackman admits is high, will start to decline since builder production rates are as low as they have ever been. Finally, he believes the downside in housing is limited because at a certain price, institutions could step in and soak up the excess inventory. More

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    No matter what the outcome of the November elections is, hedge fund managers agree they need a bigger presence in the nation's capital.

    Unsurprisingly, Washington D.C. is dominating conversations among hedge fund managers and their investors.

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    - Oct 14, 2010 1:03 PM ET
  • Why David Einhorn is short St. Joe

    The Greenlight Capital manager made his name by publicly shorting Lehman Brothers. Now he expects shares of the Florida real estate firm to fall.

    By Scott Cendrowski, reporter

    David Einhorn is double-dipping his short ideas.

    At the 6th annual Value Investing Congress on Wednesday, the noted short-seller presented his 139-slide bearish case against The St. Joe Company (JOE), a Florida real estate firm that made a strong push into residential developments. Einhorn was MORE

    Oct 13, 2010 1:43 PM ET
  • Why GM is a buy

    One hedge fund manager with stellar recent returns plans to profit on the discrepancy between the valuations of General Motors and Ford.

    As General Motors prepares for a November initial public offering, hedge fund manager Michael Kao, founder of Akanthos Capital Management, told the audience at the 6th Annual Value Investing Congress that he is going long GM bonds and short the stock of Ford (F).

    Kao's Akanthos makes money by identifying discrepancies MORE

    - Oct 13, 2010 1:18 PM ET
  • Betting on a Japanese default

    One hedge fund manager who accurately predicted the mortgage crisis says the "Keynesian end point" for Japan is inevitable.

    Japan is lumbering toward default, veteran investor Kyle Bass said Wednesday at the 6th Annual Value Investing Congress in New York City.

    As part of his presentation called "Does Debt Matter?" Bass described in stark detail how one of the largest economies in the world will eventually be stuck in a permanent MORE

    - Oct 13, 2010 10:52 AM ET
  • View from the hedge fund seat looks good

    One activist investor believes the uncertainty that's paralyzing corporate leaders will lift after the election.

    Hedge fund manager Bill Ackman gave a sunny prognosis on corporations and consumers Wednesday at the 6th Annual Value Investing Congress, a two-day confab for devotees of Warren Buffett, David Dodd, and Benjamin Graham.

    "We are more bullish than most," Ackman said, referring to his hedge fund Pershing Square Capital Management. On the corporate side, he said MORE

    - Oct 12, 2010 5:26 PM ET
  • The bullish case for tech stocks

    Calling the technology sector incredibly cheap, Lee Ainslie said Wednesday that his hedge fund Maverick Capital is 17% net long tech stocks.

    This represents Maverick's largest portfolio allocation, Ainslie told participants at the 6th annual Value Investing Congress in New York City, a two-day conference for investors who emulate the likes of Benjamin Graham and Warren Buffett.

    Not only are tech stocks near historically low valuations, the sector is full of strong, MORE

    - Oct 12, 2010 1:16 PM ET
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