Looks like billionaire hedge fund manager Eddie Lampert thinks the U.S. housing bust is almost over. According to the Wall Street Journal this morning, Lampert has been acquiring shares in beaten-up home builders, mortgage lenders, and a home-improvement retailer. The Journal’s Gary McWilliams wrote:

Recently, the Greenwich, Conn., hedge fund, which controls investments it valued at about $11.6 billion in its most recent government financial report, began picking up shares in hard-hit housing-related stocks. ESL acquired small stakes in U.S. home builders Centex Corp. and KB Home, according to its latest Securities and Exchange Commission filings. At recent prices, the stakes in the two home builders are valued at $10.4 million and $10.8 million, respectively.

ESL also is tip-toeing into mortgage origination and servicing, acquiring about four million shares of CIT Group Inc., a struggling subprime home and commercial lender, as well as 1.4 million shares of PHH Corp., a mortgage originator and mortgage-service company. The shares are valued currently at about $35.5 million and $25.2 million, respectively. ESL spokesman Steve Lipin declined to comment on the investments.

McWilliams also noted that Lampert, who is also the chairman of Sears Holding Corp., added to his holdings of home-improvement retailer Home Depot. His hedge fund now owns about 22.7 million shares (valued at $590 million), up from 16.7 million shares in 2007.

Source:

“Lampert Puts Money On Housing Rebound”
Gary McWilliams
Wall Street Journal, June 12, 2008

In today’s New York Sun, Dan Dorfman wrote about a phone call he made this past weekend to Jim Rogers, chairman of Rogers Holdings, in response to a reader’s e-mail asking, “Since Jimmy Rogers has been so right, why not ask him what he thinks now?” Here’s what Rogers had to say about U.S. stocks, monetary policy, and his investment strategy:

U.S. Stocks

The trend is still lower and I wouldn’t buy any American stock now. Unless you’re a very good trader, you’re not going to make money on the long side. I don’t know if the market is going down another 10% or 50%, but it’s going down. Washington is making loads of mistakes.

U.S. Monetary Policy

In the end, the Fed’s action will produce much higher inflation, a weaker dollar, hgher long-term interest rates, and the worst recession we’ve had in years.

Investment Strategy

Dorfman wrote:

Although extremely bearish, Mr. Rogers thinks a near-term rally could occur, given the recent decline. As a result, he has covered some shorts and stopped selling the dollar, which he says is ultimately headed considerably lower. Still, he remains short Fannie Mae, which he says he thinks is going broke, the home builders, and the investment banks.

Despite some analysts calling for a bottom in financials, Rogers feels otherwise:

In fact, while many bargain hunters have been snapping up the bloodied shares of investment banks following the Fed’s efforts to bail out Bear Stearns, Mr. Rogers has gone the other way, shorting more of them through an exchange-traded fund, Amex Securities Broker/Dealer, which is traded on the American Stock Exchange under the symbol XBD.

The Quantum Fund co-founder talked about some recent purchases of foreign airlines:

On the other hand, he has bought some airline stocks in China, Taiwan, and Europe, citing very little new capacity coming online, sold-out production at Boeing and Airbus, and rising fares. Mr. Rogers said he wouldn’t touch the stock of an American airline because “they’re so hopelessly managed.”

The legendary commodities investor, who called the beginning of the current bull market in 1999, discussed the market in “hard” assets:

Mr. Rogers is a long-term bull on commodities, which have recently been hit by a wave of selling pressure, and he reiterated his enthusiasm for them, though he says he wouldn’t be a buyer now because they could be subjected to further weakness from forced hedge fund liquidations. For the year ahead, he expects agricultural commodities to be the sector’s best performer.

Dorfman also talked about Rogers’ currency plays:

An active player in currencies, he favors the Chinese renminbi, which he bought recently and sees on a rising trend for years to come, Swiss francs, and the Japanese yen.

The New York Sun columnist wrote that Rogers was forecasting a grim situation for the next President of the United States:

As far as the national election goes, Mr. Rogers views it as a nonevent for the market, although he notes the next president will inherit an economic mess.

Source:

“Money Manager Says No to U.S. Stocks”
Dan Dorfman
New York Sun, March 24, 2008