JULIAN ROBERTSON: I Think We’re In The Middle Of A Bubble Market And When It Breaks It Will Be ‘Pretty Bad’

October 8, 2013 Leave a comment

JULIAN ROBERTSON: I Think We’re In The Middle Of A Bubble Market And When It Breaks It Will Be ‘Pretty Bad’

JULIA LA ROCHE OCT. 7, 2013, 3:51 PM 4,159 5

In recent weeks, we’ve had three investing legends — Stan Druckenmiller, Carl Icahn and Warren Buffett — all suggest that the stock market is fully valued. Now Julian Robertson, the 81-year-old founder of Tiger Management, has said the same thing in an interview with CNBC’s Maria Bartiromo on “Closing Bell” today. Robertson also thinks we’re in the middle of a bubble market right now and when it does burst the reactions will be “pretty bad.”  Here’s an excerpt from Robertson’s interview with Bartiromo courtesy of CNBC. (Emphasis ours).   MARIA BARTIROMO: Thank you.  So let’s talk about– the environment– with which you find yourself investing.  The broad economic landscape first.  How would you characterize it?

JULIAN ROBERTSON: Well, I would– characterize it as precarious.  And– I think everyone knows that.  And– I think that– rather than just sitting back and– saying, “What if this happens or that happens”– we go ahead and find good companies and invest in them and– bad companies and– them.

MARIA BARTIROMO: And of course you are one of the most-followed person in finance.  Where do you see the sweet spot in the market right now?

JULIAN ROBERTSON: I don’t see any particular sweet spot.  But I do see sweet stocks that I really love and like and– think are going to do well.  And– one is– a company that– probably makes that beautiful toenail polish you’ve got on. A company called Ulta.  And it has just beautiful beauty salons all over the country.

And it sells all the great products.  And it’s growing– probably at 25%– or so, will grow that way over the next three or four years.  This year won’t be quite that good.  But– it is just amazing what’s happened.  And– how well they’ve caught this great movement.  And– we’ve interviewed a lot of women and Ulta is where they’re going.

MARIA BARTIROMO: Is that right?  So what are the screens you look at in terms of finding some of these companies?  Is it revenue growth, is it management ownership?  What are some of the most important screens that you look at when you pick stock?

JULIAN ROBERTSON: Well, I– one of the things that I’m particularly interested in is– stocks and who’s already picked them.  And– we’ve had some really good people here who have excelled in certain fields and– I love to see really what they had bought recently.  And– Ulta is one of those stocks.  And– I think it’s going to be a real good one for next year, so.

MARIA BARTIROMO: Hmm.  So this is not really a sector call?  This is a specific-name stock picking?

JULIAN ROBERTSON: That’s really the way I’m looking at stocks primarily now.  I think we’re in the middle of a kind of a bubble market, where it’s going to take something– bubble-like to happen.  And– prick the bubble and we’ll probably have pretty bad– reactions to the breaking of the bubble.  But– probably not right now.  And somehow I think we’ll wallow through the political and fiscal crisis we have in front of us.  And then we’ll sort of see what happens.

MARIA BARTIROMO: So when you look at the broad averages, you think that– this market’s full of value then?

JULIAN ROBERTSON: I think the market is reasonably– yes, is fully valued.

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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