As markets seesawed but generally went on a higher ride, 2014 saw several veterans of investing world make high-profile bets that garnered much attention in the media and among the investing public. Here is a round-up of a few that made the most news this year.
As markets seesawed but generally went on a higher ride, 2014 saw several veterans of investing world make high-profile bets that garnered much attention in the media and among the investing public.
Here is a round-up of a few that made the most news this year.
Prashant Jain’s bet on banks
Technically a 2013 bet (and an investment as opposed to a trade) whose result was decided this year, ace fund manager Prashant Jain of HDFC Mutual Fund invested in banking stocks last year, expecting them to benefit from the country’s economic recovery.
Bank stocks went down last year, taking performance of Jain’s high-profile funds with it, but the move finally paid off this year as bank shares rallied in anticipation of an economic turnaround.
Rakesh Jhunjhunwala’s bet on SpiceJet
Legendary investor and trader Rakesh Jhunjhunwala made a punt on near-bankrupt carrier SpiceJet, picking up shares at Rs 18.5 apiece, but as the carrier continued to flounder, the stock nosedived, reaching a low of Rs 11.25.
While the bet formed only a fraction of Jhunjhunwala’s billion-dollar-plus portfolio, it evinced interest in the trading community and triggered much debate over whether the market maven had got it wrong this time.
Finally, the emergence of erstwhile promoter Ajay Singh as a white knight has resurrected hopes the company may make it out whole, leading shares to come back above Jhunjhunwala’s buying price.
Radhakishan Damani’s bet on logistics companies
Low-profile billionaire investor, and Jhunjhunwala’s trading guru, Radhakishan Damani, picked up shares of logistics firms GATI and Transport Corporation of India, hoping they would benefit from improving economic activity and the ecommerce boom.
The ace trader and investor -- who in his years away from the stock market was busy building up D-Mart into a formidable retail chain – hit bulls’ eye with his bet.
Year to date, Gati has surged 430 percent while TCI surged 175 percent.
Bill Ackman’s bet against Herbalife
In 2012, billionaire hedge fund manager Bill Ackman announced an audacious bet against multi-level marketing company Herbalife, calling it a giant pyramid scheme and said he would short-sell shares till they went to zero (Ackman’s bet at one point reached a total of USD 1 billion).
But Herbalife found backers in Ackman’s fellow billionniares George Soros and Carl Icahn, with the latter picking up 20 percent in the firm, and going head to head with Ackman in what soon turned out to be an ugly, personal battle.
Ackman’s bet – he had shorted at USD 38 – backfired badly in 2013 with the share price topping out at USD 82. But this appeared to be his year, with regulatory troubles, increasing claims of business malpractices and volatile earnings finally taking a toll on the stock—its price halving in 2014 falling back to USD 38.
Andy Hall’s bet on crude
Legendary hedge fund manager Andrew Hall, known to some as the ‘God of Oil’, was caught unawares by the slump in crude prices this year.
Hall’s long position on crude -- he expects crude oil to increase sharply over the next few years and dismisses the American shale revolution as overhyped – called into question his trading genius but he made up for it by going long the US dollar, a move that reportedly saved his hedge fund from making losses for the year, and him the blushes.
John Paulson’s bet on gold
Paulson, executioner of the greatest trade ever, has somehow found it difficult to repeat his 2008 success, when he shorted housing stocks.
Part of the reason has been Paulson’s bet on gold, after the hedge fund titan expected the price of bullion to rise in anticipation of higher inflation in the US.
Gold prices have fallen through ever since they peaked out in late 2011, thanks to benign inflation and a comeback in the US economy, even though Paulson has stood by the yellow metal for now.