LONDON Jan 4 Hedge fund manager Patrick
Armstrong is backing his confidence in the technology and luxury
goods sectors by buying shares in Apple and holding his
positions in the likes of LVMH and BMW.
Armstrong, who co-manages $220 million as head of investment
selection at Armstrong Investment Managers, believes that such
companies will help to drive the S&P 500 and other stock markets
to new highs in 2013, aided by central banks' pro-growth
policies and fast-growing emerging markets.
"Some equity markets, including the S&P 500, will reach
their all-time highs (in 2013)," the former co-head of Insight
Investment's $2 billion multi-asset group said in a statement.
Technology companies are expected to flourish in emerging
markets. In India, for example, sales of tablet computers are
expected to at least double this year to six million, research
firm CyberMedia said on Friday.
Armstrong's Diversified Dynamic Solution fund returned 8
percent in the first 11 months of last year, against a hedge
fund industry average of 3.17 percent in the year to Dec. 28,
Hedge Fund Research data shows. His fund lost 0.2 percent in
2011 but made 12.3 percent in 2010 and 31.3 percent in 2009.
The 41-year-old's bullishness on stocks echoes that of other
hedge fund managers, many of whom have turned positive as a
result of action by central banks to prop up economies and boost
growth. The European Central Bank, for instance, promised in
September to do whatever it takes to protect the euro zone.
The consensus forecast among equity strategists in a Reuters
poll in December was for the S&P 500 to finish 2013 close to the
record high of 1,576.09 recorded in October 2007. The index,
which rose 13.4 percent last year, was up 0.23 percent at
1462.75 at 1529 GMT on Friday.
However, some commentators believe that stock markets could
be hit by continuing recession in the euro zone and further
budget wrangling between President Barack Obama and
congressional Republicans in the United States.
Armstrong told Reuters he had been buying shares in Apple
and British chip designer ARM during December.
Apple's iPhone and iPad products helped to propel its shares
to a record high of $705.07 on Sept. 21, but the price fell to a
little more than $500 last month after analysts cut shipment
forecasts on concerns over competition from phones using
Google's Android operating system. At 1529 GMT on Friday the
shares were down 2.4 percent at $529.21.
On Wednesday Leon Cooperman, CEO of hedge fund Omega
Advisors, said he is optimistic about stock markets this year,
while bonds are in a "bubble". Cooperman said he owns shares in
Apple, despite being wary of the company's hoarding of cash on
its balance sheet.
Armstrong said he likes companies offering high growth, and
that he is also holding on to positions in luxury goods
companies such as L'Oreal, LVMH and BMW.
"We prefer to pay premium multiple(s) to get premium growth
- (we're) not convinced (by the) margins and growth of the
staple companies," he said.
He has started shorting consumer staples stocks Nestle
, Unilever and Procter & Gamble.
Shorting is the selling of stock you have borrowed in the hope
of buying it at a lower price later to complete the trade,
thereby profiting from falling prices.
He also said that 2013 "will mark the beginning of a bear
market for government and high-grade corporate bonds, which will
run throughout the remainder of the decade".
Armstrong expects investors to move out of expensive
government bonds into higher-yielding equities and said that he
is shorting French and German government bonds.