NEW YORK (Reuters) - With U.S. stock prices near record highs and major economies worldwide on an upswing, top investment professionals are seeking out less familiar and less popular ways to invest.
At this week’s Reuters Global Investment 2018 Outlook Summit in New York, London, Hong Kong and Singapore, many investors said equities look relatively costly, and a lack of fear may leave investors ill-positioned for when prices head south.
That, they said, justifies diversification.
For Thomas Kwan, chief investment officer of Hong Kong-based Harvest Global Investments, dogs, cats and other furry friends that people keep as pets is one pick of the litter.
He said people in China, whose population is 1.4 billion, are taking care of pets better, and will buy more from companies making products such as pet food than they once did.
“People have been getting more reluctant to have kids, or they want kids but they also want pets where they can find love,” he said. “There’s a margin in this type of product that can be much higher than in other products because the customers — dogs and cats — are really not that picky.”
Beyond the earth-bound, Marc Lasry, the billionaire co-founder of Avenue Capital Group in New York and co-owner of the National Basketball Association’s Milwaukee Bucks, is looking to the sky to buy.
Lasry, who buys “distressed” and other undervalued securities, said he is investing in older, short-haul planes such as the Airbus A320, as low fuel prices prompt carriers to lease planes longer rather than update aging fleets.
“We’re willing to buy end-of-life planes,” Lasry said. “You’re able to generate very, very high rates of return. Think of an old car. A 20-year-old car, the value is $500. But you don’t mind driving it because fuel is cheap.”
Other investors are betting on things they believe should be cheap.
Glen Kacher, whose Light Street Capital Management hedge fund in Palo Alto, California was up 53 percent from January to October, said he is “shorting almost every retailer,” betting their share prices will fall.
Kacher said many big retailers have failed to adapt to changing customer preferences.
He said some even lag the prototypical corner deli now using technology to let people buy their breakfast sandwiches and coffee in seconds with the tap of a finger.
“The retailing industry is going to be an apocalypse,” he said, without identifying which retailers will go down in flames. “Anyone working in the consumer retailing industry ... should be training for a new job.”
Jim Chanos, the president of Kynikos Associates LP in New York who was early to predict Enron Corp’s 2001 downfall, is again breaking with the popular wisdom by going short against Elon Musk’s electric carmaker Tesla Corp (TSLA.O).
That bet has yet to work out well, but Chanos is unfazed.
“It’s a future bankruptcy,” he said, without providing a time frame. “If you just look at the cash flow, it’s not a sustainable business model.”
Mario Gabelli, the Wall Street legend who oversees Gamco Investors Inc (GBL.N) and Gabelli mutual funds, has a more conventional forecast, expecting a flurry of mergers he called “global lovemaking” if the Republican-controlled White House and Congress cut corporate taxes.
But he foresees an “old-fashioned correction” at some point, pointing to recent power assertions by two young non-U.S. leaders: Saudi Arabia Crown Prince Mohammed bin Salman, who has purged some rivals, and Kim Jong Un, whose military arsenals in North Korea could destabilize the Korean peninsula and beyond.
“There’s a 32-year-old in Saudi Arabia and a 32-year-old in Pyongyang,” Gabelli said. “Something is going to go wrong.” Kim is more widely believed to be 33.
Follow Reuters Summits on Twitter @Reuters_Summits
For other news from Reuters Global Investment 2018 Outlook Summit, click here
Reporting by Jonathan Stempel in New York; Additional reporting by Marius Zaharia in Hong Kong; Editing by Jennifer Ablan and Susan Thomas