Companies/managers with Deflation protection thesis

[jobyts]

Like FRFHF, I was wondering if there are other managers/companies that have active management and heavily into deflation protection. I'm not looking for the list of deflation protected asset classes, I am specifically interested in active management.

 

Also, a hedge fund manager that takes a minimum of $5mil to open a account does not help me.

 

Thanks in advance,

[TwoCitiesCapital]

Like FRFHF, I was wondering if there are other managers/companies that have active management and heavily into deflation protection. I'm not looking for the list of deflation protected asset classes, I am specifically interested in active management.

 

Also, a hedge fund manager that takes a minimum of $5mil to open a account does not help me.

 

Thanks in advance,

 

TBH - if you're really looking for a bet on deflation, you'd probably want something a little more "pure" then buying equity that is going to be affected by business results, market sentiment, and other idiosyncratic risks that are totally unassociated with deflation. I think in general, you're best bet would be to have a portion of your funds in long-term gov't bond ETF/mutual fund.

 

The reason Fairfax is so attractive for this purpose is the leverage inherent in the bet - 1) $535 per share in high-quality bonds 2) total hedging of equity portfolio 3) CPI derivatives.

 

For every $460 you put into Fairfax, you're getting $535 in bonds PLUS the upside from derivatives plus any alpha generated from equity hedging. The inherent leverage is what makes Fairfax attractive as a deflation hedge and why I am willing to use it as my deflation bet as opposed to a "purer" play. That being said, you won't find very many businesses that have this deflationary bias, let along have it leveraged, so it might be difficult to find something better than Fairfax and/or bonds.

 

 

[constructive]

In my opinion, you don't need deflation protection. You may need protection against the value of your equity assets declining, but deflation is just one possible mechanism for that - and not a particularly promising one.

[ERICOPOLY]

I think our economy would collapse if commodities like oil/steel/etc skyrocketed in price.  I mean, imagine if commodities tripled in price overnight.  Consumers would go into shock. 

 

The funny thing is that we are faced with the reverse and it has people even more terrified.

 

Such a funny world.