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FPA Capital: Robert Rodriguez's Final Commentary


dcollon
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  • 7 years later...

maybe the wrong thread for this but here's the 2017 FPA letter.

 

Note the comments in the letter on the market and ETFs being weapons of mass destruction and the insider selling.

 

 

"...we say the time to be fearful is now.

 

...

What are management teams doing as stock indices continue climbing higher? Evidently, they are selling. According to Vickers Stock Report’s latest count, insider sales were eleven times larger than purchases – which amounts to a 3.5 standard deviation above the mean.5 Another research firm, Washington Service, reported that both total insider buys and the ratio of buyers to sellers were at their lowest points since at least 1988 (29 years). To put it in perspective, there were 3,200 insider buyers in November 2008 and only 279 in January 2017.6 In the face of these cautionary signs, what are the investors doing? The investors are so excited about the market that margin debt hit an all-time record in February 2017. They borrowed $528.2 billion against their brokerage accounts.7 Margin debt was also at peak levels in 2000 and 2008. Since 2009, global investors decreased their cash positions to a two-decade low and increased their stock weighting by over 60% (almost no change in fixed income).8

 

...While this part of the cycle can be frustrating for value investors like ourselves because our hunting grounds shrink, we hold firm to the belief that stock prices cannot remain untethered from fundamentals indefinitely. Ultimately, we believe that the higher stock prices rise without improving company fundamentals, the harder they will fall. ...

 

Energy investments

...Let’s end with some simple math to better illustrate why those concerned with today’s oil market concerns may be missing the larger picture. On the demand side, the ..."

 

 

http://www.fpafunds.com/docs/hc_capital/fpa-capital-fund-commentary-2017-q1.pdf#page=2

 

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