Didn't Grant write about this Peter Thiel guy recently? The FT has an interesting article on what his hedge fund is doing:
“The increase in the price of oil is equivalent to a $1,000bn global tax inc-rease,” he said. “Where is that $1,000bn going, how is it being spent??.?.?.?It is going to wealthy people and governments in Saudi Arabia and Russia. From there the money goes to Geneva and London and is invested in the financial markets, in high-risk things, extended out as credit.
“We think this effect may have been extraordinarily large and may be as large or larger in impact than the oil price hike itself,” he said, explaining Clarium’s view on how to play the oil price jump.
“We think of it as dumb money. A lot of it is probably going into investments that aren’t good?.?.?.?It’s going into housing, the euro and the pound,” said Thiel, who believes that sterling may be the most overvalued currency in the world.
“The UK has probably been the single biggest beneficiary of this petrodollar flow,” he said. “The end of the housing boom for a normal economy would have been catastrophic but it hasn’t been in the UK. The reason is this relentless amount of money being pumped into London.
“The day the oil [price] finally comes down, the pound will weaken dramatically. I will make that prediction. The petrodollars are systematically distorting things. You don’t want to be long the pound, long the euro or long housing, or emerging markets bonds right now,” said Thiel who believes these are all being propped up by the oil price.
However, he said that paradoxically energy stocks were cheap. Speaking just before the sharp downturn in the oil price during the past few weeks, he said: “The price of oil is $75 a barrel and the forward price of oil is $70 a barrel. But the Canadian oil companies are priced as if oil is $50 a barrel.
“Every other high-risk investment we look at is fully priced – emerging market equities, technology equities, housing, it is all fully priced. You have a trillion dollars in extra money that is going into all these high-risk investments.
“But if you look at the oil services companies they have earnings multiples of 10, 12, 14 – not that high but the earnings are growing at an incredible clip,” he said.
ft.com |
