Can Turtles Fly?

Thanks to Value Investing World for bringing this Hugh Hendry interview to my attention. I may not agree with all the things—short-term orientation of hedge funds is actually worse IMO; the sharp pencil effect doesn't always work—but Hendry is a true contrarian and worth listening. Like Marc Faber or Jim Rogers, you also can't take everything Hugh Hendry says seriously. I had always felt Hugh Hendry was firmly in the deflation camp but I get the feeling that he is now opening up to high-inflation possibilities. Otherwise, his stance appears to be similar to past opinions.

Sticking with his outside-the-box thinking and contrarian persona, Hugh Hendry picks an obscure novel as the best investment book of all time... From The New York Times , The inspiration for his investment approach comes from an unlikely source: “The Gap in the Curtain,” a 1932 novel by John Buchan. The plot centers on five people who are chosen by a scientist to take part in an experiment that will let them glimpse one year into the future. Two see their own obituaries in one year’s time. Mr. Hendry calls the novel “the best investment book ever written” because it taught him to envision the future without neglecting what happened leading up to it , a mistake many investors make, he said. Probably not helpful to investors who rely on fundamental analysis but I can see some merit for those who are more macro-oriented and rely on technical analysis. Can you pluck a security's value at a point in time and take it for what it is; or is it important to know what led it to the curren...

A stack of hardbacks sits on the windowsill in the office of hedge fund manager Hugh Hendry. They make up a reading list perhaps now common in London's embattled financial community. The Volatility Machine: Emerging Economics and the Threat of Financial Collapse sits under a copy of Lords of Finance: The Bankers Who Broke the World, a timely examination of the Great Depression. On top of the pile, lies a dog-eared dictionary open at the page with words beginning "sco-". What was Hendry looking up? He bounds around his desk. "Oh, yes," he says, running his finger down the page, "it was for an article I wrote about hedge fund managers last week. I was looking up 'scourge', as in 'scourge on society'." ###   Hendry is the boss at Eclectica Asset Management, which he launched five years ago. Like all hedge funds, it takes money from investors and uses it to make bets on their behalf. A good bet means a healthy return for investors –...

Finally catching up on investment articles and here is a long list of items you may not have run across.

Thanks to AdvisorAnalyst.com for bringing to my attention the following Hugh Hendry CNBC Europe segment (dated October 16th of 2009.) The following videos essentially cover the material in his November 2009 fundholder letter (topics include deflation, US$, China, Russia, metals, central bank policies, world economics, and Japan.) I'm not going to summarize the videos since I went over the fund manager letter in extensive detail . Part I Part II Part III Part IV Part V Part VI Part VII Part VIII I'm becoming a fan of Hugh Hendry—hopefully it's because he is insightful and not because his views agree with mine :| —but I notice that he dodges questions about his performance. As one may expect of anyone skewed towards deflation, his portfolio has performed poorly this year (he is posting around -7.5% YTD vs +22.4% for MSCI World, as of last published info.) Someone challenging your poor performance is always difficult to tackle in public but I'm curious to see how humble h...

This month I will attempt to answer the entrance examination for the Chinese civil service. That is to say, I will attempt to tell you everything that I know. In doing so, I will argue that this year's rally in inflationary assets, from emerging stock markets to industrial commodities to the fall in the US dollar, could be a FAKE. Let me explain why. — Hugh Hendry, Nov '09 Eclectica Fund Manager Commentary One of the difficulties with contrarianism is that it is never clear whether you are being contrarian for the sake of being contrarian; or if you are actually right and the crowd is wrong. Such is the case with Hugh Hendry of Eclectica Asset Management. Whenever I look at his comments, it is hard to tell if he is going overboard by taking an extreme contrarian stance (I have a habit of doing this too :( ). His latest commentary touches on all sorts of issues and is an interesting read for macro-oriented investors (if link doesn't work, try the posting at Zero Hedge ). Th...

I hate scribd since it doesn't print properly (it crops the page for some reason) and it's hard to copy & paste. So it took a while before I found a PDF version of Hugh Hendry's August commentary. Thanks to Phil's Stock World , who credits GreenLight Advisors , for linking to the PDF version of Hugh Hendry's August Eclectica Fund commentary . The first portion covers his thesis, suggesting that the current situation is similar to the 1920's and 1930's. Near the end of the commentary, he says how he is trying to profit by using interest rate derivatives. Hugh Hendry takes very extreme positions, like Marc Faber, so one needs to figure out if he is overdoing it. The Present = The Great Depression... Sort Of Most of the commentary is consistent with my views and follows themes I have discussed before. In particular, Hugh Hendry suggests that the present situation may be similar to the 1920's, and the current account surplus countries may end up getting...

Read a whole hoard of articles on the Eclectica website and Hugh Hendry is really into technical analysis. Although I like his macro views, his investment style is not attractive to me. Here is some tidbit from the Feb/Mar 2006 Hedge Fund Journal article (as usual, any bolds in the quote are by me): A key point here is the importance of technical analysis to both Hugh Hendry and OAM. For some years veteran chartist Brian Marber had provided a technical input on markets/stocks/sectors to the investment professionals at OAM. Through the course of time Hendry came to recognise that he was placing more reliance on the chart patterns and levels than his mentor Odey. Just as Hendry was increasingly relying on technical signals to tell him he was right (or wrong) on the timing or correctness of his market and stock views ... ... What is Eclectica Fund? It is described by its management company as “an opportunistic fund investing in global equity, fixed income, currency and commodity markets...

I remarked recently that I ran across the Scottish CIO of Eclectica Asset Managament, Hugh Hendry, and was quite impressed by him. He reminded me of the first time I encountered Marc Faber, who incidentally had a huge impact on me. Like Faber, he is outspoken, quite controversial, and a bit arrogant (I don't like his arrogance though.) Most importantly, however, Hugh Hendry, like Faber, seems to have a good understanding of investment history. I would say that Faber knows a lot more than Hendry but Hendry seems good as well. Interestingly, Marc Faber and Hugh Hendry are both skeptical of central bank actions but they take completely opposite views: Hendry is a deflationist while Faber is a hyperinflationist (do note that they may change their opinions over time.) I did some research on Hugh Hendry to see if he is actually someone worth listening to. Not being part of the hedge fund world or having access to his hedge fund letters, I am limited to his public writings and appearance...

Yes, this is like a major discovery to me :) One of the endangered species these days seems to be the deflationists. Sure, you have a bunch of amateurs on message boards, or blogs, or whatever, claiming to lean towards deflation but there are very few professionals I see investing with a deflation outlook. The only two major individuals in the deflation camp (that I know of) are Gary Shilling and Mike Shedlock. Well, I found another guy who runs Eclectica Asset Management. I don't know anything about his fund or his record—for all I know he could be the 2nd worst investor in the world, right behind me—but I share his thinking so I thought I would point it out to my readers. Regardless of what one thinks of Hugh Hendry, he seems to be a true contrarian. He reminds me of the first time I encountered another contrarian, Marc Faber, who was so shocking that my view of the world completely changed. I'm actually quite impressed with Hugh Hendry and will try to follow him in the futur...