David Gerstenhaber Is Very Bullish About the Markets

David Gerstenhaber, the manager of Argonaut Capital, is one of the first tiger cubs, seeded by the guru Julian Robertson. Mr. Gerstenhaber follows a global market investment approach and has been returning over 10%, when most of other hedge funds were losing ground. In the latest round of 13F filings, Argonaut Capital revealed an equity portfolio worth $147.61 million, of which the largest portion is invested in the SPDR S&P 500 ETF Trust (NYSEARCA:SPY), the holding amassing over 40% of the total portfolio value.

Mr. Gerstenhaber has recently been on CNBC, where he discussed the current market situation for stocks and bonds. He started by saying that bonds are clearly a sell at the moment. He considers that markets will continue to gain ground and there is no current evidence that the bull run is over.

“The economy has bounced back strongly from the first quarter. You’ve got strong loan growth, good unemployment claims. You’ve got PMIs all registering nice, punchy growth and you’ve got inflation picking up, which people have been loathe to talk about,” the manager of Argonut Capital said.

In this way, with the current inflation level of over 2%, “to have bonds at 260, 270 seems inconsistent with the underlying tone to the economy,” Mr. Gerstenhaber considers.

“The Fed is starting to get out of the way. The tapering is persisting, they will cut more at the next meeting and they will be out of the market by October. The Fed’s own forecasts for interest rates are considerably above what the market is pricing at present. So, I don’t think it is a stretch to suggest that interest rates can move up from here, despite what’s going on in Europe,” Mr. Gerstenhaber concluded.

Watch the full discussion below:

The company that currently represents the largest holding in Argonaut Capital’s 13F portfolio is Delta Air Lines, Inc. (NYSE:DAL), of which the fund owns 72,000 shares, valued at around $2.5 million. The Blackstone Group L.P. (NYSE:BX) and Apple Inc. (NASDAQ:AAPL) represent two other significant holdings, in which Argonaut Capital reported ownership of 53,000 shares and 3,042 shares respectively.

Disclosure: none