Just got back from Boston, where I spent the day with one of the best stock investors and traders of the past 30 years. His name is Gerry Jordan of
Hellman Jordan Management
Gerry and his associates have been quietly compounding client money in their largest stock partnership at about 30% a year for the past decade (gross, before fees), a period of time when the
S&P 500 rose about 18% a year. This year, they are doing even better, north of 50% year to date. Unlike the bozos you too often see on television, Gerry is the real deal.
You might want to hear in brief what Gerry has to say about the market. (I'll have a full-blown
with Jordan soon.) Like all good investors, he doesn't pull his punches.
He likes various certain sectors of the market long term -- oil and gas, in particular. He thinks that the energy stocks will benefit
from a supply/demand equation that must lead to higher oil and gas prices and continually improving earnings for the companies in the sector.
Oil and gas stocks have had a great rally this year, and despite the selloff of the past few days, Jordan expects that rise to continue for a long time. He argues, basically, that supply constraints will combine with inexorable demand to raise prices. He says it would not surprise him to see oil prices above $50 a barrel before pipeline and refining capacity and drilling catch up with global demand. He has a commitment to Canadian natural gas companies such as
and to drillers such as
No More Love for Tech Stocks
Jordan has made hundreds of millions of dollars in technology stocks over the years. But he does not love them now. Why not? He sees a slowing economy and a tech sector that is more reliant on corporate capital expenditures than many investors realize. In his view, the earnings-growth shortfalls we have begun to see in the area will worsen.
, for example. Many readers have asked me whether Intel is a buy at current levels, down about 45% from its high set at the end of August. In Jordan's view, the chipmaker is still not a good value. It still trades at slightly more than 30 times earnings despite revenue growth of about 12%. Jordan remembers buying Intel at 12 times earnings when growth was ramping up.
He says that too many investors are suffering from a kind of psychosis or delusion when it comes to high-priced tech stocks. Again, take Intel. They bought the stock at $60, watched it go to $75 and now see it settling at $41 and change. They cannot admit, he thinks, that they were wrong at $60 and still wrong at $40. Until they admit they were wrong and sell, the stock cannot go much higher, he says. He is not short Intel, but neither would he own it.
Jordan has been short some of the more expensively priced tech stocks, meaning he's borrowed shares and sold them in hopes of buying them back for less later, returning them to the lender and pocketing the difference. Among them is
, which provides information-storage services to corporations.
EMC trades around 170 times earnings and has grown revenue about 40% to 50% a year for the past three years. But Jordan covered shorts on EMC and a bunch of other fast growers Wednesday. He did that because he does not know where tech is headed short term, and he preferred to take profits where he could.
Tech could get a bounce here, he says, if only because it has been selling off so hard so quickly, or it could drop further this month as the large-cap growth-stock mutual funds try to blow out money-losing bets before their fiscal year-ends in October. He will wait and see before jumping back in.
But long term, Jordan is a bear on tech. He sees too many new companies competing for the same markets. Try this thought on for size: Tech stocks remain weak for years, not months, as a result of massive overinvestment in the area.
Jordan might be wrong, but there's an awfully good chance he'll be right. His
-like record as a moneymaker for more than 20 years as a professional investor is reason enough to listen to him.