Dark days have arrived for Apple, as its stock prices falls from 2012 highs. One investor was bearish on the the stock when its was riding high, however: L.A.'s Jeff Gundlach.
Last year, Jeffrey Gundlach, the CEO of Los Angeles-based DoubleLine Capital, lay out what some called the most contrarian Apple trade imaginable. In spring of 2012, Apple was riding high, climbing to almost $640 per share in early April. It gave some of that back over the summer, but by September, it made all-time highs above $700 and Apple observers started seriously talking about it as the first $1,000 per share/$1 trillion company.
Back in the spring, Gundlach predicted, in effect, that Apple's run was over. He put himself in the mind of a risk-craving hedge fund trader — his reputation is as a solid manager of bond investments, although his exit from his previous employer, TCW, was controversial — and recommended betting that Apple's share price would collapse. He paired that bet, his short position, with a call to go long on natural gas, so cheap at the time that it was practically free: around $2 per million BTUs.
Justin Sullivan/Getty Images
Ron Paul speaks during a campaign event. He plans to go to the Republican National Convention in Tampa and be placed on the nominating ballot.
Mitt Romney may be the presumptive GOP presidential nominee, but Texas congressman Ron Paul never planned to go away quietly before the Republican National Convention in Tampa in August — and neither did one of his staunchest supporters, L.A. hedge fund investor Mark Spitznagel.
It’s partly Spitznagel’s doing that Paul held out for delegates at one of the campaign's final acts, the Nebraska state Republican Party Convention, which took place a week and half ago, more than a month after the state's primary. (Paul failed to gain a plurality, dooming his chances at speaking in Tampa.) All along, the hedge funder helped keep Paul in the race, both by raising money and by providing the campaign with intellectual oomph.
Spitznagel, who runs Universa Investments, which he founded in 2007, lives in Bel Air and operates out of an office in Santa Monica. Why is the Michigan native so far out west, anyway? After all, hedge funds are supposed to be in Connecticut. Or at the very least, Manhattan. That wasn't Spitznagel's scene. "I wanted to get out of that groupthink of Wall Street," he said on the phone recently. "Everyone there is crammed into a handful of blocks." But it's perhaps more than just the non-NYC quality of L.A. that has made it a comfortable place for Spitznagel.
President Obama might have, most of the time, big-gun public intellectuals like Paul Krugman and Robert Reich in his camp. Mitt Romney has Harvard economist Greg Mankiw advising him. And Ron Paul? Mr. Black Swan himself, Nassim Taleb, says that Dr. Paul is the only candidate who's "saying the right things" and has the "guts" to take on the Federal Reserve.
Not surprisingly, it actually seems pretty black and white with Taleb. He's worried about hyperinflation (not regular old run of he mill inflation-inflation, mind you). And he thinks that the only way to fix the financial system to treat government like cancer — in the video above, which I picked up from the Paul campaign's website, he refers to "metastatic" government at least twice. Taleb is himself a cancer survivor, so you can understand his metaphor in that light. But there are plenty of other people who are making this argument. That said, they don't have Taleb's intellectual heft.
To guard against "black swan" events, companies can assess their global exposure to "resiliency risk."
Last week, I had a great follow-up conversation with Matthew Le Merle of Booz & Co., prompted by my post on a white paper he authored for the consultancy. The paper was titled "Are You Ready for a Black Swan? Stress-Testing the Enterprise with Disrupter Analysis" and it laid out a methodology for global corporations to mitigate the impact of "black swans" — unforeseen events that can have cataclysmic consequences.
One of the things that Le Merle pointed out was that disrupter analysis can reveal greater "risk concentration" in an enterprise than was previously known. I thought this was stunning:
Risk concentration shouldn't be a revelation. Risk ought to be something that professionals can assess if not completely quantify. If the risk crosses a threshold, then they can abandon the project, trade, whatever. They shouldn't have so thoroughly botched the analysis that a black swan looms.
Justin Sullivan/Getty Images
LE MARS, IA - DECEMBER 30: Republican presidential hopeful U.S. Rep Ron Paul (R-TX) speaks during a town hall meeting at the Le Mars Convention Center on December 30, 2011 in Le Mars, Iowa.
Ron Paul — Republican presidential candidate, GOP congressman from Texas, father of Sen. Rand Paul, libertarian, and dogged foe of the Federal Reserve — is touching down in Los Angeles on March 20 for a fundraiser. If you think Paul, with his desire to return the U.S. to the gold standard (bimetalism, actually, using gold and silver) and his tendency to subject Fed Chairman Ben Bernanke to lengthy disquisitions on inflation, is a litle bit different, just wait until you get a dose of the guy who's hosting this Bel Air shindig, at the former residence of Jennifer Lopez.
He's Mark Spitznagel, a very successful hedge-fund manager whose Universa Investments is based in Santa Monica. There are hedge-fund managers and there are hedge fund managers. Spitznagel is definitely in the latter category. He plies his trade in an exotic corner of the industry, making huge bets on statistically improbable events, now colloquially known as "black swans," after the 2007 book of the that title by Nassim Taleb.