Clunie’s fund has the capacity to both buy shares that he thinks will rise in value, and short-sell hose he feels are over-valued.
The Jupiter Absolute Return fund has returned 18 per cent over the past five years.
Clunis commented that, ‘as investors we are underweight the US market as a whole. We are overweight the UK, where some stocks, such as BP and Rio Tinto look cheap. I think a lot of the domestically focused stocks in the US are overvalued right now.’
Of the 110 shares Clunie is presently short-selling, 70 are in the US.
He commented that the stocks he is short-selling in the US can be divided into two groups, ‘the glamour stocks, and the good firms, but at the wrong price shares.’
Amongst the ‘glamour stocks’ on which he has currently got a negative view are Tesla, Netflix, he commented that those businesses have a habit of ‘borrowing to acquire growth, and are very fashionable right now, so the valuations are high.’
Clunie next turned his thoughts to the stocks that he calls ‘good firms at the wrong price.’
Amongst the stocks he places in this category are Campbell’s, a soup company, and Coca Cola.
He commented that in recent years it has been the shares in this latter group that have performed well in recent years as inflation expectations have been low.
The fund manager commented, ‘but after many years, a whole career for some investors, everything we have expected or known about inflation has changed. At some point in the years ahead a great inflation is coming, it will come because it suits policymakers for it to come, because that will help to wipe out the national debt.’
The Jupiter Absolute Return fund has returned 24 per cent since launch in 2009.