Clarium and Keeley Up, Value Guru’s Down as Wall St Heads for Back Nine

Wall Street is limping into the second half of 2008. Merrill Lynch, Citigroup, Wachovia Corpse., Legg Mason, Lehman Brothers and JP Morgan were a few of the stocks hitting 52-week lows as we head for the halfway house and gather our courage to actually play the back nine. Chances are one of the above institutions will not exist in its current form by year end; 2009 is certainly shaping up to be the equal of late 1990, when the Street was hunkered down and financial stocks were left for dead.

Speaking of limping, one side of the stylebox has been decimated over the past six months. Marty Whitman is down over 43%. Mohnish Pabrai 41%, Bill Miller 38% and even hedge fund manager Bill Ackman 20%. Whither, value?

No, it is not all bad in the value camp. Keeley Asset Management's Small Cap Value Fund (KSCVX) was up 12.35% in the second quarter, and is ahead 8.39% YTD. The fund is number one in its category over the past three and five years, but the performance is solid no matter how you cut it, as long as 2nd percentile over 10 years agrees with you.

How do you lead the way in the world of value? To start, don't let any financials sneak into your top 25 positions, and underweight the sector. Get long metallurgical coal plays. And drilling down deep on the investment opportunities in the Haynesville Shale does not hurt either.

With Walter Industries (WLT-NUSE) up 203% YTD, Alpha Natural Resources (ANR-NYSE) up 221%, Goodrich Petroleum (GDP-NYSE) up 266% and 4 other top 25 positions better than doubles on the year, it is amazing the gang in Chicago is not up more on the year. Letting their winners run to the top of their sheets no doubt covers up their sins, but it is remarkable in a year that finds the average long-only manager down in the neighborhood of 10%-15%, or worse.

Congrats.

Of course, I have to wonder what is going through the mind of Peter Thiel and the good folks at Clarium Capital. Their Global Macro fund was up a bit over 36% YTD coming into June, and their long energy/oil and short leveraged financials theme worked like a dream in June.

Clarium was up 24% in the month of January, which was similar, in many respects, to June. Clarium’s long energy/oil position is working, but his shorts are really, really working. It is not a stretch that Clarium was up over 10% for the month, and quite possible more. Yes, they are closing in on $6 billion in assets under management and 50% gains, year to date.

2008 is taking its toll on many managers, but there is reason to be optimistic, at least if you picked your managers carefully.
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Happy days in the Haynesville Shale

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(Value) Guru Returns Show Just How Tough the Going Has Been Lately
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Clarium LP and Peter Thiel Rule Hedgistan in 2008
1440 Wall Street

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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No Positions

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