Today we got to see Ken Heebner of CGM Funds for a quick interview on CNBC. For those of you who follow Mr. Heebner, you already know that he is deemed by most as a far better trend spotter and far more nimble than Warren Buffett.
He recently came out with a strong defense of Petrobras or Petroleo Brasileiro (NYSE: PBR). This morning he kept his bullish stance on the stock with 14 Billion barrels of oil in proven reserves, although he did note some political developments that could ultimately mean less profits for drilling in an area (which he doesn’t seem to believe will be the case).
Another name Heeber came out positively on this morning was Schlumberger (NYSE: SLB). He believes this is the winner in exploration and services and is cheap at 17-times forward earnings because he thinks we’ll see accelerated earnings growth because of higher prices later in 2008.
On a broader basis, it really seems like Heebner is turning mega-bullish. It isn’t that he made any major predictions, but he noted how certain oversold and sentiment readings are at levels not seen since 1974 and not since right before the Iraq war. He also noted how there is a record number of shorts (short selling) and things just aren’t as bad as they think. In fact, Heebner said he thinks the economy will look significantly better a year from now and the market is supposed to discount up to a year out.
On overall commodities, he’s still bullish but didn’t give any names. He said the global growth story is still there and commodity prices might be a problem in the future. Unfortunately, we got no word on whether or not he thinks the pullback specific to agriculture stocks is an opportunity or not.
He isn’t immune from making wrong decisions if you look at his call on Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) where he called a bottom very prematurely in August 2007.
Jon C. Ogg
July 9, 2008
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