Jean-Marie Eveillard, who beat 99 percent of rival equity fund managers last year by hoarding cash instead of borrowing it, is loading up on Japanese insurers and Hong Kong developers, Bloomberg reported.
"Leverage eliminates your staying power," said Eveillard, whose $16.8 billion First Eagle Global Fund beat the Standard & Poor's 500 Index every year this decade. "If things go well, you look even better, but if things go badly, you end up doing worse," he said in an interview from his office at Arnhold & S. Bleichroeder Advisers LLC overlooking Central Park in New York. "You could blow up if big leverage is being used."
By shunning leverage, Eveillard, Israel Englander and Steven Lehman are winning in the worst stock market since the Great Depression. While hundreds of hedge funds collapsed last year and financial institutions reported more than $1 trillion of losses and writedowns since the start of 2007, investors who avoided borrowing now have the money to buy stocks in the MSCI World Index trading at the lowest valuations since at least 1995, according to data compiled by Bloomberg.
Eveillard, 68, says Japanese property and casualty insurers Aioi Insurance Co. and Nissay Dowa General Insurance Co. are too cheap to pass up. Englander, whose $13.5 billion Millennium Partners LP hedge fund limited losses to about 3.5 percent last year, plans to continue trading hundreds of millions of shares a day in search of gains of less than half a percentage point.