Rogers Talks About Investing In Commodities

agricultural investmentsLegendary investor Jim Rogers talked to Reuters yesterday about the ongoing boom in commodities, which is buoyed by serious supply shortages.

Retuers’ Pratima Desai wrote:

Some analysts say commodities this year have experienced a bubble, which will quickly deflate when short-term investors pull out, but along with large institutions such as pension funds, Rogers is in the market for the long term.

“Yes, there is always new money. That always happens in bull markets, because that’s where the opportunities are,” he said in an interview.”

The creator of the Rogers International Commodities Index cited the example of crude oil, which is trading above $100 a barrel.

Rogers said:

People have been telling me for five years that oil prices are going down. Every time I ask them where the supply is coming from. So far, nobody has been able to tell me. Please tell me where the new oil is because I want to invest in it.

While many commodity analysts focus on demand, the chairman of Beeland Interests pointed out the significance of supply problems and historically low inventories.

Rogers told Reuters:

Shortages are developing because production is declining… Oil fields are in decline, copper mines are in decline. Whether it’s oil, wheat or sugar, the world does not have new production capacity.

Desai talked about some of Rogers’ investment plays. George Soros’ former partner in the legendary Quantum Fund “only invests in exchange traded securities, with the one exception being gold coins… Agricultural investments include listed stocks with farmland holdings and underlying futures such as wheat contracts.”

Rogers said:

“There are enormous opportunities in farmland if you are a good farmer. Even if you are a mediocre farmer you can make a lot of money. Farming is going to be one of the best places to make money in the next 10 years, if you know what you are doing.”

According to Desai, the author of Hot Commodities: How Anyone Can Invest Profitably in the World’s Best Market “is not a farmer and has instead invested in the sector through listed companies with holdings in places like Australia and Brazil.” Rogers noted that because of the high price of oil, people are going to use more sugar for ethanol. In addition, the elevated oil price will mean strong demand for commodities like cotton. Rogers said, “Synthetic fibres come from oil, people will try to use more natural fibres.”

Mark Mobius Talks About Credit Crisis

credit crisisMark Mobius appeared on Bloomberg this morning and talked about the credit crisis and his investment strategies. According to Bloomberg’s Hanny Wan and Catherine Yang, the head of Templeton’s Global Emerging Markets Equity Group said the credit crisis which is responsible for $245 billion of losses at banks and brokerages is “near the end.” Predicting that the worst of the crisis has passed, Mobius said:

Most of the bad news is already in the market. The writedowns are coming in fast and furious.

The veteran emerging markets investor also talked about his investment strategies. Mobius told Bloomberg that energy stocks are his biggest investment because of rising oil prices. He said:

Energy is by far the largest weighting in our portfolio. We don’t see any reason to change that any time soon.

Bloomberg noted that Petroleo Brasileiro SA, Brazil’s state-controlled oil company, and PetroChina Co., China’s largest oil producer, were respectively the biggest and third-biggest holdings in Mobius’ emerging market fund at the end of last year.

The famous investor has also been buying financials. He said:

We’ve been adding in the banking sector generally. Prices have come down to more reasonable levels.

Mobius noted that he has been buying shares of banks including Bank of China Ltd. and Industrial & Commercial Bank of China Ltd.

Mobius also added shares of Sweden’s Oriflame Cosmetics SA to his holdings recently. He invested in Oriflame, which sells natural makeup in more than 50 countries, to benefit from rising consumer spending in Russia. Bloomberg noted that shares of the company gained 68% in the 12 months through yesterday.

Finally, Mobius indicated that he also likes Malaysia. Bloomberg’s Wan and Yang wrote:

Prime Minister Abdullah Ahmad Badawi last month vowed to proceed with infrastructure projects to promote growth and pledged measures to help the poor, seeking to reassure investors after the government’s narrow poll victory.

Malaysian stocks are “becoming more and more attractive as a result of these political changes,” Mobius said. “There has been re-awakening so to speak, reassessing that Malaysia should be doing well and prosper. I think that’s good news and that could have good impact on the market.”

Gross Buys $1.5 Billion Of Municipal Bonds

municipal bondsEarlier today Reuters reported that “The King of Bonds,” PIMCO’s Bill Gross, bought $1.5 billion of municipal bonds last Friday. In an e-mail, Gross told Jennifer Ablan and Joan Gralla:

We bought $1.5 billion on Friday at very attractive prices that have since improved substantially.

According to the Reuters reporters:

The $2.6 trillion municipal bond market has become a bargain-hunter’s delight, because hedge funds and other players that use leverage were forced to sell billions of dollars of bonds last week. February recorded the municipal bond market’s worst-ever performance, according to Merrill Lynch indices.

Gail MarksJarvis of the Chicago Tribune wrote earlier today:

In a topsy-turvy market of worry and low interest rates, investors are finding deals in a place they might not generally look—municipal bonds.

Typically, investors in municipal bonds accept yields lower than those on U.S. Treasury bonds because so-called munis let investors escape federal taxes on bond interest. But after several days of panicked selling in the municipal bond market, yields on the bonds are higher than Treasuries and have reached historically high levels.

Even retail investors are trying to get in on the deal. On Monday, the State of California sold 70% of the $1.75 billion of bonds it is selling to individuals. The state ended the retail presale period early because it wanted to preserve some of its new bonds for institutions.