“Bond King” and billionaire investor Jeffrey Gundlach is looking for energy-related shares to blast higher and Facebook shares to head in the other direction.
During his presentation Monday at the 2018 Sohn Conference in New York, the head of DoubleLine Capital revealed he is long the SPDR S&P Oil and Gas Exploration and Production ETF and short shares of Facebook.
“Nothing new ever occurs in the business of speculating. What’s happened in the past will happen again and again and again,” Gundlach said.
“There’s good and bad going on in the world. Interpretations matter,” he added.
Gundlach sees Facebook falling as public perceptions of the company change. Where once the social network was considered at the vanguard of communications in the future and the leader among all of technology, recent revelations about how Facebook allows companies to mine its users’ data has caused a public relations nightmare.
Founder Mark Zuckerberg‘s apology before Congress came off as insincere, Gundlach added, and the company’s fortunes are changing.
Supporters, he said, argue that “regulation outprices competition,” but Gundlach said “equity bubbles pop by regulation.”
The pair trade of energy exploration and technology seems incongruous, but such efforts have paid off before.
Looking at the diversion between prices in the XOP exchange-traded fund and Facebook, Gundlach said the technical formation “is a thing of beauty” and the trade “could really, really perform.” XOP is trading above its 200-day moving average, while Facebook has stayed below the key longer-term level.
News of the play had little market effect, with both trading slightly higher.
Gundlach has been on a strong run lately, correctly predicting the rise in long-term government bond yields and forecasting that commodities would be strong in 2018.