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Jan. 24 (Bloomberg) -- Michael Litt, the chief investment officer of Arrowhawk Capital Partners, said U.S. investors will make a “massive” shift out of bonds and into stocks within the next 12 months.
“Within this time frame, you will see the inflection point between those two asset classes,” Litt said today at the Bloomberg Sovereign Debt Crisis Conference in New York, hosted by Bloomberg Link.
One potential reason for the bull market in equities is the rising supply of natural gas within the U.S., thanks to new drilling techniques, Litt said. Once U.S. companies convert their equipment to run on natural gas rather than gasoline and petroleum, they will have a competitive advantage over rivals in other parts of the world, he said.
“We are in the driver’s seat in terms of energy efficiency, we just have yet to take advantage of it,” Litt said.
Arrowhawk, based in Darien, Connecticut, has about $575 million of assets under management. Litt, previously a partner at Frontpoint Partners LLC, started the firm in 2008.
China may also present investment opportunities now that the government has gotten inflation under control, said John Brynjolfsson, the managing director of Armored Wolf LLC, who also participated on a panel at the conference. Brynjolfsson said he is “pretty confident” that growth in China’s gross domestic product will have an 8 percent floor in the future.
Litt said that his firm “covered our shorts” in China during November and December. Investors use short sales to bet an asset will decline in value and then cover or close out the trade when they think asset values probably won’t decline much further.
--Editors: Steven Crabill, Christian Baumgaertel
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