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20-Somethings Don’t Want To Own Homes, Says One Hedge Fund Manager

At least that’s the bet one hedge fund manager is making, shorting the home building sector on the belief that a “generational shift” is creating permanent renters.


When it comes to the housing market, a small faction of the hedge fund world has little faith that 20-somethings will play much of a role in a recovery. Some investors have so little faith, in fact, that they are actively betting against the ability of young people to become homeowners in the near future, or possibly ever.

At the 2014 Sohn Investment Conference in New York on Monday, famed bond investor Jeffrey Gundlach presented a large short position in home building stocks, an investment thesis predicated on his belief that young people will fail to realize the “American Dream” of owning their own home due to a confluence of generational factors.

“The kids aren't all right,” Gundlach said to a packed auditorium at Lincoln Center, an audience made up primarily of hedge fund managers and traders congregating to hear investment ideas from their most successful peers. “Renting is more appealing as a generational preference across all geographic areas in the U.S.”

Gundlach cited low employment, student loan debt, and declining wages among the “millennial” generation as reasons for his short bet on a housing recovery, and also noted that many 20-somethings were moving back in with their parents. This, Gundlach initially thought, was an indication that young people were trying to save on increasingly higher rental costs to buy a home. But that endeavor has so far failed to materialize in the housing market.

While some studies have suggested that “millennials” are showing a strong desire to become homeowners, the mortgage market has seen plunging demand in recent months.

On the heels of Gundlach's presentation, shares of homebuilding stocks dropped 1% to 2%, including XHB, the specific exchange-traded fund Gundlach stated he was shorting.

Still, Robert Goldsborough, a fund analyst at Morningstar covering the XHB ETF, says that while Gundlach's bet against home ownership gains could indeed turn out to be a prescient one, it's much too early to tell if 20-somethings dragging their feet on buying homes will be a significant contributing factor.

“Housing stocks tend to trade heavily on sentiment,” Goldsborough said. “They don't necessarily trade on fundamentals. “[Gundlach] expects very bad news ahead. He thinks even if there's new supply, there won't be enough buyers. [Millennials not buying] is a secular, long-term call, and I can certainly see how he could make that argument. We're not going to know this answer ultimately for another decade. If what happens unfolds the way that Jeff has laid out that it will, there's no question that homebuilding stocks are going to get hammered.”

Getty Images’ Feminist Photo Collection Is A Hit So Far

Sales of existing images in the recently introduced Lean In collection are up 31% from last year. Getty’s Pamela Grossman and Cosmopolitan ‘s editor-in-chief talked about changing stock images of women in media.

Getty Images' “Lean In Collection”

Getty Images' new Lean In Collection, which features more than 2,500 photos of female leadership in contemporary work and life, is off to a strong start.

Sales of images in the collection that Getty already owned are up 31% from last year, a percentage that's expected to increase as many clients are using some of the photos in mockups right now and will license them months from now, Pam Grossman, director of visual trends at Getty, said at The Atlantic and the Aspen Institute's New York Ideas conference on Tuesday. The collection, introduced in February in conjunction with Sheryl Sandberg's LeanIn.org, aims to supplement notoriously stereotypical and sometimes sexist stock photos with more accurate representations of women today.

“We're pretty thrilled about it,” said Grossman, who joined Cosmopolitan Editor-in-Chief Joanna Coles on a panel called “Changing the Stock Image of Women.” “We have a lot of content in there of business meetings, and it seems a little bit obvious, but the images where the woman is the one in the leadership position, the one at the head of the table, the one speaking, and the men look a little more collaborative or ancillary, those are performing really well.” The collection also has lots of images of fathers in which a woman might be doing something else like working on a laptop, she said.

Coles, too, has been making efforts toward including more images of empowered women in Cosmo.

“Not all the women in Cosmo are fantastically thin,” she said, adding that she tries to avoid pictures of “thin, white wasted youth where they do look slightly druggie and kind of weird.” Coles said she met with Facebook's Sandberg when she took the editor-in-chief job, and the two “talked intensively of images of women and how could we show women in leadership positions because if you can't see it, you can't be it.”

Still, that doesn't mean Cosmo is walking away from using, say, Photoshop.

“I'm the first person at Cosmo to demand that I'm airbrushed within an inch of my life — there's no reason anybody needs to see these wrinkles, they've been hard-won,” Coles said. But the magazine uses Photoshop within reason, like if a celebrity or a model has a spot or a cold sore, or even if there's an odd shadow on the picture.

Grossman agreed that “we're not the image police.” But it's essential to show “a lot of different alternatives and options and possibilities,” she said.

“Women are the primary users of social media… that's an immense amount of control for the first time in history, I would argue,” Grossman said. Because women are dominating the conversation, “it's shifting the ways in which we're sharing images of ourselves.”

Via gettyimages.com

HTC shares fall after guidance announcement

TAIPEI (Reuters) – Shares of Taiwan’s HTC Corp opened 4 percent lower on Wednesday after the struggling smartphone maker said it is likely to break even or book a profit in the first half.

Shareholders set to grill Allianz management on Pimco

MUNICH (Reuters) – Top Allianz executives are set to face a grilling on Wednesday from shareholders worried about a wobbly performance at its Pimco fund management unit.