About 41 percent of the fund is invested in sovereign debt, currencies and commodities, with another 39 percent in U.S. and international equities.
Rate Increase
Kuehne in September expects the first interest-rate increase by the U.S. Federal Reserve since June 29, 2006, which he’s betting will hurt U.S. equities while boosting U.S. Treasuries and the dollar.
“The best opportunities in equities are probably in the European and Japanese markets,” he said. “Every country in Europe, except Greece, has lower yields than the U.S.”
The dollar has soared 19 percent since July 1 against a basket of 10 leading currencies tracked by the Bloomberg Dollar Spot Index, while the yield on U.S. 10-year bonds is 1.9 percent, compared with 0.44 percent for French, 0.34 percent for Japanese, 0.16 percent for German and -0.1 percent for Swiss government debt with the same maturities.
Distressed for Success
In the second quarter, Kuehne said he plans to add emerging market securities to the distressed debt and stocks of companies that have reorganized financially in his $30 million Opportunity Fund, which produced a compounded annual rate of return of almost 37 percent since it began in September 2006. He’s working on improving the 3.9 percent return of the $35 million Medalist Fund, a long and short equity vehicle begun in April 2011. He’ll get there, Bass said.
“Once he decides that he wants to excel, he has a constancy of purpose, that inner will to succeed that you can’t teach, and he’s got the drive to make it happen,” he said.
An indicator of that resolve came after the final of the 1994 U.S. Amateur, which Kuehne lost by one hole to Woods after leading by six holes. Kuehne then had to watch as his brother, Hank, took the title four years later and his sister, Kelli, won the U.S. Women’s Amateur in 1995 and 1996. It wasn’t until 2007 that Kuehne joined them as a USGA champion.
“I really wanted to win a USGA event,” Kuehne said.