By Foster Kamer
The New York Observer
On the rare occasion that New Yorkers talk about farming, it’s usually something along the lines of what sort of organic kale to plant in the vanity garden at the second house in the Adirondacks. But on a recent afternoon, The Observer had a conversation of a different sort about agricultural pursuits with a hedge fund manager he’d met at one of the many dark-paneled private clubs in midtown a few weeks prior. “A friend of mine is actually the largest owner of agricultural land in Uruguay,” said the hedge fund manager. “He’s a year older than I am. We’re somewhere [around] the 15th-largest farmers in America right now.”
“We,” as in, his hedge fund.
It may seem a little odd that in 2011 anyone’s thinking of putting money into assets that would have seemed attractive in 1911, but there’s something in the air-namely, fear. The hedge fund manager and others like him envision a doomsday scenario catalyzed by a weak dollar, higher-than-you-think inflation and an uncertain political climate here and abroad.
The pattern began to emerge sometime in 2008. “The Hedge Fund Manager Who Bought a Farm,” read the headline on one February 2008 Times of London piece detailing a British hedge fund manager’s attempt to play off the rising prices of grains in order to usurp local farmland. A Financial Times piece two months later began: “Hedge funds and investment banks are swapping their Gucci for gumboots.” It detailed BlackRock’s then-relatively new $420 million Agriculture Fund, which had already swept up 2,800 acres of land.
Even Michael Burry, the now-defunct Scion Capital founder and star protagonist of Michael Lewis’ The Big Short-who bet against the housing bubble in 2008 with credit default swaps to enormous profit-gave a rare interview on Bloomberg TV last year, explaining that he’s thrown his hat into “productive agriculture land with water on site” as it’s going to be “very valuable in the future.” (Like most of those asked to comment for this story to The Observer, Burry declined to discuss his investments in farmland.)
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