"I agree it's not predictable when it will end. But what is predictable is that most of the companies won't grow into their multiples. And shorting them with guts and not looking at the portfolio for three years is probably a smart thing to do," Pzena added.
Pzena's firm manages long-only funds that focus on investing in stocks to appreciate, unlike a hedge fund that also bets on their decline, or "shorting."
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James Dinan of $21 billion hedge fund firm York Capital Management said he was avoiding "hyper-growth" businesses, but wasn't shorting them either.
"The last thing we want to be is the proverbial investor being carried out on the stretcher," Dinan said of betting against irrationally priced stocks.
Dinan noted that most of York's exposure was in the U.S. despite uncertainty about economic growth.
"I personally don't see equity (price) expansions in the U.S. equity markets being more likely than not," Dinan said. "The U.S. is not doing, in my view, as well as people are told. Everyone keeps blaming the weather, the weather, the weather. At some point you have to stop blaming the weather."
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The managers were also bearish on emerging markets.
"The emerging market world is really going to take a big hit," Dinan said in noting the global impact of slowing economic growth in China. "We're going to continue to see a lot more turmoil … and that's going to keep investors on the edge."
Silverman said that Senator invests "very little" in emerging markets but tracks them nonetheless. "Emerging markets are really tricky so we are staying away from them," he said.
Pzena also noted that the stocks he prefers in emerging markets—those that benefit from the rising middle class—are still not cheap despite the prices for other companies tied to commodities and construction decreasing in value.
Pzena said he prefers Europe.
"Europe is probably one of the best values around—the cheapest markets. Comparable companies that are global in nature and have the same kind of mix of business, sell for significantly lower prices in Europe—the same company—as it would in the U.S.," he said.
The comments were made at an event celebrating the winner of Portfolios with Purpose, a nonprofit founded by former hedge fund marketer Stacey Asher in 2011. The group stages a stock-picking competition for investors, and the winners steer money pooled from entrance fees to their favorite charities.
A total of 416 players from eight countries competed in the 2013 contest, raising $198,700 for charity. Silverman won the "Master Class" division with a return of 103 percent. The Jericho Project, which helps provide housing to the poor in New York City, received $66,000 as a result. Dinan finished second (up 60 percent) and Pzena third (up 58 percent).
The 2014 edition of the contest features Kyle Bass of Hayman Capital, Leon Cooperman of Omega Advisors and Marc Lasry of Avenue Capital, among other well-known hedge fund managers.