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Momos In Turmoil As Patron Saint Of Momentum "Investing" Calls It Quits

Tyler Durden's picture




 

Over the years many have wondered how it was possible that a hedge fund could exist that did nothing more than ride momentum and heatmaps higher or lower without almost any insight into the fundamentals of the underlying corporations. That hedge funds, of course, is John A. Thaler's JAT Capital, which did nothing but buy the most talked about, "storied" momo stocks and ride them higher. Or lower, as the case may be. Because the hedge fund which only managed $3.7 billion as of March 31 just because it was a Tiger Management spin off, is no more.

As Reuters reported last week, the days for momo chasers are now over, as presaged by the passing of their patron saint, JAT which is returning cash to outside investors and is doing the Point72 thing where what little money it will have left will be used to manage Thaler's own personal assets.

From Reuters:

Hedge fund JAT Capital Management is returning money to outside investors to restructure itself as a family office, a person familiar with the $1.7 billion firm said on Tuesday.

 

JAT, founded in 2007 by John Thaler, had become an industry darling after posting a 20 percent gain in 2009.

 

But it faced tougher times more recently, posting double-digit losses in 2012 and 2014.

 

Thaler, who focused on telecommunications, media and technology stocks, told investors this was the "right moment to take a break."

JAT's passing had been long expected but was only realized now due to the rangebound nature of the S&P for the past 6 months or ever since the end of QE3 where the stock market has gone largely nowhere, landing a deathly blow to all those whose only skill is to buy and pray.

In any case, with JAT out, a countless number of copycat investors are sure to exit stage left, as the sun finally sets on one of the most moronic trading strategies (alternatively, if you disagree, just pay your Ameritrade broker's heatmap app $5.99 a trade to just buy whatever is most green and short whatever is most red on any intraday heatmap and achieve the same results).

Worse, now that JAT has become an major overhang for virtually every momo stock in the US market, expect the following Thaler holdings as reported on the company's latest 13-F to do ungood to quite ungood in the coming days and weeks as any (momentum of course) ramp is met with liquidation selling by the soon to be family office.

 

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Mon, 05/18/2015 - 08:20 | 6105124 AIIB
AIIB's picture

I'm sure your creator will be very impressed with your credentials in life when you present to him/her that your sole contribution to life on planet Earth was riding the gravy train on Grubhub.com

Mon, 05/18/2015 - 08:22 | 6105134 VinceFostersGhost
VinceFostersGhost's picture

 

 

He'll be back.

 

No one just quits heroin.

Mon, 05/18/2015 - 08:57 | 6105216 NoDebt
NoDebt's picture

Wait, momentum trading is dead because this guy quits?

Let me count the ways I doubt that statement.  As long as there is a Feral Reserve with a printing press there will be momo trading.

Mon, 05/18/2015 - 09:05 | 6105240 negative rates
negative rates's picture

The Fed is about to default, where do you stand now? Got insurance bitches??

Mon, 05/18/2015 - 09:57 | 6105350 CPL
CPL's picture

Just to point out the insurnace is all under-written in USD, everyone might get a payout but it would be like winning the Zimbabwe lottery.  All that money insurnace payouts might buy you a pack of gum.  Anyone looking to migrate their company stock to the BTC exchange might want to contact the Winklevoss-Twins @  https://gemini.com/  (gotta feeling Facebook is going to be told to suck it)

Mon, 05/18/2015 - 08:56 | 6105214 saveUSsavers
saveUSsavers's picture

If only his PASSING was true!

Mon, 05/18/2015 - 08:28 | 6105144 buzzsaw99
buzzsaw99's picture

stick with a hedge fund long enough and eventually your assets magically become their assets. funny that.

Mon, 05/18/2015 - 08:28 | 6105145 williambanzai7
williambanzai7's picture

Mon, 05/18/2015 - 08:33 | 6105154 AIIB
AIIB's picture

Leonard? Is that you?

Mon, 05/18/2015 - 08:49 | 6105195 Dr. Engali
Dr. Engali's picture

Looks like Jim Cramer.

Mon, 05/18/2015 - 08:55 | 6105206 buzzsaw99
buzzsaw99's picture

imo too much hair on top of his head

Mon, 05/18/2015 - 09:51 | 6105338 Grinder74
Grinder74's picture

Obama

Hillary

Mon, 05/18/2015 - 16:37 | 6107014 AIIB
AIIB's picture

Wookie

Jackie O

Mon, 05/18/2015 - 08:31 | 6105152 new game
new game's picture

gambling other peoples money, ha- folks we lost your hard earned money to algorithum robots that are smarter than our collective momo smarts. we didn't have enough money to buy our stocks up higher and dump. we been dumped upon. so now, you the bag holders, get a haircut. welcome to the reality of investing with hot shots. you loosers deserve what you get- less (you greedy fucks)...

Mon, 05/18/2015 - 08:57 | 6105213 buzzsaw99
buzzsaw99's picture

when i gamble and win i get 20% of your money. when i gamble and lose i get 2% of your money.

she got the gold mine, i got the shaft.

Mon, 05/18/2015 - 08:36 | 6105164 q99x2
q99x2's picture

Central bank software will buy that up with freshly issued fiat no problem. BTFD

Mon, 05/18/2015 - 09:05 | 6105238 JoeTurner
JoeTurner's picture

"We momo'd some folks !"

Mon, 05/18/2015 - 09:14 | 6105257 Mike Honcho
Mike Honcho's picture

He missed out on the Hot Cheese Truck, chump.

Mon, 05/18/2015 - 09:17 | 6105262 Jack Offelday
Jack Offelday's picture

John A. Thaler neglected another important physical concept...

W=Fd (work equals force times distance)

in which case the work performed by JAT Capital = 0

Mon, 05/18/2015 - 10:00 | 6105362 SamuelMaverick
SamuelMaverick's picture

This guy has some of the worst run, most poorly managed companies in the world in his stock list. Time Warner ? Yahoo ? Netflix ?  All crap.  All gross., no ( or little ) net equals a worthless good for nothing business that needs to be put out of its misery.

 

                             Maverick

Mon, 05/18/2015 - 11:08 | 6105570 Ajax_USB_Port_R...
Ajax_USB_Port_Repair_Service_'s picture

So the VIX will probably hit 35 just after JAT exits its trades.

Mon, 05/18/2015 - 12:05 | 6105774 Niall Of The Ni...
Niall Of The Nine Hostages's picture

Bets on what he'll be going all in on now it's actually his money at stake?

(Russian equities. Goldman called the trough in oil.)

Mon, 05/18/2015 - 17:44 | 6107256 Livermore Legend
Livermore Legend's picture

".....Buy and Pray."

Indeed....

Tue, 05/19/2015 - 11:05 | 6109664 DisasterCapitalist
DisasterCapitalist's picture

Yes, this "article" was quite stupid. I seriously doubt that the writer knows what momo is, and I even more doubt he's even a trader. The only thing the writer was accidentally right about was that momo strategies are doing poorly right now. But 6-months of S&P chop would unlikely be enough to cause JATC to shutdown, although the historical data shows this chop, in such a tight range, is unusual.  The only interesting thing in the article was the list of longs, which one could easily get from EDGAR anyway without this article.

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