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The Gift Just Keeps On Giving: Anti-Tilson Returns 50% In Two Weeks

Tyler Durden's picture




 

Anyone who held only cash all year, and followed our advice to do the inverse of the ridiculously overly publicized in every possible venue "Tilson trade" (as in buy GMCR and short NFLX) on November 11, can now unwind, having made not only their year, but guaranteed themselves a place in the top 0.01% performing hedge funds in the world in 2011, with a 50% return in two work weeks, and likely the opportunity to raise their AUM by billions in 2012 as everyone else still flounders with ridiculous momentum, 13F mimicry and beta chasing strategies. We can only hope and pray that Whitney makes it once again all too public what his next trade will be.

CIX chart courtesy of BBG

 

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Thu, 12/01/2011 - 12:30 | 1935150 Comay Mierda
Comay Mierda's picture

you're going to make him cry for mommy

Thu, 12/01/2011 - 15:49 | 1935953 Panafrican Funk...
Panafrican Funktron Robot's picture

Anybody that says they can't get great trading ideas from ZH just isn't paying attention.

Thu, 12/01/2011 - 12:31 | 1935156 SHEEPFUKKER
SHEEPFUKKER's picture

Only 50%? Give him two more weeks and he will probably lose all of your money. 

Thu, 12/01/2011 - 13:05 | 1935310 Jay Gould Esq.
Jay Gould Esq.'s picture

Fifty per cent in two work weeks...

"We can only hope and pray that Whitney makes it once again all too public what his next trade will be."

There, you see ? CNBC has some worth, but one will have to employ TiVo assiduously, and sort through the chaff ( which is plentiful enough indeed ) in order to find the high-grade, soft winter Tilson wheat.

Thu, 12/01/2011 - 13:11 | 1935332 Richard Chesler
Richard Chesler's picture

If you lose 50% of your capital you need a 100% return just to make even.

Just saying...

 

Thu, 12/01/2011 - 12:32 | 1935162 YesWeKahn
YesWeKahn's picture

Did he promise to double your money?

Thu, 12/01/2011 - 12:33 | 1935165 J 457
J 457's picture

Missed Tilson trade, need more advice.

Thu, 12/01/2011 - 12:33 | 1935166 YesWeKahn
YesWeKahn's picture

Love to know how the inverse-paulson is doing.

Thu, 12/01/2011 - 12:33 | 1935168 Zola
Zola's picture

Spread trades like this work until you get one wrong and your fund blows up...

Thu, 12/01/2011 - 12:38 | 1935175 hedgeless_horseman
hedgeless_horseman's picture

 

 

Spread trades like this work until you get one wrong and your fund blows up...

Zola, your comment gets my vote for most ignorant post of the day. 

 

 

Wait a second...Whitney...is that you?

Thu, 12/01/2011 - 12:55 | 1935258 Dismal Scientist
Dismal Scientist's picture

Spoken like someone who never managed money in his life. Spread trades snapping back/blowing out on fund managers have been the death of many a fund. Just ask those who got on the wrong side of the 'can't miss' Volkswagen share class trade in 2008...

Thu, 12/01/2011 - 12:59 | 1935272 hedgeless_horseman
hedgeless_horseman's picture

 

 

Most any trade a fund manager falls in love with and refuses to exit can do that.  Pray tell, what makes a simple long/short position different, Mr. Expert?

Thu, 12/01/2011 - 13:01 | 1935286 Dismal Scientist
Dismal Scientist's picture

To my mind, not a lot. Any time you put on a pair (long/short) or a spread, you have the possibility of being wrong in both directions...

Thu, 12/01/2011 - 13:10 | 1935322 hedgeless_horseman
hedgeless_horseman's picture

 

 

...the possibility of being wrong in both directions

Don't forget opportunity cost, so there is many more than just two ways to be wrong.  But what do I know?  I am someone who has never managed money in my life.

Thu, 12/01/2011 - 16:04 | 1936012 Dismal Scientist
Dismal Scientist's picture

On that basis, unless you pick the best trade every time possible, there is always an opportunity cost to doing anything. Fallacious argument, try again.

Thu, 12/01/2011 - 12:59 | 1935276 Tyler Durden
Tyler Durden's picture

The VOW trade only did what it did because every single hedge fund in the universe (thank you Value Investor Club, though not Tilson's) was in it, the company was well aware of this, and caused literally the biggest squeeze in history. If you jump in too late into any trade, and most certainly not only pair trades, you will be subject to the technicals of the trade more than the fundamentals.

Which is why this trade is now closed.

Thu, 12/01/2011 - 13:03 | 1935296 Dismal Scientist
Dismal Scientist's picture

Thats actually not quite true, but I'll let you off for being 99% right. It wasn't me who was the 1%, btw

Thu, 12/01/2011 - 13:04 | 1935304 Ratscam
Ratscam's picture

one trade that is still open is long platinum short gold, if you believe the rare 0.9 ratio will go back again to its long term trend. platinum is much rarer than gold and it's catalytic industrial applications are widening

Thu, 12/01/2011 - 15:52 | 1935971 Panafrican Funk...
Panafrican Funktron Robot's picture

CB's don't hold plat.  Same argument for why I'm not in silver.  I hold money, not commodities.

Thu, 12/01/2011 - 12:56 | 1935261 mspgrandi
mspgrandi's picture

MR Zola is right .... although this trade has performed 50% in the last 2 weeeks. only an idiot (in this case a luckly idiot ) wld have put the whole capital on such trade. hats off to ZH for calling the trade, yet am kind of sure even ZH did not play a large sum of their capital on this

Thu, 12/01/2011 - 12:35 | 1935174 Captain Benny
Captain Benny's picture

The gifts that keep on giving: Herpes and the Anti-Tilson fund

Thu, 12/01/2011 - 12:39 | 1935180 Zola
Zola's picture

@Hedgeless_horsemann ?  what are you talking about ?? To make 50% return you need to have all your capital on the trade .... so if it goes against you , you will lose money fast...

You may think you re a smart ass but i know from experience funds that blew up because of running the wrong spread trade so i m not going to comment further on your replies...

Thu, 12/01/2011 - 12:40 | 1935193 thedrickster
thedrickster's picture

WTF

Thu, 12/01/2011 - 12:51 | 1935196 hedgeless_horseman
hedgeless_horseman's picture

 

 

Poor Whitney..I mean Zola.  On what planet does commitment of capital correlate with trade type?

Thu, 12/01/2011 - 12:42 | 1935198 SheepDog-One
SheepDog-One's picture

Zola...What?

Thu, 12/01/2011 - 12:39 | 1935186 SheepDog-One
SheepDog-One's picture

Whitneys next trade? Does he have any money left?

Thu, 12/01/2011 - 12:50 | 1935228 Zola
Zola's picture

Your risk size will correlate to the impact the trade has on your overall returns at fund level. To have the meaningful impact presented here on the returns you will need to size it in a way that will be big enough . Also you could leverage it even MORE so that a 1% move in the spread is a 3% move in the equity of the fund but then you could blow up... FYI...

Thu, 12/01/2011 - 12:53 | 1935233 hedgeless_horseman
hedgeless_horseman's picture

 

 

i m not going to comment further on your replies...

 

                                             -Zola Tilson

Thu, 12/01/2011 - 12:53 | 1935241 Tyler Durden
Tyler Durden's picture

Yes. Or you could be up 50% if you did the opposite of Tilson.

What's your point again?

Thu, 12/01/2011 - 12:53 | 1935245 thedrickster
thedrickster's picture

..

Thu, 12/01/2011 - 13:01 | 1935288 CvlDobd
CvlDobd's picture

I agree with Zola.

IMO position sizing is THE most important part of the trade. Not blowing yourself up with a bad bet in choppy market is key. Anyone want to prove they had 100% of their capital tied up in two positions?

Yes the trade made 50% on cap invested but for your account to be up 50% you would have to put all your money there. Not prudent in these markets but that's just my opinion.

Thu, 12/01/2011 - 13:04 | 1935308 hedgeless_horseman
hedgeless_horseman's picture

 

 

This was a single trade recomendation...not a fucking portfolio.

Thu, 12/01/2011 - 13:11 | 1935334 CvlDobd
CvlDobd's picture

Thanks for making the point of Zola, dismal, and myself.

Thu, 12/01/2011 - 13:23 | 1935361 hedgeless_horseman
hedgeless_horseman's picture

 

 

I hope for the sake of you three, and all your co-workers over at Tilson's shop, that it was just a very small trade.  Although, it sure didn't sound like it listening to Whitney on the telescreen.

Thu, 12/01/2011 - 13:47 | 1935463 CvlDobd
CvlDobd's picture

Lol

I thought I'd get paid more than this to work at a hedge fund!

I'm a small town individual with a love for position sizing. Honestly it's my favorite topic in investing.

Slow and steady wins the race. Most trades I run I risk .5% of capital. Only my highest conviction trades will I get close to risking 1%.

That's me in a nutshell.

Thu, 12/01/2011 - 13:55 | 1935481 hedgeless_horseman
hedgeless_horseman's picture

 

 

Only my highest conviction trades will I get close to risking 1%.

Diversity guarantees mediocrity.  Have you considered index funds?

 

Thu, 12/01/2011 - 14:02 | 1935537 CvlDobd
CvlDobd's picture

I'm not sure you understand risk/reward and position sizing. I posted in the Berlusconi is resigning thread that I am shorting XLK (so yes I considered indexing). It popped right into a resistance line that has been in place all year. Given the proximity to the trend line I can run a tight stop. With the limited amount of risk to the stop I can purchase a large number of shares and put 5-8% of my portfolio to work. I said I risked 1% not invested 1%. There is a large difference! You're are really making yourself look bad to anyone that understands money management.

Thu, 12/01/2011 - 14:12 | 1935560 hedgeless_horseman
hedgeless_horseman's picture

 

 

You're are really making yourself look bad to anyone that understands money management.

Consider the possibility that I might understand what seems to be your take von a very common (old) approach to "money management" but I simply do not subscribe to it.  I remember when Modern Portfolio Theory was all the rage, before leverage, and then later HFT came to the fore. 

The index funds comment is meant to be an insult.  Sorry.  I will try to do better next time.

Thu, 12/01/2011 - 14:13 | 1935583 CvlDobd
CvlDobd's picture

I gave up MPT Q1 2009

Jk

Instead of attacking everyone, perhaps try to show the flaws in conservative position sizing?

I love to learn about others' strategies and opinions.

Until I find better I'm sticking with my % position size.

Thanks.

Thu, 12/01/2011 - 14:22 | 1935588 hedgeless_horseman
hedgeless_horseman's picture

 

 

It popped right into a resistance line that has been in place all year. Given the proximity to the trend line

Maybe you haven't heard?  Technical analysis is dead.  It is buried next to Fundamental analysis.  The Central Bankers killed them both.

Welcome to Fight Club.

 

Thu, 12/01/2011 - 14:35 | 1935651 CvlDobd
CvlDobd's picture

As much as I don't want to agree with you on the death of TA given my background. I kind of do. Long upper shadow on spy on Friday. Finish at the lows. 3 days later it is at 125? WTF? No TA hints to that one.

I can't abandon it as it is still my operating system. I still use it but I find myself taking fewer and fewer trades. The trades I do take still have my old ass techniques.

Good chatting with you and thanks for the fight club welcome. It's why I'm here.

Thu, 12/01/2011 - 14:36 | 1935652 Nucking Futs
Nucking Futs's picture

Depends on your definition of "dead".  TA still works fine for me.  Yeah there are these FED induced moves that can't be determined by a chart, but that's what stops are for (black swan-like events).  Some say that any of the Fibonacci Grids and Retracements don't work, some say that Elliot Wave doesn't work, and some say TA doesn't work.  To make a blanket statement that something doesn't work, just because it doesn't work for you is flat out ignorance.

Thu, 12/01/2011 - 13:14 | 1935348 Carlyle Groupie
Carlyle Groupie's picture

I smell minions.

Thu, 12/01/2011 - 13:18 | 1935360 SweatpantKing
SweatpantKing's picture

Tyler, one day I will listen to some of your advice and make $$$.

 

This trade had a lot going for it.... Green Mountain was slammed on a change in guidance  and investors over-reacted.  Then the holidays came and all the idiots maxed out their credit cards and the world was whole again.

 

NFLX had nothing going for it and continues to limp along and gets shakier on profit.

 

Great pair of trades (I imagine more went into this than just doing the opposite of Tilson, or maybe not).

Thu, 12/01/2011 - 13:20 | 1935374 Zola
Zola's picture

I have absolutely nothing to do with Tilson's and dont have much respect for him given his poor long term track record. However to suggest such returns can be had with little risk is disingenuous at fund level. Sure it was a great spread trade and i applaud Tyler for showing it. It does make a lot of sense to short overbloated and incompetent entites. However since ZH has long led the way in discussing excessive leverage and the dangers it had created i felt this was an appropriate comment to make. 

Thu, 12/01/2011 - 13:45 | 1935395 hedgeless_horseman
hedgeless_horseman's picture

 

 

However to suggest such returns can be had with little risk is disingenuous at fund level.

That's the way, Whitney.   If you can't beat the market, then at least you can always beat a strawman!* 

Obama teach you that rhetoric?

 

http://en.wikipedia.org/wiki/Straw_man

Thu, 12/01/2011 - 13:53 | 1935483 lairdwd
lairdwd's picture

Love it! Keep it coming. Ol' Whitney must look at ZH and have tears well up. LOL

Thu, 12/01/2011 - 15:12 | 1935801 gatorontheloose
gatorontheloose's picture

hey Zola a.k.a. numbnuts

It's 50% return of whatever your position is, not 50% of all your money.  you trade a pair, you half your typical one way position size and there's no additional risk.   durrrrr

Thu, 12/01/2011 - 15:29 | 1935888 gatorontheloose
gatorontheloose's picture

if you always have a fixed 1% of capital going to any one trade, do you even set your stop loss ?

if you pick a stop loss target equal to of 1% of your captial, that gives you your max position size. Sometimes that position size can use 100% of your capital, or whatever you're ready to lose if the stock goes to zero.

 

 

Thu, 12/01/2011 - 16:22 | 1936094 electricgorilla
electricgorilla's picture

Either you followed this trade and made around 50% on your capital invested or you didn't. Not sure how things got more complicated than this.

Thu, 12/01/2011 - 17:31 | 1936376 Dust in the wheel
Dust in the wheel's picture

Ty,

Please don't close the trade. How will I ever know how Tilson is doing if you close the trade?  I guess I could follow TILFX  (Tilson Focus Fund) down 21.5% YTD.  That’s not bad for a long only fund, is it?

 

Fri, 12/02/2011 - 22:58 | 1940707 MisterKurtosis
MisterKurtosis's picture

I and (many others) appreciate your work and I'm no fan of Titney Wilson; that said, I find it a bit disturbing that you (implicitly) endorse GMCR with your "Anti-Tilson" ETF (which I do find amusing).

What if I were to tell you that GMCR has/is committing accounting and business fraud, in the manner that David Einhorn, Sam Antar, etc. have suggested/questioned?

If that were the case, it would seem your "Anti-Tilson ETF" runs counter to the very things you stand for (and that I have proudly defended against your critics), such as:

(1) Advocating the markets as a medium to expose and punish corporate malfeasance (you were big into the China Reverse Merger fraud stocks, and even critical of GMCR), especially since the legal, regulatory, and enforcement of white collar fraud is poor.

(2) Acting as a safe haven, even advocate, for vocal critics who take a stand against unethical/illegal corporate behavior;

(3) Criticizing the collusive, unethical, and possibly illegal behavior amongst C-level executives, sell-side analysts, investment bankers, lenders, "investors", etc.

I guess the bottomline is that if you find the giggle factor and possible short term profitability of an "Anti-Tilson index" more important than sticking to what you seem to stand for... you're no better than the investment banks, politicians, etc. that you criticize and expose.

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