How To Lose 75% In One Year
Whitney Tilson may have met his match. Canadian commodities hedge fund Salida Capital is no stranger to media notoriety: last October none other than Zero Hedge wrote that "Fund Blamed For Gold Sell Off, Salida Capital, Tumbles 37% In September, 49% YTD" after the fund's infamously timed bet on more easing by the Fed backfired and resulted in losses so severe it was enough to warrant liquidation rumors across all commodity classes, which in turn set off follow on liquidations worries in a self reinforcing feedback loop. In retrospect, anyone who read the caveats about the Toronto-based asset manager would have been wise to get the hell out of dodge, because the firm that simply had used massive amount of leverage to generate ridiculous returns such as +35.84%, -66.50%, +188.55%, 44.88%, and -53.39%, is now down 75% in the last 12 months, meaning anyone who invested $100 with the fund, is down to just $25 (and realistically less when management fees are accounted for). It also means that the fund's Sharpe ratio is borderline negative. Finally, it is precisely such fantastically leveraged contraptions on coin toss-based outcomes that even further undermine what little credibility and standing the last vestiges of real, alpha not beta-focused, asset managers remain in this New Normal of ubiquitous central planning.
If there are any silver linings, it is this:
We are our largest investors
Partner and employee personal capital represents a significant portion of our assets under management. Collectively, we have a deep belief and financial commitment in the talent of our team.
Effective June 6, 2012, the investment minimums for the Salida Strategic Growth Fund and Salida Wealth Preservation Fund have been reduced to the following:
Initial Investment: CAD $5,000
Subsequent Investment: CAD $1,000
In other words, hopefully it is just the firm's own employees that have had to sit through a dramamine-demanding P&L rollercoaster which despite all the up years looks set for its light out moment. And hopefully any outside investors have lost at most CAD $5,000.