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Presenting Whitney Tilson's Performance Since Inception Relative To The S&P
Pardon our ignorance, but shouldn't a value-focused hedge fund that has been in operation for 7 years, and has nearly daily TV and media exposure, outperform the S&P net of fees? Actually, scratch that, shouldn't any hedge fund still in existence after 7 years, outperform the S&P?
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thanks whitney for the 12% gain on my crm puts you just handed me...but now that you're short I'm seriously considering getting out...
J, why are you wearing a lifejacket? ;-)
Jumped ship. Comes from upbringing.
Wont the majority of hedge fund's charts look similar?
Isnt this why some of the big boys closed up shop?
Did those who closed see the shit storm coming?
Many do. If you can't do any better than S&P, you might as well quit, save yourself the embarrasment, and pray there's a market left to start up in again when dust finally settles.
I love the Hedge fund model, charge 2% of your assets, 20% on crazy bets income. Just by forming a billion dollar hedge fund which is not an uncomon size the general partners have enough to live a lifetime. Customers are left with 10-15% yearly attrition (funds that go bust!), a lottery ticket for next year's hopes and dreams!
On the contrary, the jacket is stuffed with my pms which I plan on using to buy bread for my 'hood after the fall. Will show them how to harvest methane from pig shit and teach them about crop rotation. Hoping to be remembered as an Obama-like messianic figure and have a 16 foot tall bronze statue of myself erected in the center of town....
you know your av is from 'back to the future' don't you? i guess you didn't get the joke.
lol. yes, I'm aware of where my avatar came from. And it wasn't me who junked you.
Master Blaster runs Bartertown!
Nice. I imagine your ability to float without swimming will be something akin to Jesus walking on water.
An orange down vest is a lifejacket? And he's the stupid one?
Don't hunt much, do you?
see above reference to BTTF. and the wink in my comment. looks like you're the only one who didn't get it.
BandGap...so you missed Back to the Future part 2 then?
Damn navy deserters. They are everywhere and clueless.
At this point any question such as, "shouldn't Hedge Fund X outperform (__) index?" is akin to, "shouldn't the average drunk bum outperform that latest OTB race?"
TD...
Who facking cares.
I do ... free raw outspoken contrarian indicators aren't that plentiful in nature.
Plus, I use his kind as negative energy channeling buffer.
Every hedgie is a "legend", "guru", "titan", "genius".......in a fake Bernanke-induced bull market. As evidenced by the chart.....
The grizzly separates the wheat from the chaff.
ahh the Fall of 2010. Those were the best of times. Sigh..
Bad ZH!
When I grew up, I learnt that you are not supposed to be mean to the slow kids!
Its funny, 'cause its not me (or you)
Speaking of slow kids, I haven't seen my son running around here lately.
He probably got beat up by the cool kids.
There's always one in every class, Mrs. Trader: the kid who got pantsed in gym.
Hey, mine used to complain about that every day. Said they were the second worst thing kids did to him, behind swirlies, whatever those are.
MILF
I'm really self-conscious I look too much like Blythe Masters.
Blythe ain't got nothing on you girl!
Thanks girlfriend!
Mrs. Trader,
Robo got jacked up by TSA VIPERS on the freeway.
TSA launched a new campaign of random checkpoints on Tennessee highways last week, complete with a sinister military-style acronym--VIP(E)R
Ron Paul called to alert us. http://bit.ly/rDiE4x
Their clients aren't allowed to access this site.
Quite the (underperformance) gap there at the end.
Just seems like someone does not like him. He tells everyone his positions and then someone in Wall Street trades against him.
After he said he was long NFLX I even though about shorting it. I watched CRM go up after he said he was short.
Maybe he should figure out who is shorting against him. Or is that why he now owns GS stock?
Plus, anyone who shorted NFLX when he was saying to short it got CREAMED.
It looks like it did outperform the S&P... until it didnt....
higher highs and lower lows
= leveraged beta
Tilson shorted NFLX too soon, but went long NFLX recently, just after empirical proof was abundantly clear that NFLX has a fatally flawed business model (think of NFLX as Blockbuster 2.0 - because it really is), in an attempt to catch the falling Sword of Damocles.
I don't know if their current value is fair value, I wouldn't buy it yet but NFLX doesn't have a fatally flawed business model, its stock just got way ahead of itself. Sure people can find movies online for free but people will be willing to pay to have the ability to find movies in one place that can be streamed easily. To say the company is worthless doesn't make sense, they were certainly overvalued.
DVDs will soon be an endangered species, and streaming content makes NFLX little more than an unnecessary middleman. They don't own the content, they don't own the infrastructure, they don't own the presentation medium. At some point they will be cut out of the picture entirely.
not so sure about the "soon" part, as regards to the demise of DVDs. think of other legacy media that has lingered in the past......
When was the last time you bought a music CD?
Let's see:
1) Zero or the equivalent of business/enterprise real near zero cost (in the modern business era) barrier to entry.
Check
2) Lack of any significant intellectual property of a proprietary nature that forces consumers to use its service rather than current, or more importantly, emerging competitors (many of whom are far more well capitalized - think Amazon, Google, etc).
Check
3) Lacks any moat to not only prevent well capitalized competitors from stealing customers and compressing its margins (via price wars), but faces competition from alternative services essentially providing the same end user experience.
Check
4) Lacks ownership of the infrastructure upon which its core revenue generating activity depends on.
Check
5) Competes in a space that is likely to see the rapid onset of new technologies that bring better economies of scale and efficiencies to the playing field, as well as improvements to the quality of the product, which will not be benefits that accrue to it (see lack of proprietary technology and lack of ownership of 'infrastructure,' to allow it to build a moat to fix the aforementioned 'issues.'
Check
And as a bonus:
6) Faces hostile rebellion from former co-partners who see it as a threat to their own business model (ala Starz disaster).
Check
I agree with you. I do not think that NFLX is a buy here. Just the fact that they are splitting the two business's I see as a problem.
I think the reason they are spliting the Businesses is so if necessary they could Bankrupt one of them. I am thinking about the streaming business with all of the overhead costs. Or the other option would be they could sell one of them and keep the other. But I see this split as a real problem.
I would have shorted them after that announcement but was tied up in another stock.
1/2 the game is having a waspy, dumb name.
the other 1/2 is getting others with waspy dumb names to give you their inheritance to invest.
LOL- you just outed 90% of the hedge fund business....
changed my last name to tennenbaum and my client list is through the roof!
the absolute return blue bloods will be tracking you thru the FED's Social Networking Data Mining Program.. so that they can...
LOL!!
These idiots don't care about the money they didn't earn or themselves enough to be a threat to anyone other than themselves!
Why would they care about anything else? other than spending a life time trying to milk someone else's hard works and fore thought!
The 6% (then 5% then 4% and now the sub 1%) Crowd has always been the best pigs to slaughter, why is it that they, in their purposeful ignorance are as well the most surprised when the losses mount?
These people (broadly) don't care enough about themselves to be engaged in their own lives.. so how could one reasonably expect them to care about someone else or anything else for that matter?
Blissfully Ignorant, Purposefully Disconnected and ready to be Milked (wholesale) by the Hungry, Greedy Nuevo Riche'!
Goldman Sachs has to make payments into Lower Income Banks.. and becuase of the $10 Billion that Goldman Sachs took from the Government.. the requirement needs to be met!
Goldman then uses the money that they are required by LAW to pass out.. as a carrot.
the video is soooooooo worth the watch!
http://www.youtube.com/watch?v=wNif3r8sOO4&feature=relmfu
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And going to Harvard. He happens to be Ackman's classmate and buddy. Coincidence?
whitney is the buffett replacement for cnbc
Bubba, looking at your "performance", well I kind of did better then you, hehehehehe, and didn't pay 2/20, actually I paid myself, a lot!
Tyler, speaking of our ( and Whitney's ) friends in the media, plot T2 vs. Insana Capital Partners. The former Comcast personality/"managing director" of the firm which bears his name may well have outperformed.
Oh that's right. From Wikipedia: "Managing Director of Insana Capital Partners from inception to collapse." Can't plot against that one.
You people obviously don't understand hedge funds. they are measured on absolute performance and that fund has made its investors nearly 10% since inception.
I could never understand as to why this loser (that I would not even trust to wash my car) gets so much media exposure?!?
I guess because his largest holding is Buffet’s Berkshire.
If people keep money with hedge funds that charge these exorbitant fees and the fund consistently underperforms the S&P, well, then, these people are idiots and deserve to underperform the S&P.
Isn't delivering the same return with less risk the same as outperforming?
E.g. The fund matches the SPY return but has a Sharpe Ratio of <1.
Am I missing something here?
1st statement true
2nd statement false
from the chart, the fund's returns "look" more volatile than the market: a clear sign of leveraged beta
"shouldn't any hedge fund still in existence after 7 years, outperform the S&P?"
actually, yes, and it wouldn't have been all that hard. running an index portfolio over that time but omitting the large banks starting some time in 2009 (not even before the crisis!) and you would fairly easily beat the index.
I consider myself an educated long time reader of ZH. However, given all my knowledge that the average Joe doesn't have I still manage to make enourmously wrong decisions. Been reamed on PM stocks, oil stocks, shorting stocks, options, even picking stocks at random... Can not get it right.
Has anyone on here made a decent return overe the last year or so? At this point I am almost ready to throw in the towel and put everything into physical PM and my TD checking account...
Jumping in for a moment, one of my best returns over the prior twelve-month period has actually been PM...tobacco.
I have done Ok this year. Ever since Bernanke got out of the Market. But, only as a Day Trader. I try to trade the Highs or Lows of the Day and close out the position by the end of the Day.
I may not make as much Money but scalping a few hundred Dollars here and there does add up.
I find it really hard to make a profit if I hold overnight with all of the Gap Up's and the Gap Downs.
Yeah, I made 136% on SLV. Held for about 9mo, sold at $40 something.
Strategas has figured it out. They came up with a list of the top 50 companies that spend the most on high intensity government lobbying:
Per The Economist: In aggregate the results have been stunning, comparable to the returns of the most blistering hedge fund. The index has outperformed the S&P500 by 11% a year since 2002 (see chart). There have been bumps along the way: the index fell sharply in 2008 and again this summer, when debt-ceiling brinkmanship raised the prospect of government austerity. But at other times, it seems remarkable that companies would do anything but lobby. A particularly vivid example was in 2004, when an aggressive corporate campaign prompted Congress to grant a one-off tax holiday for American companies to repatriate foreign earnings. The outright return on lobbying costs, according to one of the various studies that served as inspiration for the Strategas index, was $220 for each $1 spent.
http://www.economist.com/node/21531014
Who is doing better than this? I'm now investing heavily in high intensity corruption, and shorting moral values.
That's amazingly smart and cynical. From the article it seems similar to another suggestion above-- major companies, minus banks because their lobbying is less "intense," meaning spending on lobbying/corporate assets. There must be a lot of military-connected companies in the index too, right?
Actually, scratch that, shouldn't any hedge fund still in existence after 7 years, outperform the S&P?
Yes, it should.
Tyler, can you please show us what Bershire would return vs. both the S&P and Treasuries over the last few cycles? I suspect "The Oracle" will not impress...
Most of my investing is sadly limited to shuffling between funds in the 401K -- and it's amazing how few of the options outperform the S&P over the last year, 3 years, 5 years etc. And all of these loser funds have higher fees than the simple S&P 500 index.
I suppose this indicates that it's hard to beat the S&P500, but what the fuck are the fund managers getting paid for?
This is what is meant by there is no alpha right?
"I suppose this indicates that it's hard to beat the S&P500, but what the fuck are the fund managers getting paid for?"
In a society where we pay people millions of dollars to hit a ball or throw it into a basket, it seems odd that someone would pay people money to invest it for them? I don't understand why idiots cheer for sports team but I understand that they are out there, its the same with investing.
I understand that fund managers should be compensated, but in 401Ks, the stock picking funds charge fees 3 to 4x that of the simple S&P 500 index while consistently underperforming it, as well as the guaranteed income options.
Sports is arguably more entertaining, aesthetically pleasing, and has traditions that build loyalty over the years. Plus, people pay mostly to see the game played well. I'm not sure why anyone would have loyalty to a fund for any reason beyond real return. That said, people with money would be better off transferring their intense engagement with sports to interest in finance. I'm making that transition myself, aided by the NBA lockout and the entertainment provided by ZH.
I REALLY wish ZH would do a segment on this total asshat, Jonathan Golub, from UBS/Bear Stearns/JPM.
He's on CNBS's RetardLunch saying 1350 by year end, and that Europe is "priced in".
This is the ultimate indicator how f'ed up the MSM is that this total richardhead is allowed on to provide "expert ANALysis".
Can ya'll give me some insight on this: Why do we (as a sovreign nation) borrow money from a private banking cartel?
I hear a lot of discussion about gold/silver replacing FRNs or at least backing a new currency. I don't think it matters what we use of for currency or what backs it. It's not WHAT we use for currency, it's WHO controls the production/destruction of the currency. Currency should be a debt free public utility. The volume of currency in circulation should be controlled by 'we the people'....debt free, no interest due! Gov't prints and circulates we just don't charge ourselves interest. National debt...GONE. That was simple.
What's that you say... The representatives of the people would take advantage and print to oblivion creating massive inflation....um look around. They're doing it now! AND we now have the interest due to contend with. Think like this, what If we gave the govt the ability to create debt free currency, as a utility, instead of borrowing from the Fed (with the expectation of having to pay back interest). If there was over deflationary pressure, expand currency in circulation, if there was over inflationary pressure, decrease the volume of currency in circulation. If the representative of 'we the ppl' recklessly over expanded that money supply (hyper inflationary) at least I would know, without a doubt, who was to blame. The avg. American doesn't even know who to be pissed off at right now...the potus, the bankers, the fed...
Where is the flaw in this logic?
Blames Netflix? Someone grab ya by the throat and make ya buy that stinker? I hear Goldman has an opening, soon to be several...
New chappy plenty of ways to make money in last year, its just been extremely volatile, holding a lot of cash and firing in the items youve listed above after corrections would have worked fine.
Full disclosure: silver hurt me twice this year! Yet still posting signifcant gains....
New chappy plenty of ways to make money in last year, its just been extremely volatile, holding a lot of cash and firing in the items youve listed above after corrections would have worked fine.
Full disclosure: silver hurt me twice this year! Yet still posting signifcant gains....
So it's basically like an S&P500 index fund, but without liquidity and with higher expenses?
Wow, that's great. Shame I don't have the net worth to join in.
I should start a hedge fund. Im up 300% since 2003.
I decided to learn everything I could about the market after the 2000 tech explosion, I lost money for two years straight because I bought into the buy and hold, dollar cost average crap CNBC and other supposedly professional money managers spew.
Run your own money.... its a no brainer.
Bernie? Bernie Maddoff? Is that you??
Paraphrasing Buffett... It was easy making money when the stakes were low(er) and he didn't have as much on the line. Manage other people's money, with FINRA and SEC auditors, litigation lawyers... rules and regs. beyond any possible comprehension... and let me know how much of a "no brainer" it is.
Of course, running a hedge fund SHOULD be easier, what with limited oversight, limited requirements for audited performance, open use of leverage, unlimited insider access (I won't call it 'insider information'), co-location.... These guys play on an uneven playing field and STILL haven't been able to generate consistent Alpha!!
No disrespect intended, by the way...
How do you escape it? Correlation is 1.0 among all assets, money managers, and even businesses. Nobody can outperform anyone else in this centrally planned world. Central banks print precisely the amount of money to neutralize all the market forces, no more and no less. If the business cycle is a sine wave, the Federal Reserve is a cosine wave whose sum results in a straight line with no deducible information about either force.
There is only one way mathematically to have a correlation less than 1, and that is to short. Market neutral funds can have correlation close to 0, but that doesn't mean they will make money or beat the S&P 500. In fact most of them have done worse than the S&P 500 since March 9 2009.
Too Funny. The Fast Money Gang jizzes all over themselves whrn they have this guy on as a stand-up guest. THey think he's a genius.
One would think that the fee structure would be directly linked to actual performance. Most of these hedge fund managers are charlatans and think that 2 & 20 is justified simply by calling yourself a "hedge fund" - it's certainly not based on superior performance and acutal alpha generation in most instances. Despite being willing participants, the various hedge fund LPs (institutional, FOF, HNW) are idiots for buying into this scam.
Equity Hedge Funds are all GUARANTEED to lose versus the indexes over time.
The reason is basic Casino 101: the odds always favor the house.
The Fed and the Exchange Stabilization Fund do not CARE about the Hedgies- They care about the INDEXES, so POMO and ESF will always move to adjust the indexes whichever way TPTB need them to go in order to preserve and maintain MOPE.
.gov has .unlimited liquidity- The hedgies do not.
The hedge funds are scrambling to try and beat the indexes by a percentage that will make them AND their customers a net capital gain, but they are doing it at a giant craps table where the other player (.gov) is allowed to use their own set of dice (and one die is all 5's, and the other die is all 6's)... And the hedgies keep wondering how the government can keep betting on the 16 to 1 line, and why the Dealer keeps yelling "YO-LEVEN"...
he loves GS stock too, he is clueless, already down probably 10% on his NFLX long position
Well she has actually done pretty well for herslef. You add back in that 2%-20% and she has really outperfomed the S&P over 7 years on her own money
Now on top of that skim a 2%-20% annually on S&P returns and you have a pretty darn good wealth creation machine
Who are the people who invest in such crap and how do I meet them and their money??????
Well he has actually done pretty well for himself. You add back in that 2%-20% and she has really outperfomed the S&P over 7 years on his own money
Now on top of that skim a 2%-20% annually on S&P returns and you have a pretty darn good wealth creation machine
Who are the people who invest in such crap and how do I meet them and their money??????
One point I always like to make with HF comparisons..... T2 (as well as other funds) managed to only equal (on a good day) the S&P by taking waaaaaaaaaay more risk than the guy who bought SPY using NO leverage and fell asleep for 7 years. And in talking about overall HF performance over a given period.... Don't forget reporting errors and misreporting, intentional or not (I'm sure this doesn't happen with Whitney*) One trick SOME HFs have played is to bank excessive returns one year for reporting (e.g.) the next year when they need to make their high water mark. And don't forget 'survivor bias' in reporting.
* Note the sarcasm.