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So Much For "Value Investing" - Whitney Tilson Plunges 13.3% In August, Down A Mass Redemption-Inducing 21.1% YTD
If anyone works in finance, chances are they have at some point, or more likely, constantly, received emails (we want to keep it civil) to participate in the Value Investing Congress, which purportedly, promotes ideas based on, well, value. Alas, if that is indeed the case, then primary sponsor Whitney Tilson's T2, has to urgently look up the definition of velue. To wit: "Our fund declined 13.3% in August vs. -5.4% for the S&P 500, -4.0% for the Dow and -6.4% for the Nasdaq. Year to date, it’s down 21.9% vs. -1.8% for the S&P 500, +2.1% for the Dow and - 2.2% for the Nasdaq." Even more to wit: "On the long side, our portfolio got clobbered across the board despite generally good company- specific news regarding our major holdings (discussed below). Amidst a tumultuous month in the markets, investors dumped stocks that were even slightly illiquid, or that are valued primarily on future, rather than current, profits – both traits that characterize many positions in our fund. One of our biggest advantages is being willing and able to look out 2-3 years when most investors are looking out 2-3 months (or, in many cases, 2-3 microseconds), but this hurt us last month." But wait, despite what is basically the start of yet another hedge death watch, Tilson sees smooth sailing ahead. "In our view, the turmoil of the past month has created the best bargains we’ve seen in the market since the chaos and panic of late 2008 and early 2009. Of course stocks aren’t anywhere as cheap now as they were then, but the risks aren’t nearly as great either (we think many people didn’t realize or have forgotten how close we were then to a worldwide Great Depression), so on a risk-adjusted basis we think our portfolio is as attractive now as it was then." We can only hope Whitney has some, any, money left to spend on chasing these amazing value bargains. In the worst case, the fees from the VIC conference should find the purchase of at least one block of ES.
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Bullish.
I would call these guys anything but 'money managing' folk.
At least I didn't pay any1 to loose me 20% that I can do solo :)
One of the advantages of being down 21% in a year is that you need to average being up 13% over the next two to break even. So we've got that going for us, which is good.
real value investing is gold, bitchez.
http://azizonomics.com/2011/09/01/why-nouriel-roubini-is-wrong-about-gold/
You don need a whole post for that. He? wrong on gold because he was told to be wrong on gold. Zionist paper currency pushers stick together.
Because everything is a conspiracy by the Jews.
/sarc
BUY AND HOLD BITCHEZ!!!
It certainly feels like this reserve banking charade can go on for much, much longer--twenty or thirty years or more. Think about the news with Brazil. If every country lines up in a circular firing squad, all currencies get devalued relative to one another. None of the majors are going to zero, though I would love to see it.
As for QE, think about it like this: If Operation Twist or Torque happens, 2 year yields get sold and short-term rates stay low because of ZIRP until 2013. The Fed uses money from the sale of 2 year notes to buy longer yield. That means no new money is printed (except for what banks loan, which would actually stimulate the economy), and banks do in fact have to start lending, because Treasury note and bond yields are so low, there is no other place to look for a reasonable rate of return (i.e. one that keeps up with inflation). This also means that stocks look much more attractive. Could it actually work?
The Fed isn't stupid, and banksters have a plan to stick around for a lot longer. The ONLY argument that the system won't fail is that TPTB have a vested interest in its existence, and they have the benefit of thinking outside the box to keep things moving. Twist or Torque is pure evil genius . . . and I have a feelling we haven't even started to see them get creative.
They will have to get very creative. They will have to create qualified borrowers out of thin air.
yeah, um, to lend successfully they have to like get paid back and shit.
There's no demand for credit at these prices because there is nothing here to do with the money that will turn a positive ROI after interest.
Well said.
Mr. Bernanke. Let me introduce you to The Law of Unintended Consequences.
And a heck of a lot of resources as well - oil, fresh water, etc.
You do remember why the soviets built walls, right?
To keep people IN.
IMHO, value vs. growth is a senseless argument. Every money firm's definition of growth or value is a little different from the next.
Well, at least Whitney isn't an index hugger.
Me thinks that one should buy what he's selling and sell what he's buying. +80% for the year.
Funny how "cheap" stocks always seem to find a way to get cheaper right up until you think people are giving them to you at which point you discover that you're an idiot. Learned that 25 yrs ago.
When stocks and your portfolio goes to zero, we'll an infinite return on nothing.
"In our view, the turmoil of the past month has created the best bargains we’ve seen in the market since the chaos and panic of late 2008 and early 2009. Of course stocks aren’t anywhere as cheap now as they were then, but the risks aren’t nearly as great either ..."
Sorry, Whitney ... but Reuters has a different take:
Analysis: Big-name stocks cheaper than during 2008-09 crisishttp://www.reuters.com/article/2011/08/31/us-markets-stocks-pe-idUSTRE77...
Even as S&P 500 earnings soar past Wall Street estimates quarter after quarter, the lack of investor confidence has dropped the forward price-to-earnings ratio of at least 50 of the largest U.S. companies below their crisis lows, according to a screen of Thomson Reuters data.
Investors are now willing to risk less cash for every $1 in earnings they expect to rake in for upcoming quarters than they were in 2008 or 2009.
I love how someone want to sell their fail. Shocked that they say that investors are now reacting in nanoseconds...you all trained them to flip paper over paper to make comissions as fast as possible. So now they learned to be faster than you :) good luck
I recall years ago being very bullish and informed about a very small cap stock(the company that made the BreatheRight nasal strips). He and I exchanged opinions(he was not long the stock and challenged the value that I thought was abundant in it).
Normally, I would not disrespect someone's contrary opinion to mine if I thought the homework behind the opinion was there. His was clearly not worthy of respect.
The stock went up 10x in the next couple of years.
I think he is vastly overrated.
average down in JCP and "delighted" that GS earnings were weak...got it...
And there goes another Big Boy of the Hedgie world. Paulson, Ackman, and I even count Gross in the group.
For sure they're not 'fully hedged'. That was always BS. And for sure they are all correlated. Like everything else in this screwed up environment: all placing bets at the table with the Fed as the Croupier. All trying to frontrun, not actually Invest (meaning putting capital to work in productive industry)
So many funds forced to chase yield instead of invest. Pure risk. This is where we are now. The sheep have been herded into a corner. At some point they get sheered. Retirement funds galore get wiped out in a flash, leading the muni's into the abyss. Seeing some of these big funds start to take hits is scary. Is the market slowly turning to cannabilize itself?
Another glaring reason to manage your own money. He should do the right thing and not charge a fee for doing such a shitty job.
funny how buying an index fund for a few basis points in management fees would be yielding far better results this year.
They will switch to HFT soon
Their returns since inception is really disgusting. 8.5% against 23.6% on the SnP? Could have just bought into an index ETF, made higher returns with lower fees.
He likes Wells Fargo and B of A because Buffett, his Pied Piper, is in them.
Again, not worthy of respect, because he basically just follows Buffett around. Where does that leave him and his investors when St. Warren goes on to that great candystore in the sky?
And Wells is the best franchise in banking? C'mon they are every bit as insolvent as B of A. Just take the HELOC portfolio --the collateral - the home equity- is all but long ago evaporated. And just that part of their balance sheet is 2x the entire shareholder equity of Wells --- and that is not to mention all the other Wish-we-had-never-done-those consumer and business loans they're buried under. Take away extend and pretend accounting and Wells is every bit as dead as B of A.
THAT is what he considers the best franchise in the industry? Maybe the franchise is worth something once they wipe out all the current shareholders and bondholders and recap the company, but certainly not now.
Maybe Tilson meant to say that WF is best Zombie in the race.
WF has been actively getting in their own way at unloading their HELOC portfolio. They cling to this ever depreciating colateral as if it actually has the value they are claiming it to have on their cooked books.
Whether or not WF's "extend and pretend" is a by design strategy or simply a by product of cluelessness, it appears to be working. At least until B of A goes Lehman and someone actually looks at their true liquidity.
I have always respected Tilson's analysis, especially of the real estate & lending sectors, but I would have never let him make my mistakes for me, especially in equities. He should stick to selling analysis.
We can only hope Whitney has some, any, money left to spend on chasing these amazing value bargains...
Funny, that's what I was thinking as I was reading the preceding sentences. Somehow I doubt Whitney is the type of person who sits on much useless cash so time to recruit some more suckers, er, value infestors.
My conclusion of this article is that if we "were" on the edge of a global depression..............Now we're really fucked because we blew trillions propping the garbage up and it's all coming down. Again. This is like setting for sail to China from the US on a ship that has 1 million holes. Before it leaves shore they patched 300k of them, then hand you a 5 gallon home depot bucket full of puddy and a spatual and hope you can keep up with the leaks. Result: You drown. And so does everyone else on the ship.
setting the bar low.......2012 should be a banner year of -12%
I am so relieved to know that T2 only bought BAC after Buffett. Oh, an that Bill Ackman owns JCP. That's what 2 and 20 gets today!
I only lost my shirt, what a value!!!!
A penny saved is a penny earned is what I've always heard, but I guess these folks don't subscribe to the same mentality, even after they lost their ass holding losing positions. Their excuses for poor money management give more reason to flee the fund then the poor money management itself, IMO. Can't expect them to change anything when they wont admit they were wrong.
You are what your record says you are....
whitney...put your NFLX short back on dude...
starz netflix
So in summary, every stock that can be levitated by CPUs purchasing ES, Dow and Nasdaq futures has been miraculously raised from the dead this month, while other US stocks and every other stock exchange in the world is still 20% down?
Even a cursory glance at ZH and a few Marc Faber \ Peter Schiff Youtube videos would have told you that stocks were due a correction. What do these people do all day?
Farmville, of course.
What kind of L/S equity manager maintains net exposure of 76%??? A "hedge" fund in name only. That's why you got bitched slapped, Whitney.
good point
B-but Whitney Tilson had a system!
Only gamblers have "systems"
And Sept has gotten off to great start with his largest position, Berkshire down 2.3% today.
What Whitney does not yet realize is that we are in a depression NOW.Today's bargains will be look overpriced wihtin a year.
Since its inception his fund is up in single digits(not annually) for the last 5 years.Why does this man get so much free press?
I thought value investing died when Warren bought 5 billion worth of BAC
Benjamin Graham would be spinning in his grave.....
Tilson's more into charter schools than investing. http://edreform.blogspot.com/
Be careful of his education mailer... there's no way to opt out. I've heard similar for his funds... no way to opt out.
OK - When Whitney looks up the definition of velue, she can tell the rest of us. That's value Tyler, value. I'm an editor and even with these here fancy word processin machines, its astounding how many misspellings I have to correct. That one was a hoot.
Speculating in zombie financials that are allowed to commit accounting fraud everyday and pay little or nothing in dividends is what passes for "value investing" these days?
Sad.
Is Whitney Tilson a HE or a SHE ?
No one seems to freekin know - and it's starting to really bug me!
Whitney is a guy.
Very few rich people name their male children "Bubba".
Well I'll tell you one thing: any guy growing up in the S. Bronx in the 60s with a faggot name like "Whitney Titson" woulda got his ass kicked so bad , he woulds been very happy to have been called Bubba.
He should be thankful his last name wasnt "Museum". LOL!
I think I shall start charging huge sums for my investment advice, as I tend to do much better than most of the Big Names. Sheesh.
serves him right for being long BP...
No, I'm reminded of it everyday. This dumbass Whitley Tilson lives in a bubble more impenetrable than the one Obama lives in.
#opened new position in GS
those guys are idiots.. did they look at chart of GS?
THERE IS NO SUPORT WHATSOVER UNTIL LOW OF 2008..
LOOK LIKE TO ME GS IS GONNA TEST 2008 low..
soryy for people who invested,
alx
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