Hedge fund manager lost more than 30% in '18: 'Nothing went right'

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percy
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Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by percy »

Comedy Gold!
"Nothing went right for the entire year," Einhorn said in the letter to investors. "In 2018, the losses were a mile wide and a yard deep. It's much easier to explain results when they are driven by large moves in a few names. It's much harder when the answer is a lot of everything. But today, it feels more like a combination of a few where we were wrong, a difficult environment for value investing, and a lot of adverse variance."
Ooh, "adverse variance" is rough; still, I don't know why he couldn't just factor for that and time the market accordingly...
Einhorn's collapse came in a dismal year when stocks and other risk assets took a hit from the ongoing trade battles and slowing global growth. However, Einhorn's hedge funds underperformed the market drastically — the S&P 500 ended 2018 down just 6 percent. His funds have been lackluster since 2015 when they lost more than 20 percent. They returned 7 percent in 2016 and 1.5 percent in 2017.
The underperformance in 2018 has inevitably led to "substantial redemptions," which forced Einhorn to reopen the funds to gain additional capital. Einhorn had not allowed new investments in four years.

"At this point, we no longer believe there is risk of our assets growing too quickly (other than through improved performance), so for those interested in investing, the answer will now be yes," Einhorn said.
Phew, glad to hear there's no risk of assets growing too fast! Don't let this rare investment opportunity pass you by folks.
Always passive
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by Always passive »

The problem is very simple. Hedge funds started as long short tools that provide absolute return, or at least close to it. However, the word "hedge" does not mean anything anymore. It has become a vehicle for managers to use what is supposed to be their superior skills to do what they want with no constraints. And if you combine that with investors that believe that these people know better, you get two things, a) a wealthy, very wealthy manager; and an investor loses his shirt.
I was hired by a group that wanted to start a Fund of Hedge Funds to look at building a portfolio strategy. During the process I was shocked by what I saw. But there are enough suckers to keep the business going.
Nowizard
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by Nowizard »

However, did you see that a "Billionaire" hedge fund manager just purchased the most expensive residence ever in Manhattan overlooking Central Park? It doubled the previous most expensive purchase for a 24,000 s.f. condo. How would Bogleheads feel about a fund with expense ratios allowing such accumulation of wealth?

Tim
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by goblue100 »

Wait, I thought hedge funds were supposed to shine when the going got tough?
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by Independent George »

Nowizard wrote: Thu Jan 24, 2019 7:33 am However, did you see that a "Billionaire" hedge fund manager just purchased the most expensive residence ever in Manhattan overlooking Central Park? It doubled the previous most expensive purchase for a 24,000 s.f. condo. How would Bogleheads feel about a fund with expense ratios allowing such accumulation of wealth?
You know the old adage about how the real way to make money in gold is to sell shovels?

I need to start figuring out what kinds of things I can sell to hedge fund managers...
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rob
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by rob »

I didn't see what he was paid for such an outstanding performance.... Bet it was "livable". :oops:
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SagaciousTraveler
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by SagaciousTraveler »

Perhaps we should leverage our Hedge Fund contest to solicit his customers.

We have plenty of Bogleheads that put little effort into picking stocks (long and short) and are doing quite nicely.
lyrictulip
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by lyrictulip »

Adverse variance is such a wonderful euphemism for bad luck
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by Tamalak »

percy wrote: Thu Jan 24, 2019 2:51 am They returned 7 percent in 2016 and 1.5 percent in 2017.
How is this possible? Everything was up in 2017, everything. To make 1.5 percent in 2017 is like going outside in a rainstorm and dodging all the rain. These guys are really geniuses.
lyrictulip
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by lyrictulip »

Tamalak wrote: Thu Jan 24, 2019 10:28 am
percy wrote: Thu Jan 24, 2019 2:51 am They returned 7 percent in 2016 and 1.5 percent in 2017.
How is this possible? Everything was up in 2017, everything. To make 1.5 percent in 2017 is like going outside in a rainstorm and dodging all the rain. These guys are really geniuses.
Easy! You take a 19% return, subtract 17.5% in fees, and claim that the difference is because of your brilliant "hedging" strategy.
alfaspider
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by alfaspider »

Out of ~70 random Boggleheads who entered the 2018 hedge fund contest and probably spent around 10 minutes deciding on their investments for the year, he did worse than about 60 of them :oops:
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by Jack FFR1846 »

Hedge fund managers.......sigh

https://www.youtube.com/watch?v=1YZ25T0 ... e=youtu.be

Go to about 11:30 for only some of Skippy's cars in his garage. He founded and runs a hedge fund and this is his house in Glastonbury, CT. Although there's maybe $15M in cars in the garage there, they aren't even showing his Koenigsegg Agura RS or Pagani Huyra BC (If you only have a million dollars, you don't have enough to buy either of these cars). You could follow him or his son on instagram (my son does). Sorry, I don't have their full instagram names.
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percy
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by percy »

lyrictulip wrote: Thu Jan 24, 2019 8:44 am Adverse variance is such a wonderful euphemism for bad luck
Yeah, I'm not very well versed with investment terminology, but that phrase sure stuck out to me as pure bullshit.
Last edited by percy on Thu Jan 24, 2019 12:56 pm, edited 1 time in total.
KlangFool
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by KlangFool »

OP,

You need to change the title of your topic.

<<Hedge fund manager lost more than 30% in '18: 'Nothing went right'>>

The hedge fund loses money but the hedge fund managers are doing very well collecting their fees. The fund manager did not lose money.

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taeham200
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by taeham200 »

Einhorn thinks it's discipline but I think he's been stubborn. Yes value and growth diversion has never been like this. However, with the fed put and low interest rates, growth was going to outperform.
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percy
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by percy »

KlangFool wrote: Thu Jan 24, 2019 12:42 pm OP,

You need to change the title of your topic.

<<Hedge fund manager lost more than 30% in '18: 'Nothing went right'>>

The hedge fund loses money but the hedge fund managers are doing very well collecting their fees. The fund manager did not lose money.

KlangFool
Important point, but the title is from CNBC; not mine. Full title from the article:

Hedge fund manager Einhorn explains why he lost more than 30% last year: 'Nothing went right'
KlangFool
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by KlangFool »

percy wrote: Thu Jan 24, 2019 12:55 pm
KlangFool wrote: Thu Jan 24, 2019 12:42 pm OP,

You need to change the title of your topic.

<<Hedge fund manager lost more than 30% in '18: 'Nothing went right'>>

The hedge fund loses money but the hedge fund managers are doing very well collecting their fees. The fund manager did not lose money.

KlangFool
Important point, but the title is from CNBC; not mine. Full title from the article:

Hedge fund manager Einhorn explains why he lost more than 30% last year: 'Nothing went right'
percy,

You do not have to repeat their titles. His fund lost 30%. He may or may not lost 30%.

KlangFool
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DanMahowny
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by DanMahowny »

He has a large short position on Tesla.

I'm certain he will make a substantial profit in 2019 (as I will) when Tesla enters bankruptcy.
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by lukestuckenhymer »

lyrictulip wrote: Thu Jan 24, 2019 8:44 am Adverse variance is such a wonderful euphemism for bad luck
Sounds familiar!
https://www.youtube.com/watch?v=vuEQixrBKCc
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Darth Xanadu
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by Darth Xanadu »

fourkids wrote: Thu Jan 24, 2019 9:22 am
Nowizard wrote: Thu Jan 24, 2019 7:33 am However, did you see that a "Billionaire" hedge fund manager just purchased the most expensive residence ever in Manhattan overlooking Central Park? It doubled the previous most expensive purchase for a 24,000 s.f. condo. How would Bogleheads feel about a fund with expense ratios allowing such accumulation of wealth?
Tim
I can't believe hedge fund managers still get away with charging 20% carried interest (basically they take 20% of all gains). And it gets taxed at Capital gains rates! What a racket!
And that's on top of a management fee, usually (at least historically?) 2%
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Spinola
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

Post by Spinola »

Should've invested in index funds.. :oops:
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Re: Hedge fund manager lost more than 30% in '18: 'Nothing went right'

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