2023 Hedge Fund contest

[Greywolf]

Greywolf Holdings

Long-
GOOG
MSFT

Short-
BBBY
RIVN

Thanks!

[Raymond]

Baby Needs A New Pair Of Shoes, LLC

Short: TSLA

[Random Musings]

The "Tempting Fate by Banking on Gold" Fund

Long

AEM
CFG

Short

FATE


RM

[dumb_luck]

Your Friendly Neighborhood Hedge Fund

Long: MTH, PHM, TPH

Short: H

[mokaThought]

Gilbert Gottfried Capital

Short: GSHD

[Tanelorn]

The "Tempting Fate by Banking on Gold" Fund

Long
AEM
CFG

Short
FATE

AEM is Canadian based and hence isn't in the Russell 3000. There are several other large gold companies that are, so you're welcome to pick one of those instead.

[Tanelorn]

Tanelorn Capital: Blood Bath & Beyond
Our concentrated portfolios are designed to debunk that myth that short selling is risky and remind potential investors that no matter how cheap a stock is, there is always 100% to be made on the way to zero.

Short:
BBBY - Bed Bath & Beyond (last price $1.60, up a lot premarket)

Mudpuppy already posted the same pure short BBBY portfolio, and while we try hard to avoid duplication, after carefully reviewing dozens of promising short candidates, we wholeheartedly agree with her assessment and this one is our top short pick. In part to resolve ties, and as we know some may take issue with our unusual approach, we also offer a more diversified short-bias alternative portfolio for those seeking a more conservative approach to short selling.

Short:
AVYA - Avaya Holdings
CORZ - Core Scientific
PRTY - Party City

Unlike last year where inspiration was scant, this year short candidates abound and it's hard to pick just one (or three). The EV space has many promising candidates even after the popular Tesla pick (RIVN, LCID, BRDS, GEOV, FFIE, RIDE, MULN), as well as the crypto-related stock space (CORZ above, CLSK, COIN, MSTR, GREE), and other retail favorites like AMC, CVNA, and BYND were rightly well represented among our astute managers' short picks. That's all by way of saying we think the short picks will do quite well this year, although which will end up on top remains to be seen. The competition for the worst performing stock is expected to be fierce!

Best of luck everyone and don't forget to post your picks and/or corrections by 4pm ET today.

[Artsypenguin]

Penguin consulting
Long
Brk.b Berkshire Hathaway b shares
XOM ExxonMobil
GOOG alphabet class a shares
Short
TSLA Tesla
COIN coinbase
CMG Chipotle mexican grill

[MnD]

Boomer's Sunset Fund

Short: EAT Brinker International, Inc.
Short: DRI Darden Restaurants Inc.

[danbdzs]

as well as the crypto-related stock space (CORZ above, CLSK, COIN, MSTR, GREE), and other retail favorites...

Tanelorn has shown an amazing short selling track record, but I'd like to take the other side here:

Fund name: Am not Armstrong

Long:
COIN

[Chrono Triggered]

Fund name: Dice Rollers

Long:
BIPC
GOOGL
EMR

Short:
BURL
CVX
LLY

Thank you!

[jjj_22]

Sign Here Fund

Long: DOCU

[Random Musings]

The "Tempting Fate by Banking on Gold" Fund

Long
AEM
CFG

Short
FATE

AEM is Canadian based and hence isn't in the Russell 3000. There are several other large gold companies that are, so you're welcome to pick one of those instead.

Correct. It's 4:!6, so I'm down to CFG long and FATE short.

Could the Fund name be changed to "Tempting Fate by NOT Banking on Gold"

RM

[whodidntante]

There are some awful businesses out there. Drink it in! Good luck, y'all!

[Tanelorn]

Never Gonna Give You Up

Long:

RICK
ROLL

I'm sad to report that as of late 2022, after the Russell 3000 list was made, RBC Bearings Inc changed their ticker from ROLL to RBC. You can still have the stock pick of course, but it doesn't quite go as well with your theme.

[Tanelorn]

The markets are open and the game is afoot. Starting this morning you should be able to see live updates on the state of the contest below:

Current Standings - 2023 hedge fund contest

[Darth Xanadu]

The markets are open and the game is afoot. Starting this morning you should be able to see live updates on the state of the contest below:

Current Standings - 2023 hedge fund contest

Many thanks for once again running this operation Tanelorn!

[Artsypenguin]

Thanks for keeping track of this, good luck to everyone

[LadyGeek]

I'll add my thanks to Tanelorn.

The wiki has been updated: Bogleheads® contests ("current standings" in the 2023 row of the Results table)

Everyone should check the spreadsheet to be sure it's correct.

Also, the fund names are linked to BigCharts (by MarketWatch). Click on the fund name to see how it compares to the benchmark (VTI).

[Beensabu]

Never Gonna Give You Up

Long:

RICK
ROLL

I'm sad to report that as of late 2022, after the Russell 3000 list was made, RBC Bearings Inc changed their ticker from ROLL to RBC. You can still have the stock pick of course, but it doesn't quite go as well with your theme.

That's okay. At least I got to post it I'll stick with the pick.

[Tanelorn]

Tanelorn has shown an amazing short selling track record, but I'd like to take the other side here:

Fund name: Am not Armstrong

Long:
COIN

Congrats on the good start. danbdzs is in first place with his Coinbase pick +13%. Who knew 20% layoffs were a bullish sign? Not me.

Meanwhile, BBBY has several short selling managers tied for dead last at -28%. Apparently hiring bankruptcy advisors and firing staff were very bullish for them also today, because it sure wasn’t their Q3 earnings this morning where they reported record losses.

Quite the spread on the first day, and we have more volatility in store with the CPI coming up later this week. Meanwhile, please check to see that your fund appears and your picks are correct in the spreadsheet below (and reply if you find any errors).

Current Standings - 2023 hedge fund contest

[Mudpuppy]

Meanwhile, BBBY has several short selling managers tied for dead last at -28%. Apparently hiring bankruptcy advisors and firing staff were very bullish for them also today, because it sure wasn’t their Q3 earnings this morning where they reported record losses.

At least I'm in good company at the bottom of the rankings, heh. I'm still trying to remember which TV show had that quote. It was something from the 1990s/2000s TV era, and it's not exactly the most searchable of phrases. Well, we'll see if BBBY survives so I can keep thinking "It's BEYOND!" (with a mental hand flourish) when I drive past a store.

[Columbia85]

Hi Tanelorn:

After I messed up with BP (foreign), I edited my post a few says ago to add a different long (AMZN). Perhaps I should have sent a new reply instead so you saw it. You can add to spreadsheet if you want.Thanks for putting this together!

[LadyGeek]

The post is here: Re: 2023 Hedge Fund contest

If a post has been edited, the date and time are displayed at the bottom of the post. "Last edited by Columbia85 on Sat Jan 07, 2023 8:32 pm, edited 1 time in total."

[Tanelorn]

After I messed up with BP (foreign), I edited my post a few says ago to add a different long (AMZN). Perhaps I should have sent a new reply instead so you saw it. You can add to spreadsheet if you want.Thanks for putting this together!

Ah, I missed it. Fixed.

[Tanelorn]

Meanwhile, BBBY has several short selling managers tied for dead last at -28%.

Did I say -28%? BBBY shorts are now -115% at the close and dodging margin calls from their brokers, while hoping that “efficient market” resumes any day now. The after hours highs were as high as -160%.



No one said holding your positions through volatility would be easy.

Current Standings - 2023 hedge fund contest

[whodidntante]

Tanelorn, fretting over a 100% loss is for amateurs and sometimes Rick Ferri. strong!

[Tanelorn]

Tanelorn, fretting over a 100% loss is for amateurs and sometimes Rick Ferri. strong!

Who's fretting? You just give yourself unlimited margin from your associated broker, backed by customer assets, tell them not to margin call you (since you own that biz too), and hope no one notices before the trade works out. Works less well for stocks I guess, being more regulated, but could have worked for FTX, MF Global, etc, in less regulated markets.

[Tanelorn]

goodLife’s crystals ball was working well and he briefly took first place with his huge CVNA gains (80% by my recollection), but like BBBY, it’s fortunes turned while crypto continued a strong move higher and COIN gains has danbdzs in first place now 30% gains.

Meanwhile, a couple of nameless Bed Bath skeptics were down about -325% yesterday and are back to a mere -125% or so presently.

Current Standings - 2023 hedge fund contest

[er999]

In real life if you are short -100% you’ve lost all your capital, correct? You can’t go -125% like Bed bath and beyond is as
of 1/13 and still keep your position without adding more money? Not planning on shorting any stocks just curious if in real life shorting is more difficult than this contest.

[LadyGeek]

The term "short" should be replaced with "borrow". The wiki has some background info: Short selling stock

Note the big orange caution box at the top of the article. Don't do this in real life unless you really know what you're doing.

From the linked SEC article: SEC.gov | Investor Bulletin: An Introduction to Short Sales

If the price of the stock drops, short sellers buy the stock at the lower price and make a profit. If the price of the stock rises, short sellers will incur a loss.

[...from the example] Unlike a traditional long position — when risk is limited to the amount invested — shorting a stock leaves an investor open to the possibility of unlimited losses, since a stock can theoretically keep rising indefinitely.

You have to repurchase the stock from your own funds. If it rises in value, you'll need to find the money from somewhere.

[Tanelorn]

In real life if you are short -100% you’ve lost all your capital, correct?

Yes, if you take all your money and bet it on a single short, you have zero equity in the account when the stock rises +100%.

You can’t go -125% like Bed bath and beyond is as of Jan 13 and still keep your position without adding more money?

That would depend on the brokerage’s margin requirements, but typically you would have had to add extra money even before -100% due to a margin call. That said, margin calls usually have a few days before you have to provide the extra money, so if the stock rapidly moves back in your favor, maybe you could get away without adding extra. However, that time frame is at the broker’s discretion and the more severe the stock move is, the less likely they are to give you the time. Their risk is that the stock rises more than +100% so your account becomes negative in value, doesn’t recover in your favor, they close the position at a loss, and then they can’t collect the negative value from you and eat the loss themselves. Bad for business letting that happen.

just curious if in real life shorting is more difficult than this contest.

Yes, both. Shorting is way way more complicated. Stocks must be borrowed, and can be difficult or expensive find from people who have not already lent them (or rather, brokers who have already lent their stock, collect the high lending fees, and don’t tell or share those with the customers). Costs are variable and often high for stocks that are in high demand among short sellers. Short squeezes, such as the one last week where many highly shorted stocks all rose simultaneously, can cause margin calls across the short selling community and force them to cover lest they incur large losses or margin calls. Stock shares once borrowed for a short sale can be recalled by the lender, so short sellers may be forced to cover at times not of their choosing and usually at detrimental prices. All of these factors and risks vary on a case-by-case basis, and none of which lend themselves to easy inclusion in the contest.

If you’re considering shorting a stock as a beginner, the best way to start is via long put options. You pay a fixed premium to buy them, all you can lose is that premium (-100%, if the stock never drops below the option strike price), and all the headaches about variable costs and borrowing is someone else’s problem. For example, if you thought BBBY was going to be worthless in bankruptcy rather than the next GameStop meme wonder, you might buy the Jan 2024 $1 put options, last seen at $0.67. If the stock is indeed wiped out in bankruptcy and worthless in a year, you’d make the full $1 and earn 50% returns. If it stays over $1, you lose 100%. That’s not great, but you can’t lose 500% along the way or have to pay large fees that might eat up all your headline profits and then some, even if you avoid the margin calls and such along the way.

[LadyGeek]

^^^ An important point -

"Never invest in anything you don't understand." If you don't completely understand what Tanelorn is discussing, stop. You can always ask for help in the forum, but consider the risks with what you are considering.

[Jags4186]

One of the stocks I am invested in, LPI, is being reported as $0.48/share instead of $48/share. This of course is making my Hedge Fund drastically underperform

[Tanelorn]

One of the stocks I am invested in, LPI, is being reported as $0.48/share instead of $48/share. This of course is making my Hedge Fund drastically underperform

Thanks. Laredo Petroleum (LPI) rebranded themselves as Vital Energy (VTLE) a week ago. Your holdings have been updated and VTLE is indeed up about +5% currently.

https://investor.vitalenergy.com/news-r ... branding-0

[er999]

It seems like the best strategy for this contest is a single pick rather than diversification with 3 picks (or 6 picks if you do long/short). That is assuming that the only thing that matters is number one and number two is the same as last for the contest purposes.

This applies to active management where many inflows come to the fund with the best prior year’s returns. Since the manager makes fees based on percentage of assets, the winning strategy is to make a risky bet (see the arkk fund) or for a fund company to have a number of fund with a bunch of risky bets that they can then promote whichever fund was best the following year. This is my first time entering the contest but would be interesting to track the performance of over time (as looks like the contest goes back to 2009) and see if any single person (=manager) beat the market over the past 13 years.

[whodidntante]

It seems like the best strategy for this contest is a single pick rather than diversification with 3 picks (or 6 picks if you do long/short). That is assuming that the only thing that matters is number one and number two is the same as last for the contest purposes.

This applies to active management where many inflows come to the fund with the best prior year’s returns. Since the manager makes fees based on percentage of assets, the winning strategy is to make a risky bet (see the arkk fund) or for a fund company to have a number of fund with a bunch of risky bets that they can then promote whichever fund was best the following year. This is my first time entering the contest but would be interesting to track the performance of over time (as looks like the contest goes back to 2009) and see if any single person (=manager) beat the market over the past 13 years.

Are we allowed to talk strategy with the competition?

It's a moonshot contest, so undiversified bets are reasonable. Of course, the one short crowd like me could also lose 9,000% this way. Maybe I can do the dishes to work it off.

[mokaThought]

Thought for a moment my entry got missed. My username somehow became MakeThought instead of mokaThought.

[whodidntante]

I've flushed 62% in a couple of weeks and couldn't even manage to be dead last.