Greenlight Q3 Letter

[Spekulatius]

I wonder if there's a chart that shows the net $ amount that Ackman's made/lost because some of his big losses came when Pershing Square was much larger..

 

Yep, generate great performance when you manage a few million, then generate lousy performance when you manage billions. Talebs Monkeys at play.

[Gregmal]

The rest of your post about rich kids and real jobs doesn't make much sense. Buffett was basically a rich kid and he turned into a great investor. Working on the street is not a real job and you don't learn anything about investing by working on the street either (you do learn a lot about Excel though). Plumber, mechanic, doctor, those are real jobs. But I don't see the legions of great plumber-investors.

 

Investing is just like any other craft. You get good through much study and practice. I'd also say that in this discipline, like many others, being a rich kid helps. But I think in investing it helps more. Also, there's a very big difference between being a good investor and being a good fund manager.

 

I'm pretty sure Buffett spent nearly a decade working as a stock broker and then under Ben Graham. I'm also pretty sure he's also said many times how much he learned from this experience.

 

From his Wikipedia:

 

"Buffett worked from 1951 to 1954 at Buffett-Falk & Co. as an investment salesman; from 1954 to 1956 at Graham-Newman Corp. as a securities analyst; from 1956 to 1969 at Buffett Partnership, Ltd. as a general partner"

 

So half a decade. Probably more non "run my own shop" experience than Ackman, Einhorn, and Tilson combined.

 

I say the above not to be derogatory but because I've noticed a certain mentality with these types of people. They are super bright, but too academic, mainly because that's all they know. They do what the textbook says is the right thing to do even though anyone who's worked in just about any profession after studying it in school will tell you that you learn very quickly out there in the field that the textbook isn't always right. You have to adapt. The tone of Einhorn's letters lately scream "but the textbook says I'm right".

 

 

[stahleyp]

A couple notes about Tilson, he had a very solid track record (against the S&P 500) until 2010 or so. He had about $180 million in 2010 which isn't large but not bad considering we were just getting out of the financial crisis.

 

http://ritholtz.com/wp-content/uploads/2011/02/T2-Partners-Jan-2011.pdf

 

I also think he did not comes from a wealthy family (but could be wrong on that).

[Ballinvarosig Investors]

I also think he did not comes from a wealthy family (but could be wrong on that).

Whitney Tilson's parents were both teachers and certainly not rich.

[given2invest]

A couple notes about Tilson, he had a very solid track record (against the S&P 500) until 2010 or so. He had about $180 million in 2010 which isn't large but not bad considering we were just getting out of the financial crisis.

 

http://ritholtz.com/wp-content/uploads/2011/02/T2-Partners-Jan-2011.pdf

 

I also think he did not comes from a wealthy family (but could be wrong on that).

 

Fund was launched on 1/1/99.  That terribly skews his track record till that date.  Show it to me annually not since inception.  I saw it and I remember being far from impressed vs. the bench marks.  And through 2016 I believe even since inception from that lucky date he hasn't beat it.

 

Edit:  I see the annual comps at the bottom.  They are fine.  If you add the last 6 years though...

[stahleyp]

yeah his last 6 or 7 years were horrendous.

[StevieV]

Styles of investing, including, and perhaps especially, value, don't work all the time.  That is fine.  But, Einhorn has dug himself quite the hole over the last few years versus the market.  It isn't easy to make up that type of under-performance.  Perhaps particularly so when long-short.

 

Einhorn

H1 2018 - (18%)

2017 - 1.5%

2016 - (0.1%)

 

S&P

H1 2018 - 2.7%

2017 - 22%

2016 - 12%

[Gregmal]

Styles of investing, including, and perhaps especially, value, don't work all the time.  That is fine.  But, Einhorn has dug himself quite the hole over the last few years versus the market.  It isn't easy to make up that type of under-performance.  Perhaps particularly so when long-short.

 

Einhorn

H1 2018 - (18%)

2017 - 1.5%

2016 - (0.1%)

 

S&P

H1 2018 - 2.7%

2017 - 22%

2016 - 12%

 

I agree. It's odd to me how one's style of investing can in and of itself be an excuse. Most things don't work all the time. However if you have enough evidence to conclude that something isn't working(ie your returns suck), I don't know why you wouldn't look to fix it. Only in the hedge fund world can awful performance be excused simply by drawing some nonchalant, lazy excuse like "I'm a value guy".