The 400% Man!

[rcnewport]

Any glaring reasons for selling 40% of LUK stake, a position that was just opened last quarter?

 

Allan is on here and posts rarely. Maybe he'll respond to a PM.

 

Seems that many value investors that held JEF that got shares of LUK have trimmed their LUK shares.  I personally think it is just a bit a profit taking not a negative on LUK at all.  Scan some of the 13f files for some of the investors we follow and you will see most of them trimmed a bit.

 

I would love to hear more wisdom from Allan here on the site.

[compoundinglife]

Any glaring reasons for selling 40% of LUK stake, a position that was just opened last quarter?

 

No idea. His partner at the fund Ben worked at LUK for a couple of years though. At least that what I remember him saying at the annual FFH/COBF dinner.

[Evolveus]

Anyone have a PDF of the 400% man article?  I wanted to share it with a friend, but that link is dead. Did some googling as well with no results. TIA

[cubsfan]

Anyone have a PDF of the 400% man article?  I wanted to share it with a friend, but that link is dead. Did some googling as well with no results. TIA

 

here you go!

Allan_Mecham_2012-02-15_SmartMoney_Magazine_article_-_The_400%_Man-1.pdf

[Evolveus]

Many thanks!!! ;D

[balancesheet]

manual of ideas, thanks for the info.

[siddharth18]

400% in 12 years translates to a CAGR of 12.25%...definitely above average.

 

I was more impressed by his drive, background and age rather than his returns.

 

BTW here's a new link to the article if the old one's pulled: http://www.marketwatch.com/story/the-400-man-1328818316857

[Parsad]

400% in 12 years translates to a CAGR of 12.25%...definitely above average.

 

I was more impressed by his drive, background and age rather than his returns.

 

BTW here's a new link to the article if the old one's pulled: http://www.marketwatch.com/story/the-400-man-1328818316857

 

No, check the math Siddarth...closer to 14.5% annualized, during a period when the S&P did less than 5% annualized.  Cheers!

[siddharth18]

400% in 12 years translates to a CAGR of 12.25%...definitely above average.

 

I was more impressed by his drive, background and age rather than his returns.

 

BTW here's a new link to the article if the old one's pulled: http://www.marketwatch.com/story/the-400-man-1328818316857

 

No, check the math Siddarth...closer to 14.5% annualized, during a period when the S&P did less than 5% annualized.  Cheers!

 

Ahh rookie mistake by (won't be the last)...I counted the final value as 4 instead of 5.  ::)

 

 

Cheers!

[fareastwarriors]

He's now a "super investor" @ Dataroma. Congrats!

 

17 Nov 2013 Introducing new Super Investor, Allan Mecham of Arlington Value Management 

 

Allan Mecham, better known as The 400% man  is the founder and portfolio 0manager of Arlington Value Management. Mecham's investing style is very much in the tradition of Warren Buffet. He primarily looks for good and sustainable businesses trading at fair prices. He runs a highly concentrated portfolio through deep analysis of businesses and their management. Mecham refers to himself as the 'old school' type researcher, preferring printed reports and filings while shunning spreadsheets and stock screens.

 

Here are some more links to articles and interviews over the last several years:

 

Interview with Allan Mecham

 

Notes & Articles on Allan Mecham of Arlington Value, “The 400% Man”

 

The Oracle of Salt Lake City? Allan Mecham’s Success Confounds Experts

 

We have already added the last four quarters of portfolio activity (since Arlington began filing) to our database.

 

 

http://www.dataroma.com/m/holdings.php?m=AV

[Palantir]

I just heard an ad for Vistaprint on the radio...might have to look at this.

[mhdousa]

Anyone know what the story with his purchase of Rue21 (RUE) was?  Looks like he bought it after it had already been announced that it was being taken private.

 

[stahleyp]

Anyone know what the story with his purchase of Rue21 (RUE) was?  Looks like he bought it after it had already been announced that it was being taken private.

 

I'm assuming this:

 

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/rue21-merger-arbitrage/msg135972/#msg135972

[JBird]

Arlington gained 51.5% in 2013,  42.6% net of fees. Congratulations to Allan and Ben.

[stahleyp]

Arlington gained 51.5% in 2013,  42.6% net of fees. Congratulations to Allan and Ben.

 

Gangtstas. ;)

 

Giving clients great performance and very reasonable fees. I wish more folks were like that.

[Mephistopheles]

Arlington gained 51.5% in 2013,  42.6% net of fees. Congratulations to Allan and Ben.

 

Gangtstas. ;)

 

Giving clients great performance and very reasonable fees. I wish more folks were like that.

 

Do you happen to know what the fees are? Thanks

[Guest longinvestor]

Arlington gained 51.5% in 2013,  42.6% net of fees. Congratulations to Allan and Ben.

Are they still holding 60% of their portfolio in BRK A&B shares?

[stahleyp]

Arlington gained 51.5% in 2013,  42.6% net of fees. Congratulations to Allan and Ben.

 

Gangtstas. ;)

 

Giving clients great performance and very reasonable fees. I wish more folks were like that.

 

Do you happen to know what the fees are? Thanks

 

From what I remember, they have a dual fee structure. One is like 2.75% and and no performance fee. I think that was for older accounts. The other I believe is 1% and a 15% performance fee. Sanj or anyone else feel free to correct me though.

[mhdousa]

Arlington gained 51.5% in 2013,  42.6% net of fees. Congratulations to Allan and Ben.

 

Gangtstas. ;)

 

Giving clients great performance and very reasonable fees. I wish more folks were like that.

 

Do you happen to know what the fees are? Thanks

 

From what I remember, they have a dual fee structure. One is like 2.75% and and no performance fee. I think that was for older accounts. The other I believe is 1% and a 15% performance fee. Sanj or anyone else feel free to correct me though.

 

You're correct except the fixed fee is 2.45%.

[JBird]

The Berkshire position was scaled back to 40%. They own those shares at least partly on margin (they're paying ~1.5% interest).

 

They're currently holding ~13% cash.

 

The fee depends on which of the funds you're in. AVM accredited asset fee is 0.20% per month, about 2.4% annually. AVM qualified is a 1% asset fee plus 15% performance fee.

 

[thepupil]

Not knocking the guy ( because he has obviously earned it many times over!) but those are actually pretty high fees to pay a long only w/o a an absolute or index hurdle.

 

Is it actually 15% of gross profits? Or is it 15% of outperformance ( much better, even better if hurdle compounds is hard and has a clawback). Those fees are at the high end of any long only  institutional manager I've ever come across ( not hedge funds, people bend over for alpha). The toniest of hedge funds that have been launching long only products don't charge 2.45%.

 

He has earned it, deserved it, and his investors have prospered, but it is despite the fees, not because of them.

 

So lets say he makes 10% and SPY makes 10%, he gets 1% + 0.15*9= 2.35%. Or with the flat fee he gets 2.45%. I don't thinke he should make anything in that hypothetical year.

 

I don't want a fee structure where I give 20 +% of profits to someone even if they just make what the index did in a given year. 1% and 15 over something seems fine though.

 

I'd prefer 0 and 25 over index or a reasonable absolute number.  Even though I would've paid more fees and be less wealthy than the current structure and it would've been better under the current regime, on principle I don't want to have to count on knock your socks off performance to come away with good net returns.

[JBird]

Not knocking the guy ( because he has obviously earned it many times over!) but those are actually pretty high fees to pay a long only w/o a an absolute or index hurdle.

 

Is it actually 15% of gross profits? Or is it 15% of outperformance ( much better, even better if hurdle compounds is hard and has a clawback). Those fees are at the high end of any long only  institutional manager I've ever come across ( not hedge funds, people bend over for alpha). The toniest of hedge funds that have been launching long only products don't charge 2.45%.

 

He has earned it, deserved it, and his investors have prospered, but it is despite the fees, not because of them.

 

So lets say he makes 10% and SPY makes 10%, he gets 1% + 0.15*9= 2.35%. Or with the flat fee he gets 2.45%. I don't thinke he should make anything in that hypothetical year.

 

I don't want a fee structure where I give 20 +% of profits to someone even if they just make what the index did in a given year. 1% and 15 over something seems fine though.

 

I'd prefer 0 and 25 over index or a reasonable absolute number.  Even though I would've paid more fees and be less wealthy than the current structure and it would've been better under the current regime, on principle I don't want to have to count on knock your socks off performance to come away with good net returns.

 

Since the AVM ranger fund started in July of 2008, it has returned 32.2% compounded annually net of fees, versus 9% for S&P 500.

 

Who the hell cares what the fees are when the returns net of fees are so spectacular?

[thepupil]

No one should care given the performance!

 

I would love to have paid Allan all those fees. In fact I expressed a desire to pay him more (the structures I think make more sense from a limited oartner perspective would definitely have paid him more).

 

I just think there should be more pay at risk in the case of the hefty well above market flat fee of 2.45% (which by itself is awful and incentivizes growth in AUM over returns, once again judging the structure , not the man, his skills or his fund)

 

And in the case of the no hurdle 15%, I don't think people should be paid for the component of returns that is market driven. No ones returns sre purely skill and over the long term some market benchmark or reasonable absolute hurdle should be used to strip the "beta" (I know many here hate that word) which is and should be free out of someone's performance.

 

Please do not mistake this for me saying that Allan's returns are market driven. He started pre crisis apparently and has absolutely killed it. I do t know him like many here do and he seems to be in the top 0.01% of managers. All I'm saying is his fee structure is awful.

 

I think Berkshire will outperform SPY by 500bps per annum over the next 10 years (9% vs 4%). I could be wrong. I could be right. I am certain I will pay no fees.  I may think Allan will outperform by 1000 bps. I may be wrong, I may be right. I'll certainly pay him 245 bps of that; can't say that about other structures mor favorably aligned with limited partners.

 

 

 

[stahleyp]

The fee is even lower than I remembered! haha

 

Thanks mhd and JBird.

[ourkid8]

I totally disagree.  It's vital keeping fees as low as possible thus maximizing investors returns.  Lets say he goes through 7 lean years, what happens then?  Even the best investors go through slumps...

 

Tks,

S

 

No one should care given the performance!