Parsad Posted October 22, 2012 Share Posted October 22, 2012 This is the October Letter written by Ben Raybould, who runs Arlington's Ranger Fund. Ben wrote a pretty interesting letter discussing the performance of his partner, Allan Mecham, who started Arlington. I don't post alot of letters, other than a few close friends that I admire, but Allan deserves recognition in my opinion. He's one of the best managers I know out there, and he is an incredibly humble guy. Probably not too keen on this even being printed here, but I do have permission. He'll probably show up to our dinner again this year, so you guys may want to ask him then how his leveraged bet on Berkshire is doing...I'm guessing pretty good! Cheers!Arlington_Value_Oct_2012_Investor_letter.pdf Link to comment Share on other sites More sharing options...
tombgrt Posted October 22, 2012 Share Posted October 22, 2012 Awesome, thanks Parsad. By coincidence, today I noticed how terrible BRK stock has been performing these last few days. It is really remarkable how little recognition this gem is getting a year after Bufett's stock buyback plan. Even after a nice run-up, it remains one of the best values out there imo! Link to comment Share on other sites More sharing options...
Guest hellsten Posted October 22, 2012 Share Posted October 22, 2012 Thank you! 20-30% relative out-performance. I guess you could call him a genius. Interesting to see Bill Miller included in the comparison. Link to comment Share on other sites More sharing options...
matjone Posted October 22, 2012 Share Posted October 22, 2012 Thanks. I assume that small investors still can't invest in Arlington? Their website won't load. Link to comment Share on other sites More sharing options...
Parsad Posted October 22, 2012 Author Share Posted October 22, 2012 Thanks. I assume that small investors still can't invest in Arlington? Their website won't load. Nope, still restricted. Cheers! Link to comment Share on other sites More sharing options...
matjone Posted October 22, 2012 Share Posted October 22, 2012 I am probably too small a fry for them to consider anyway. Kind of funny that the government is trying to keep me from losing money by not letting me invest with this guy. If they really wanted to help me they'd make a rule against me investing my money. :) Seriously, I always thought that was a stupid rule. Because you have a million dollars you must know something about investing? They ought to give you a test. Or , even more radically, stay out of it and let people make their own decisions. Link to comment Share on other sites More sharing options...
Mephistopheles Posted October 22, 2012 Share Posted October 22, 2012 I am probably too small a fry for them to consider anyway. Kind of funny that the government is trying to keep me from losing money by not letting me invest with this guy. If they really wanted to help me they'd make a rule against me investing my money. :) Seriously, I always thought that was a stupid rule. Because you have a million dollars you must know something about investing? They ought to give you a test. Or , even more radically, stay out of it and let people make their own decisions. Yea it's a bunch of bullshit. With this rule, the rich can get richer, while those of us who are not millionaires have less opportunity to become one. Similar to options trading rules. Link to comment Share on other sites More sharing options...
Kraven Posted October 22, 2012 Share Posted October 22, 2012 I am probably too small a fry for them to consider anyway. Kind of funny that the government is trying to keep me from losing money by not letting me invest with this guy. If they really wanted to help me they'd make a rule against me investing my money. :) Seriously, I always thought that was a stupid rule. Because you have a million dollars you must know something about investing? They ought to give you a test. Or , even more radically, stay out of it and let people make their own decisions. Yea it's a bunch of bullshit. With this rule, the rich can get richer, while those of us who are not millionaires have less opportunity to become one. Similar to options trading rules. The rule may or may not be stupid, but it isn't intended to reflect whether or not someone knows anything about investing. Rather it is intended to separate those who are sophisticated from those who aren't. Those who are sophisticated, in the eyes of the law, are deemed to require less protection. It is a paternalistic requirement, but in many ways a good one. It has prevented many a small investor from getting snared in things they don't understand. Now you may feel it biases you unfairly and that may very well be true, but there has to be a bright line rule in which to effectuate the law. It would be administratively impossible to have a system in which each situation is determined on a case by case basis. So in your respective cases you may have been burdened, but there are plenty of people who may jump into a fund like this, no matter how good it is, and not understand that their money will be locked up for a period of time and a host of other issues. To answer your next question, yes of course this can happen to someone with more money as well, but in the eyes of the law at that point there is a bit of caveat emptor. Link to comment Share on other sites More sharing options...
Guest valueInv Posted October 22, 2012 Share Posted October 22, 2012 I am probably too small a fry for them to consider anyway. Kind of funny that the government is trying to keep me from losing money by not letting me invest with this guy. If they really wanted to help me they'd make a rule against me investing my money. :) Seriously, I always thought that was a stupid rule. Because you have a million dollars you must know something about investing? They ought to give you a test. Or , even more radically, stay out of it and let people make their own decisions. Is he even accepting new investors? Link to comment Share on other sites More sharing options...
beerbaron Posted October 23, 2012 Share Posted October 23, 2012 I could not find Arlington's 13F... anybody has the edgar name where they disclose their 13F? BeerBaron Link to comment Share on other sites More sharing options...
stahleyp Posted October 23, 2012 Share Posted October 23, 2012 Thanks for posting, sanj. I'm looking forward to reading more about him. I was intrigued when the article came out several months ago about the "400% man" or something along those lines. Link to comment Share on other sites More sharing options...
QLEAP Posted October 23, 2012 Share Posted October 23, 2012 Interesting read, thanks Sanjeev. I wonder if he still holds SD.. Link to comment Share on other sites More sharing options...
matjone Posted October 23, 2012 Share Posted October 23, 2012 Is he even accepting new investors? I think I remember reading that "400% man" article when someone posted it on here a while back, and there was a quote from him that he was looking for new investors. Link to comment Share on other sites More sharing options...
frog03 Posted October 23, 2012 Share Posted October 23, 2012 I think their assets are still below 100 Million (probably not for long if they keep delivering at this rate...) so no 13F Link to comment Share on other sites More sharing options...
giofranchi Posted October 23, 2012 Share Posted October 23, 2012 Wonderful letter! Thank you very much, giofranchi Link to comment Share on other sites More sharing options...
mhdousa Posted October 23, 2012 Share Posted October 23, 2012 Has anyone received an email reply back from Arlington. I've emailed info@arlingtonvalue.com twice now and haven't heard back. Link to comment Share on other sites More sharing options...
Palantir Posted October 23, 2012 Share Posted October 23, 2012 How big do you need to be to invest? Link to comment Share on other sites More sharing options...
Guest deepValue Posted October 23, 2012 Share Posted October 23, 2012 I am probably too small a fry for them to consider anyway. Kind of funny that the government is trying to keep me from losing money by not letting me invest with this guy. If they really wanted to help me they'd make a rule against me investing my money. :) Seriously, I always thought that was a stupid rule. Because you have a million dollars you must know something about investing? They ought to give you a test. Or , even more radically, stay out of it and let people make their own decisions. Yea it's a bunch of bullshit. With this rule, the rich can get richer, while those of us who are not millionaires have less opportunity to become one. Similar to options trading rules. Arlington had about $100mm AUM in November 2011. The minimum investment requirement is $1mm. The cost/hassle of administering small accounts is not worth the incremental increase in AUM. Even tiny hedge funds (say, $10mm AUM) looking to raise money do not want a bunch of $50k accounts to deal with. So basically they wouldn't want your account even if Big Brother wasn't trying to protect you from yourself. I'm not sure what you're referring to as far as options trading. There is no account minimum mandated by the govt for options trading, though one may be imposed by your broker. Nothing a summer job can't fix though. Link to comment Share on other sites More sharing options...
Guest deepValue Posted October 23, 2012 Share Posted October 23, 2012 How big do you need to be to invest? http://www.adviserinfo.sec.gov/iapd/content/viewform/adv/Sections/iapd_AdvAdvisoryBusinessSection.aspx?ORG_PK=123417&RGLTR_PK=50054&STATE_CD=UT&FLNG_PK=00C08398000801640083AEF003F18DED056C8CC0 Also read ADV Part 2 at the end of the above document. Minimum $1mm. Link to comment Share on other sites More sharing options...
stahleyp Posted October 23, 2012 Share Posted October 23, 2012 I am probably too small a fry for them to consider anyway. Kind of funny that the government is trying to keep me from losing money by not letting me invest with this guy. If they really wanted to help me they'd make a rule against me investing my money. :) Seriously, I always thought that was a stupid rule. Because you have a million dollars you must know something about investing? They ought to give you a test. Or , even more radically, stay out of it and let people make their own decisions. Yea it's a bunch of bullshit. With this rule, the rich can get richer, while those of us who are not millionaires have less opportunity to become one. Similar to options trading rules. Arlington had about $100mm AUM in November 2011. The minimum investment requirement is $1mm. The cost/hassle of administering small accounts is not worth the incremental increase in AUM. Even tiny hedge funds (say, $10mm AUM) looking to raise money do not want a bunch of $50k accounts to deal with. So basically they wouldn't want your account even if Big Brother wasn't trying to protect you from yourself. I'm not sure what you're referring to as far as options trading. There is no account minimum mandated by the govt for options trading, though one may be imposed by your broker. Nothing a summer job can't fix though. deep, thanks for the information. I don't know a ton about the administration side of things, but what abut something like this. If they had someone who would stick, say $50,000 in it, ask no questions and be permanent capital (ie virtually no chance of taking money out for 10 years), wouldn't that make sense? I would think that having someone with the right mind set, who could become a big investor over time would be something desirable. Link to comment Share on other sites More sharing options...
Guest deepValue Posted October 23, 2012 Share Posted October 23, 2012 I am probably too small a fry for them to consider anyway. Kind of funny that the government is trying to keep me from losing money by not letting me invest with this guy. If they really wanted to help me they'd make a rule against me investing my money. :) Seriously, I always thought that was a stupid rule. Because you have a million dollars you must know something about investing? They ought to give you a test. Or , even more radically, stay out of it and let people make their own decisions. Yea it's a bunch of bullshit. With this rule, the rich can get richer, while those of us who are not millionaires have less opportunity to become one. Similar to options trading rules. Arlington had about $100mm AUM in November 2011. The minimum investment requirement is $1mm. The cost/hassle of administering small accounts is not worth the incremental increase in AUM. Even tiny hedge funds (say, $10mm AUM) looking to raise money do not want a bunch of $50k accounts to deal with. So basically they wouldn't want your account even if Big Brother wasn't trying to protect you from yourself. I'm not sure what you're referring to as far as options trading. There is no account minimum mandated by the govt for options trading, though one may be imposed by your broker. Nothing a summer job can't fix though. deep, thanks for the information. I don't know a ton about the administration side of things, but what abut something like this. If they had someone who would stick, say $50,000 in it, ask no questions and be permanent capital (ie virtually no chance of taking money out for 10 years), wouldn't that make sense? I would think that having someone with the right mind set, who could become a big investor over time would be something desirable. Get a bunch of your friends together, form a partnership capitalized with $1mm, and invest in Arlington if that's what you want to do. Arlington has two employees; they'd rather focus on investing than on figuring out who gets what for all of their accounts. Taking 20 $50k accounts and consolidating it into one account makes fund administration a lot simpler. Many "value" hedge funds only accept like-minded investors that sign lock-up agreements, so the fact that you'd be willing to sign a 10-yr lockup for a $50k account doesn't really make you more valuable. Link to comment Share on other sites More sharing options...
Tim Eriksen Posted October 23, 2012 Share Posted October 23, 2012 Get a bunch of your friends together, form a partnership capitalized with $1mm, and invest in Arlington if that's what you want to do. Arlington has two employees; they'd rather focus on investing than on figuring out who gets what for all of their accounts. Taking 20 $50k accounts and consolidating it into one account makes fund administration a lot simpler. Many "value" hedge funds only accept like-minded investors that sign lock-up agreements, so the fact that you'd be willing to sign a 10-yr lockup for a $50k account doesn't really make you more valuable. I'm not a lawyer, but I do manage a fund, and I am fairly certain your suggestion is illegal. If the partnership is formed by non-accredited investors with the sole purpose of investing in a hedge fund it is a violation. Even if it passes that test, it could also be subject to a "look through" in terms of investor count. Meaning if the partnership had ten people the fund would be using up ten slots. Someone please correct me if I am wrong here. Link to comment Share on other sites More sharing options...
Parsad Posted October 23, 2012 Author Share Posted October 23, 2012 Get a bunch of your friends together, form a partnership capitalized with $1mm, and invest in Arlington if that's what you want to do. Arlington has two employees; they'd rather focus on investing than on figuring out who gets what for all of their accounts. Taking 20 $50k accounts and consolidating it into one account makes fund administration a lot simpler. Many "value" hedge funds only accept like-minded investors that sign lock-up agreements, so the fact that you'd be willing to sign a 10-yr lockup for a $50k account doesn't really make you more valuable. I'm not a lawyer, but I do manage a fund, and I am fairly certain your suggestion is illegal. If the partnership is formed by non-accredited investors with the sole purpose of investing in a hedge fund it is a violation. Even if it passes that test, it could also be subject to a "look through" in terms of investor count. Meaning if the partnership had ten people the fund would be using up ten slots. Someone please correct me if I am wrong here. Tim is correct. The partners within the partnership would have to be accredited themselves to invest in an accredited fund...regardless of how much capital they have in the partnership. That being said, there is no reason why a bunch of family members or friends could not start a partnership by pooling their resources, and then investing it themselves...if you are a decent investor, your group would beat the markets, reduce frictional costs, and no one would have to come up with huge sums of money to invest. Your partnership could even invest in real estate and other opportunistic investments. But you would not be able to invest in an accredited fund, hold yourself out as an exempt fund, or anything like that. You would be just be invested in a closely held family and friends partnership. Cheers! Link to comment Share on other sites More sharing options...
Palantir Posted October 23, 2012 Share Posted October 23, 2012 But the idea is not bad. Say you have accredited investors who meet the requirements, but don't want to pony up $1M to invest in one fund, if you can get a group of them together, it could be a viable way to invest. Link to comment Share on other sites More sharing options...
Yours Truly Posted October 23, 2012 Share Posted October 23, 2012 Excellent returns.. but I wonder what his holdings are and if his returns are front-loaded as a result from loading up during the 2009 meltdown similar to Oceanstone Mutual fund that was previously brought up in another thread Link to comment Share on other sites More sharing options...
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