what was LTCM’s strategy and how were they exploiting mis pricing?
LTCM guys formed another fund only to fail again
Ackmans funds look at up on your BBG terminals is now at almost flat 1.7% since end of 2017 ITD after his spectacular $4B loss on Valeant. Wonder what the gain is for SP500 in that same time frame? The total return with dividends… Genius indeed on keeping his investors still on board…
Yeah ride out the wave for a few years and get wiped out. Those few years still underperform but no one cares. Then when you collapse, well you got your millions or billions already.
They originally did true arbitrage. For instance, a stream of small Treasuries added together was not the price of a large Treasury with the same payments. So, they would long or short this position using leverage. After that, they found other opportunities in different markets. Before long everyone copied them.
They should have accepted that their strategy was no longer valid, but instead, they changed to risk positions, like credit spreads, or other things. This all blew up later. I guess when you’re charging a big fixed fee, you have incentive to hang onto capital even though you have no ideas.
As for Ackman, from my experience working at HF and PE funds, what matters is your last name, looks, connections, school name you have on your resume which ultimately is connections.
Look at Ackman’s Pershing Square…Look at their official performance on BBG terminal…ITD is 1.7%…SP500 over the same period is three digit %. Yet he still manages $8B and makes $125M a year on mgmt fees alone.
The investors are the pensions, endowments, large banks’ private bank dept who don’t really care…once they approve it’s literally buy and hold until the fund they hold blows up and closes down…Until that happens they pay their 2/20 and go on their paid ski trips and NFL games for free with fancy dinners here and there. Is it illegal? no. Is it ethical? no but these guys say well we allocated 20% of our pension fund to alt. investment for diversification and investments take time so we must buy and hold and the price for these is 2/20 which is fair game.
In the end, it’s the middle class - the end users or beneficiaries of the pension, endowments that gets hurt. But you know what, I want in in this game. I would love to milk that 1.5/15 or 2/20 any day.
That may be a slight overstatement. They’ve made some bad calls but they’ve outperformed., though I’m not really sure when it was that this big shift in strategy occurred that seems to have rocked them for the past couple of years.
ackman made a 27million bet that turned to 2.6 billion. lol. he has spent about half of that reinvesting in his portfolio.
he can prolly offset that with his losses in his 8b portfolio as well.
becky got it back! Still a farcry from his 20b aum in 2015 though.
he had a good 2019 too. anyways. quite interesting that he made the majority of what he has in a short position.
Do you think buying Starbucks, Hilton, Chipotle etc., is a good idea now? Interestingly, after his recent interviews, where he indicated his bullish insights on this stocks, the prices started to surge. Is he trying to manipulate the prices by giving public insights? Isn’t it too early to buy, taking into account that he also said the market’s fall is still ahead?
