Everybody Was Kung Fu Fighting?

Everybody Was Kung Fu Fighting?

Last week, Finance Twitter erupted over a Bloomberg article about Michael Burry[i] and how he likened passive investment in equity markets to the bubble in the synthetic CDO market back in 2007, which he famously – thanks to Michael Lewis and Christian Bale – identified. 

Voting Machines and Weighing Machines

Voting Machines and Weighing Machines

Ben Graham is famously attributed for stating that the market was a voting machine in the short term, but a weighing machine in the long term.

 

THE DCF IS THE RANDY WATSON OF VALUATION

THE DCF IS THE RANDY WATSON OF VALUATION

I’m not very well-rounded. I studied finance in college, and finance in business school. And man could I turn out a perfect DCF. I could make that model sing.

Passively Irrational?

Passively Irrational?

Some of you may remember the quant crash of August 2007.  As Andrew Lo wrote in his initial diagnosis, “losses were initiated by the rapid unwinding of one or more sizeable quantitative equity market-neutral portfolios…which then put pressure on a broader set of long-short and long-only portfolios.”


 

The Sacrilegious Diaries:  The Benefits of Turnover

The Sacrilegious Diaries: The Benefits of Turnover

For a fundamental, value-oriented investor, we are reasonably active in the management of our portfolio names.  This is by design, and on purpose.  With a concentrated, best-ideas-only portfolio, it is imperative that we shed any anchoring biases and constantly challenge our theses.  This leads to idea and portfolio turnover. 

Stay in the Game

Stay in the Game

This is going to be an uncharacteristic departure for me.  This story is deeply personal, for our family, and for our oldest son in particular.  But it is a story he’s letting me tell, because it is a story he wants people to hear.

I’m Volatility?

I’m Volatility?

Is risk “volatility vs. a benchmark” or is risk “the potential permanent loss of capital”?

Woody Was Right

Woody Was Right

If you are managing a portfolio of equity investments, whether personally or institutionally, there are many factors that (should) go into its construction. 

James Harden and Alpha

James Harden and Alpha

I played high school basketball in Indiana.  I won a few honors, but was broadly mediocre, and certainly not NCAA D1 material.

Groundhog Day and Overnight Returns

Groundhog Day and Overnight Returns

Over the past few years, some of the finance literature has started addressing the phenomenon, if not the apparent puzzle, of overnight returns (close-to-open) vs. intraday returns (open-to-close).

Debiasing and Alpha

Debiasing and Alpha

We manage a concentrated portfolio of investment ideas.  We, essentially, try to be objective about identifying specific instances where Mr. Market may be overreacting or underreacting to particular fundamental phenomenon. 

Peak “Peak Car” ?

Peak “Peak Car” ?

Disruption in the auto industry is a very hot topic. The embers started burning back in 2005 when Tesla dropped a powertrain into a Lotus Elise, then things started heating up in 2012 when Google drove a Prius across Nevada, without a driver; and then they started blazing in 2014 after Uber did a valuation round at $18 billion.

The Right Way

The Right Way

Following on our last post “The First Step to Regaining Credibility” we wanted to quickly highlight that the difference between the fee structure of a large, diversified, purportedly active fund and a smaller, concentrated, active fund.

The First Step to Regaining Credibility

The First Step to Regaining Credibility

As equity indices romped higher throughout most of the last ten years, the long-short hedge fund industry increasingly came under attack.  

The Futility of Market Timing

The Futility of Market Timing

We are not big fans of market timing.  Those that profess to have such a skill before the fact often always turn out not to have had much skill in hindsight.  Of those that do turn out to appear to have skill, that was actually supposed to happen. 

123 Years of the Dow

123 Years of the Dow

Presented without comment.  

Histogram.jpg

Summary stats and methodology.

Summary Table.jpg


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