David Orr
@orrdavid
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I back investors who generate minimum 25%/year alpha over a statistically significant sample on a live money account, not back testing.
Moving to Osaka, JP in Dec.
Joined December 2009
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Someone replied that he doesn't understand how someone can generate 25%/year alpha with picks like Louis Vuitton $MC. He's not wrong exactly, because my expected alpha for that bet is just 3%. This post explains the gap.
(This is for long investing - shorting is a lot
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@McDonalds
@jonathanmaze
Trayvon Martin was a violent thug who almost beat a man to death. Luckily Zimmerman had a pistol to defend himself.
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To have near the quality of life as Bezos the real number is $15 million. Or $20 million with many kids
At that number you have total freedom to do most anything within some reason. You still can't constantly get VIP tickets at concerts. But you can travel as much as you want
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The topics covered in parts 1 and 4 from the book Mathematics of Poker could just as easily have fit in an investing book.
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Gator Capital Management doesn't get nearly enough praise. Since inception in 2008.
I'm guessing (?) this fund has been out in the open obvious for long enough that allocators already filled up his fund - if not that's genuinely insane.
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Ken is the true GOAT. Better than Soros, Druck, Rentech, Buffett, Greenblatt, Lynch and all the other guys who get way more praise.
People should be studying what he did more than anyone, and yet I almost never hear people talking about how he pulled this off.
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$NVDA trading for 30-40x 2024 *earnings*?
Can't remember another time we called a 30-40x earnings stock a bubble. Expensive, sure, but not a bubble.
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I've wanted to make this post for a long time.
I've made 300% in the last 5 years by shorting well over 500 companies like the death spirals described in this thread. Only ~25 bets lost more than 3%, with the largest loss being around 7%. This sample size is statistically
You will blame everyone except your own self for being unprepared for short gamma
And before you know it you will be mining ReichCoin with your 3rd videocard and shitposting Rothschild memes on 8chan while spaced out on the Xanax you stole from your teenage daughter’s hot friend
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According to the book Stall Points, when a large company's revenue stops growing, just 13% if the time it starts growing significantly again.
These are often good shorts.
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I wonder if Buffett used Excel and built models. Or Lynch. Or Wilson. Or Druck.
I doubt any of these guys did? Probably not Greenblatt either?
Why do so many people think the way to beat investing is through a spreadsheet? Why do people waste so much time with them?
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I'm a couple hours in and already found something shockingly cheap. Not sure it's liquid enough for it to move the needle that much. But for smaller guys today, this is a ridiculously good hunting ground.
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Things can go really bad when a family hires the wrong people to manage their fortune.
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@marilyn_press
@MollyJongFast
It's self serving for 78 year olds to expect the rest of the world to put their lives on hold for a year. Kids not going to school, missing sports, etc. It's ultra selfish.
It's good you stayed home. Everyone else can choose for themselves.
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The best reason to go to a top 10 American university:
In a random class you'll have a governor's daughter, the son of a billionaire and two guys with 170+ IQ. It's a hell of a group of people to mingle with to succeed in life. I'm super anti-university but I'll admit that
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@NotlouisCk
Better to stick with people that won't cancel your entire livelihood on a whim. Even if you disagree with most else of what they do.
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I had someone translate the first three chapters. What a strong opener:
Just got "My Investment Techniques: Who Will the Market Smile On?" by Tatsuro Kiyohara--arguably one of Japan's most successful investors, amassing 80 billion yen in personal wealth through his investing career. Hopefully I'll learn something that'll help me stop bleeding money.
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I have 70 LPs today. Most fall into one of three categories:
1. Close friends, ~15% of today's AUM
2. Poker players, ~15% of today's AUM
3. Professional portfolio managers / traders, which is ~70% of today's AUM
Here was my rough fundraising experience by year:
2019: ~6 close
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In the last 10 years Costco grew operating income by 120% in real terms, an 8% cagr. They've paid out very little as a percent to shareholders, which means most profits are needed to be reinvested to grow.
Trades for 50x earnings.
If over the next 10 years they double
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The most important thing I've learned about short selling:
1. Short the industries/sectors that are in decline or at least nobody thinks about anymore.
2. No matter how dumb the fundamentals are, skip sectors that are growing, getting more popular, etc.
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(1/3) The books that helped me most as an investor:
1. The Righteous Mind - People draw conclusions instantly and justify post hoc.
2. The Scout Mindset - Only the rare person has an open mind, most just join tribal thinking. Be that rare person and identify others like that.
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One of my LPs linked this great interview. Dude won 15%/year since 1998. Capped his fund, turns away money, charges a low fee even though he could rob people at this point. I respect investors like this so much, and they're rare.
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@PeterHotez
Go debate him and help change the minds of people who you think need it.
The fact that you don't want to makes me think you've got something to hide. Especially while making a call for censorship generally. It's Nazi level evil stuff.
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Hikari Tsushin $9435 is run by an allocator that doubles book/share every 3-4 years. Runs 200% leverage in a ZIRP environment. Website gives Teledyne or Berkshire vibes. Trades for 1.5x book / 10x earnings.
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@RepSwalwell
You break banking system by doing this. People can deposit in risky banks, get all kinds of perks for doing it, but have no downside.
Deposits should be tied to fundamentals.
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I studied stocks for 15 hours straight yesterday, got 5 hours of sleep, and just woke up to study them for another 15 hours today.
If you don't genuinely love doing this all the time it sure seems hard to compete.
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@visegrad24
Aren't NYC and LA supposed to be the most "inclusive" cities in the USA?
Why do most (all) of these videos seem to happen in these supposedly diverse, great cities of America?
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From a locked account:
Nikkei Gendai interview with Tatsuro Kiyohara (August 8th, by Hirotoshi Ito) [Translation]
The Night of the Nikkei's "Worst Crash Ever": What the Legendary Investor with an 80 Billion Yen Personal Fortune Was Desperately Doing
When the Nikkei 225
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With ROCE (or ROIC) most people are falling into one of two traps:
A. Not giving ROCE nearly enough weight or even ignoring it. I used to be guilty of this. If ROCE is less than 10, the company is only useful for trades not long-term investing.
A rare exception could be a
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The Fund is a scathing critique of capitalism.
Dalio is a bad investor who had a brief hot streak and one good big macro call. He somehow raised >$100 billion from that.
Then, he used money to lure people out of their real jobs to join his cult. Then destroyed them as people.
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He's talking about long only here, too.
Just pairing that against index shorts gets you to 100%/year return fast.
And that'll still be a 50%/year return at $10-20 million. For all the people who don't think that's even possible...
This was perhaps the most practical advice from Buffett for any ambitious stock picker. If you love the game and have “only a couple millions” or less, 50% per year are still possible.
For that you need to look at a lot of weird little stocks and you will still find anomalies.
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Often as I review my Japanese longs, I get real squinty eyed. It's not just one company. It's like all of them.
Why does this trade for 5x earnings? $3288
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$TLT
$110 2026 January calls can be bought for ~$2.4
$150 2026 January calls sell for $.5
Say that something horrific happens and the fed drops rates to 0%. If $TLT goes to $150+ again you risked $1.9 to win $48.
Isn't that way too cheap of tail insurance? Maybe even a
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It blows my mind that there's a real fund manager with $1 billion of AUM who's invested in a portfolio of:
1. Subprime lending
2. Timeshares
3. Credit card lending
4. Internet coupons
5. Consumer installment loans
And previously a multi-level marketing scheme.
Notice any
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$CVNA Carvana a shrinking subprime lender that loses $200 million in a quarter and has $5 billion debt.
Stonk price going up so the bulls will feel right. But outside crazy land, that's a worthless company.
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The Nikkei is down 14% in 20 days. Another day like this and it's right on the line of being a bear market.
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This is an old quote that's still true directionally but changed a lot in the last 20 years. Druck mentions in another quote from ~2010 that the whole market moves far more mechanically than in his days. That if X happened, you could reliably do Y and the market would slowly
One of my favorite Stanley Druckenmiller quotes.
“People always forget that 50% of a stock’s move is the overall market, 30% is the industry, and maybe 20% from stock picking.”
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People keep talking about long gold as the winning trade for the next ten years.
What about a bet as simple as $VALE. Isn't this like an Aramco-like, low cost producer of Iron Ore? It's had positive operating income for the last 20 years and trades for 2x peak year earnings
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(1/2) Burry said plainly what value investors were doing 20 years ago: Buying bad companies that were optically cheap to sell to a sucker on a bounce.
Many value investors from back then stuck with that strategy but markets became more efficient, and it doesn't work anymore.
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Operating income:
$MSFT - $110 billion
$META - $60 billion
$AAPL - $120 billion
$GOOG - $100 billion
$AMZN - $50 billion
= $440 billion and growing
$NVDA revenue - $100 billion annualized. I could easily see those companies investing a third of their operating income into AI
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Another thought on Kelly, which I kept stewing on because maybe it's wrong, but it just seems right:
Full Kelly only pays a bit more than half Kelly. Not risk adjusted, but in absolute terms. Assuming a portfolio uses up all of its capital, the one with twice as many half
Kelly tells you the mathematically optimal bet size given the risk/reward of a bet. When you bet too big, your returns fall. Not risk-adjusted returns, actual returns. Overbet enough and your returns go negative. But when you underbet, you still get most of the returns.
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@KidsAbrahams
@HilzFuld
Let's say they actually did all of this.
Do you honestly think Palestine would stop there and live with a two state solution?
I don't believe it for a second.
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This is the most bullish thing I've ever seen for Chinese ADRs. So they can actually pay out the money, it seems.
Anyone others to try gambling on?
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Taxi drivers in Japan are amazing. This is the best example:
The driver took a wrong turn. After realizing, he drives the distance that the trip would have been and then pulls over early and asks me to pay. At first I thought he didn't want to finish the route due to traffic,
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A big part of what Soros and Druck (and Greenblatt) did was betting absolutely huge **when the downside risk was perceived as small**.
Most people probably heard Druck's story of getting the dotcom bubble horribly wrong in 2000, causing him to take a few months leave of absence
A Soros connection, too.
Unsurprisingly, Kiyohara was a man of character and actually cared about his LPs - he didn't endlessly raise AUM like most.
If you see a fund manager talking about the importance of "hitting institutional scale" or similar, run for the hills!
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Einhorn's bread-and-butter trade was greater fool value stocks. He'd buy low-quality stocks and rotate into new ones after the price went up enough. Most value investing funds didn't have permanent capital and are extinct now so there's no counterparty anymore for those trades.
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Japan is very illiquid. $9435 is a conglomerate with 7.5 USD billion market cap. I just bought a $250k position - tiny relative to market cap - and it moved the market up .5%.
Also, I used to hate buying stocks with charts that looked like this. Now I prefer them.
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Joe is wonderful at fundamental stock selection. 8/10 stocks that he picks beat the market with only 2 true fundamental losers.
He quits the winning 8 once they're at fair value and picks another 8 to replace them. He still holds his 2 losers, refusing to admit to himself that
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@SamuelDeason
@JonHaidt
@jordanbpeterson
Someone should be able to 1. be a psychologist and 2. say what they think.
What is wrong with you.
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A beautifully styled model with ~0 downside risk and tons of upside.
$PYPL PayPal has the SIMPLEST and most POWERFUL investment thesis for me.
The stock is trading as if the market expects the company to grow at 0% for the coming 10 years.
To put it simply, if PayPal has ANY growth the coming 10 years, then it is currently undervalued.
I
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@davidbelle_
@FreeRangeKids
I used to walk home a half mile from school every day when I was 6, and it was totally fine.
If you disagree, fine. Let's agree to disagree. But please don't try to make giving kids independence illegal.
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This is Dream International $1126, a toy manufacturer.
Korean owned listed in Hong Kong, the operation is in Vietnam.
Trades for 3x earnings. Last year paid a 12% dividend.
Share count is flat this whole time, net cash balance sheet, growth is organic. Pays a large/growing dividend. What's a fair multiple?
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$MLP Maui Land & Pineapple owns ~$1 billion worth of land in Maui and trades for just $230 million. After taxes, investors might get back around $800 million someday.
The controlling shareholder is Steve Case. He's the key variable in this investment. He's a billionaire from
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@zerohedge
Sometimes it feels like our military is being deliberately sabotaged from within.
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A friend linked this video, which summarizes Buffett's top 25 investments as a percent of his net worth. I'm halfway through and it's one of the best investment videos I've seen.
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$478 from NYC to Tokyo direct economy vs $5,900 biz class.
Is anyone really paying this price difference? Is this some weird points thing? I don't get it. I'd rather buy 3 economy seats for my wife and I.
Also, that's a real cheap ticket to Tokyo, shocking how cheap it's
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People starting a fund should have a prewritten pitch which explains what they do in sections ordered most to least important:
* Results including vol, beta, sample size, drawdown. At least monthly but people will prefer a daily chart.
* About you and your full investing
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@DarrigoMelanie
What about when a billionaire buys a newspaper like WaPo and uses that as a megaphone for their preferred candidate?
What if someone funded advertising for youtube channels that promote their candidate? Etc.
It's impossible to stop.
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I moved to Chiang Mai, Thailand in 2011.
When I first moved there someone suggested a hair salon near me. When I went, I was caught by surprise that the shop was run by a ladyboy - the Thai word for a male to female trans person. But I didn't care, I got my haircut and it was
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Over the last 5 years I've run 180% gross long on average, which returned +559%. That's a 45% IRR. Adjusted for leverage, that's a 23% IRR.
It would have been a bit better, too, except I sometimes pair bad or mediocre longs to balance shorts.
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I have a 10% position in Hikari Tsushin $9435 today, but I swear it's not big enough. If this was a US stock - so that I understood it better - I'd probably be at 20%.
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Ken Griffin is underrated. He built his fund and businesses to scale better than anyone other than maybe Renaissance?
$20 billion net worth at age 55 is very high for fund managers - has anyone done better?
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One of my favorite podcasts is Risk of Ruin, which is right at the intersection of professional gambling and professional investing. Check out his past episodes as well!
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Carvana $CVNA went public 7 years ago.
In that time, the company:
* Issued ~$3.5 billion worth of new shares, with another $1 billion coming soon.
* Issued ~$5.5 billion of debt and have already defaulted on $1 billion of it.
* Lost $4.6 billion, not including the "gain" on
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Another, simple way to jumping from 2 Sharpe to much higher:
Combining 5 high edge, uncorrelated strategies.
I'm optimistic but still probably underestimating how well this is going to work.
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Is there any way to own Hyundai stock in Interactive Broker? I'm not even seeing an ADR?
5x earnings and they own Boston Dynamics the robot company. $28 billion market cap.
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Kirohara turned down $50 million from George Soros shortly after launching his fund, which would have increased his AUM by 20%.
He did this for two reasons.
1. To protect his business - you don't want >10% customer concentration in any business, including hedge funds.
2. By
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In 2021 Energy Transfer $ET had a super clear path to 100%+ upside while being paid a large dividend.
Dream International $1126 today similarly has a clear path to shares trading 150%+ higher, while being paid a huge dividend.
There's far more idiosyncratic risk, but it's also
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Now I'm up to three old friends who invested with me early on that have bought homes outright with the profits.
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$3.5 billion seems like a lot vs $KKR's $18 billion common equity. I've long considered $KKR one of the better private equity firms - if they're taking this big a loss, things seem grim for worse, levered firms.
Envision Healthcare has filed for chapter 11 in one of the largest healthcare-related bankruptcy cases ever, likely wiping out private-equity firm KKR's $3.5 billion stake in the physician-staffing company
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** US SECURITIES AND EXCHANGE COMMISION VOTES 3-2 APPROVE RULE CHANGES REQUIRING FUNDS TO REPORT PORTFOLIO HOLDINGS ON A MONTHLY BASIS INSTEAD OF 4 TIMES A YEAR
It costs around $1.3k to have a firm file the 13f so this adds another $10k/year to operate a medium size hedge fund.
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$TLT's real return over the last 20 years was 1.12%/year.
Max drawdown was >50% in real terms.
You know what's particularly sick? The starting yield was 5%. Today it's 4.6%. Starting debt to GDP was 55%, today it's 120%.
I'd bet on a negative real return from here.
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If anyone has negative thoughts on any of these please share your thinking.
$3765 - Videogame company that owns a controlling share of GRVY, nearly a net/net, heavy buybacks over the last decade.
$SYF Subprime credit card and bank, their loan loss reverse is higher than actual
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A Seeking Alpha commentor points out the absurdity of the $CVNA situation. Meanwhile guys managing hundreds of millions of dollars - backed by incompetent professional allocators - are still long.
Think how insane this all is.
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$WISE If I'm understanding this right, management has broken out in super simple terms which component of their income is likely not true long-term earnings here in the red box. IE: They expect this margin to trend towards zero. But they do expect to collect a 1% spread long
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One of the best fundamental shit co traders - he generates 50%/year alpha - DM'd me, "I haven't felt this bearish since late 2021."
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I get the allure of starting an airline. I just came up with one that would use a single shared G550 that flies back and forth daily between NYC and London. These are rough numbers - if anyone knows something here is way off, please correct it:
Nearly 1,000 people fly first or
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Yesterday two of my followers revealed to me the identities of two of the large anonymous accounts that joined the mob attacking me. I won't reveal their identities of course.
These two turned out to be young guys at low level jobs in investing. They're just a few years out of
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@jessesanchez
@latimes
Why would people *want* to work for a company that polices a totally reasonable message like hers.
These companies are sinking themselves and they don't realize it.
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Homeruns on longs mostly come from two places:
1. Sub 13 PE stocks that will keep growing earnings at least 5 years. Most "value" oriented investors should look for that growth.
2. Teen-30 PE stocks that will grow earnings substantially long term. Most "growth" oriented
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Yet another sign Japan is doing many things at once to pump their stocks.
These companies are still shockingly cheap - heads you win big, tails you don't lose too much.
The Tokyo Stock Exchange will require all of the approximately 1,600 companies listed on the prime market to disclose material information in English from March 2025.
Good news for foreign investors.
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On VIC, value investing podcasts, etc:
Why does the thesis always have to be so complicated? So "high-IQ"?
There's always some complicated narrative, or situation, that has some hidden value. Or how some big macro force is going to totally change the industry. Or how they're
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I really like Japan's immigration system.
High quality people - well to do and crime free - can go easily. They can live there for up to 5 years without having to pay taxes on global income. At that point, they have the option of becoming a Japanese citizen or starting to pay
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@SaraEisen
What... how about some of the people from the bank should go to prison for once. Just for once!
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Textbook end of bull market behavior: Money flows out of the market leader (NVDA) into the other generals (mag7), while the rest of the market gets zero action.
Since June 18th opex, mag7 ex-NVDA is up 10%, NVDA is down 7.5% and small caps went nowhere.
If my read is right
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I think by far the biggest reason I'm going to vote for Trump: He was so contrarian and right on the EU and Russia.
He told the EU to start living up to their fair share of the NATO agreement.
He also told them to not buy commodities from Russia.
At the time, these views
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This is what a 100% long only portfolio with 1.5 beta looks like over the last decade*.
In many real world cases, high beta portfolio suffered far worse drawdowns than this simple 1.5x S&P 500 rebalanced yearly strategy.
Beta and alpha aren't perfect measures, but they do a
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If you want to start a hedge fund the non-traditional way:
1. Perform very well. This is not hard if you exploit your small-scale advantage - which doesn't mean looking at microcap stocks since everyone talks about them.
2. Write concise letters that get straight to the point.
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The Hang Seng index's pe ratio is flat in the last 13 years. A 7 pe.
And the Hang Seng index is down around 10% in the last 13 years.
Paid around a 3% dividend back then and today.
From a bird's eye view, how can that make sense? Where did all the money go?
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Most long investors join one of three ideologies. Value, Growth, Quality. Their biggest leaks are equally bad:
Value guys ignore trend in earnings paid to shareholders.
Growth guys ignore valuation completely.
Quality guys think they can know ROIC in a decade.
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LTCM used 30x leverage and generated ~40%/year "alpha".
I think about how much alpha is being generated *divided by leverage*. LTCM was doing around 1.33%.
To me, a track record is not good unless it's doing at least 5%. Anything less can easily imply taking some hidden tail
1/ When Genius Failed: The Rise and Fall of Long-Term Capital Management (Roger Lowenstein)
"If there was one article of faith that John Meriwether had discovered at Salomon Brothers, it was to ride your losses until they turned into gains."
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(1/2) Avoid the "high IQ" long investors who *always* have a fancy thesis.
The tell is that they *never* post a simple thesis like, "The company is 13x earnings, it'll keep growing revenue 5%/year and they probably have a little operating leverage for a 13%/year return."
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