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Hedge-fund managers that do the most research will post the best returns

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Re: Hedge-fund managers that do the most research will post the best returns

#101

Post by RivieraKid »

thedevil wrote: post #47

Around 2008, I read some public filings by banks. I made only two back-of-the-napkin adjustments: 1) I combined off-balance sheet assets and liabilities into the balance sheet, and 2) I changed the expected % losses to approximately that of Wells Fargo. With those two simple adjustments, I saw that some big banks were in the hole by (combined) tens of billions of dollars. The market prices for these banks made it cle…

What's your opinion on Tesla? Many people who read their financial documents say their situation is really bad.

Re: Hedge-fund managers that do the most research will post the best returns

#102

Post by kornish »

wgerard wrote: post #75
bckygldstn wrote: post #73

Earlier quoted context omitted.

Automated data ingestion doesn't come for free. It's an ongoing effort to keep on top of new sources and schema changes, and the amount of effort scales with the number of sources. I'd guess that's the value you were providing for them.

Oh sure, no doubt. It makes sense to spend $10 a month on something if it saves you 10 hours of time and you can potentially make $10 million from it. I was mostly just surprised at how quick the process was. Hedge funds are much more afraid of missing out on something than they are of paying a monthly fee to someone. That might sound a bit silly (what business isn't afraid of missing out on something?), but that's d…

Was that how much you were charging? One would naively assume that you could probably have charged a lot more given the amount at stake for the fund.

Re: Hedge-fund managers that do the most research will post the best returns

#103

Post by chollida1 »

3pt14159 wrote: post #89
dsacco wrote: post #76

Earlier quoted context omitted.

> Around 2008, I read some public filings by banks. I made only two back-of-the-napkin adjustments: 1) I combined off-balance sheet assets and liabilities into the balance sheet, and 2) I changed the expected % losses to approximately that of Wells Fargo. With those two simple adjustments, I saw that some big banks were in the hole by (combined) tens of billions of dollars. The market prices for these banks made it c…

Eh. It works if you're a bear. You get in early, you sell in 2006 while shaking your head. Maybe you leave a bit in with extra exposure to volatility so you win either way, maybe not. Then when 2009 hits you pile in again. It's pretty easy to make way above average returns on the stock market. Just look for the classic signs that it is peaking (low unemployment, high P/E, high leverage, bad demographic trends, etc).

2 things about this.

1) if you are a fund you just cant' sit out 3 years. Your fund will shut down as everyone will yank their money,. if its your own money then people will leave as you won't pay bonuses.

2) If you went short in 2006 then you wouldn't have survived until teh crash of late 2008.

> It's pretty easy to make way above average returns on the stock market.

This is just an absurd statement along the lines of its easy to build a billion dollar company just mimic what all the other billion dollar companies do.

Sorry for being so negative to your comment, but come on. That statement can't be seriously defended in any resonable manner.

Re: Hedge-fund managers that do the most research will post the best returns

#104

Post by rhizome »

3pt14159 wrote: post #89
dsacco wrote: post #76

Earlier quoted context omitted.

> Around 2008, I read some public filings by banks. I made only two back-of-the-napkin adjustments: 1) I combined off-balance sheet assets and liabilities into the balance sheet, and 2) I changed the expected % losses to approximately that of Wells Fargo. With those two simple adjustments, I saw that some big banks were in the hole by (combined) tens of billions of dollars. The market prices for these banks made it c…

Eh. It works if you're a bear. You get in early, you sell in 2006 while shaking your head. Maybe you leave a bit in with extra exposure to volatility so you win either way, maybe not. Then when 2009 hits you pile in again. It's pretty easy to make way above average returns on the stock market. Just look for the classic signs that it is peaking (low unemployment, high P/E, high leverage, bad demographic trends, etc).

What kinds of successes have you had using this strategy?

Re: Hedge-fund managers that do the most research will post the best returns

#105

Post by avn2109 »

dsacco wrote: post #29
zechs wrote: post #23

Earlier quoted context omitted.

They automated signal discovery in what kind of data? I have heard their use of unconventional data sources is the source of their success, not automated signal discovery.

No, every quantitative firm uses unconventional sources of data. That doesn't meaningfully differentiate them (at least, not anymore). For example, Two Sigma has an entire division devoted to sourcing and processing "alternative data." But Two Sigma is not at all comparable to firms like RenTec. The funds I'm talking about (including RenTec) take in as much unstructured data as they can possibly find, almost indiscri…

First, thanks for writing these long and detailed comments; I find them very interesting and probably a lot of other people do too.

Second, you mention knowing the names of various comparable firms to RenTech. Can you name some of those here?

Re: Hedge-fund managers that do the most research will post the best returns

#106

Post by otalp »

RivieraKid wrote: post #101
thedevil wrote: post #47

Around 2008, I read some public filings by banks. I made only two back-of-the-napkin adjustments: 1) I combined off-balance sheet assets and liabilities into the balance sheet, and 2) I changed the expected % losses to approximately that of Wells Fargo. With those two simple adjustments, I saw that some big banks were in the hole by (combined) tens of billions of dollars. The market prices for these banks made it cle…

What's your opinion on Tesla? Many people who read their financial documents say their situation is really bad.

Not OP but Tesla's stock is certainly overvalued(Musk said so himself). Their future depends on if they can scale without QA issues - so far even producing a few hundred model 3s a week they seem to be struggling with defects and problems in the delivered cars.

The one distinguishing factor is that they have terrific brand value because of Musk, and this could mean that consumers would want their cars despite all the troubles they have. I think this unusual level of brand value is the confounding factor that muddies predictions and is unquantifiable. Brand value makes consumers make non-rational decisions. If it was any other car company with Tesla's numbers you'd be crazy to bet on them succeeding.

People who hear that say, Lexus are doing badly and have severe problems with their cars are going to go buy an Audi. People who want a Tesla so far are just waiting for a Tesla.

Re: Hedge-fund managers that do the most research will post the best returns

#107

Post by ISL »

chollida1 wrote: post #103
3pt14159 wrote: post #89

Earlier quoted context omitted.

Eh. It works if you're a bear. You get in early, you sell in 2006 while shaking your head. Maybe you leave a bit in with extra exposure to volatility so you win either way, maybe not. Then when 2009 hits you pile in again. It's pretty easy to make way above average returns on the stock market. Just look for the classic signs that it is peaking (low unemployment, high P/E, high leverage, bad demographic trends, etc).

2 things about this. 1) if you are a fund you just cant' sit out 3 years. Your fund will shut down as everyone will yank their money,. if its your own money then people will leave as you won't pay bonuses. 2) If you went short in 2006 then you wouldn't have survived until teh crash of late 2008. > It's pretty easy to make way above average returns on the stock market. This is just an absurd statement along the lines…

If you are Berkshire or Amazon, you can sit on cash or potential earnings for years, and investors can trust you with it. The keys are finding the right investors and demonstrably earning their trust.

Re: Hedge-fund managers that do the most research will post the best returns

#108

Post by synaesthesisx »

I personally know and have worked with a few people who manage hedge funds (with a combined hundreds of millions in AUM). So fun fact: one of the tight-lipped secrets about the hedge fund industry (which could arguably also be said for a lot of the financial industry) - is that none of them actually know what they're doing.

Characters like Ackman, Shkreli, etc all sell the idea that they know what they're doing, when the reality is it's simply gambling with other people's money with minimal risk. Luck will favor some, and others...not so much. The entire industry is essentially a collective delusion/sham.

Re: Hedge-fund managers that do the most research will post the best returns

#110

Post by bilkoo »

Well couldn't it have been the opposite? Hypothesis: maybe this kind of research has the least marginal return, therefore only the most profitable funds are willing (or able) to invest in it (Bridgewater would invest $10M for 0.1% of improvement while a small fund can't afford that luxury given that 0.1% is fund size independent).
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