Jim Chanos remains short Tesla.
“Put it this way,” Chanos said. “If you wouldn’t be short a multi-billion-dollar loss-making enterprise in a cyclical business, with a leveraged balance sheet, questionable accounting, every executive leaving, run by a CEO with a questionable relationship with the truth, what would you be short? It sort of ticks all the boxes.”
Crescat Capital remains bearish equities with an emphasis on valuations, leverage and the Chinese credit cycle. The firm also maintains a bearish stance on crude prices.
Crescat Capital 3Q 2017 Investor Letter
On US equity valuations:
US large cap stocks are the most overvalued in history, higher than prior speculative mania market peaks in 1929 and 2000.
Chinese yield curve inverted:
Chinese property developers - warning sign?
And finally: China newly built property prices:
Check out this amazing 60 Minutes documentary from 1999.
The skepticism at minute 11 is amazing. At the time it seemed incredible that an upstart competitor like Amazon could be beat Sears. Today, with the benefit of hindsight, it seems almost obvious.
"Amazon today is worth more than Sears … A couple of geeks who sketched out some software"
Legendary short seller Russell Clark of Horseman Capital published a slide deck outlining his strategy. The deck is full of useful case studies, a must-read for short-sellers and stock pickers.
You can find the full slide deck here: Russell Clark's Short Selling Strategy
Hans Humes, CEO of Greylock Capital Management, specializing in event-driven, absolute return strategies in the global credit markets, and invests in undervalued, distressed, and high-yield assets worldwide.
Head over to the Washington Post for a long profile of the resurgent Bill Miller.
“I regret I didn’t retire in 2006,” Miller joked. “Then I would have had this extraordinary record nobody else ever had. They would have thought I was a genius. By 2009, I was like an idiot.”
Miller could have retired. He is wealthy and commutes between Baltimore and Vero Beach, Fla., a few miles from President Trump’s Mar-a-Lago resort.
Instead, he is doubling down. This year, he bought two mutual funds he had started at Legg Mason: the Miller Opportunity Trust and the Miller Income Fund.
“I would just call it the next stage as opposed to a second act,” Miller said.
Read Hayden Capital's latest letter with a take on value investing and technology companies:
"Over the last few years, investors will notice that our portfolio has started to develop a tilt towards “technology” companies. Amazon, JD.com, Zooplus, Baidu, Cimpress, and even Interactive Brokers can all be classified into this bucket.
Traditional value investing teachings have long encouraged investors to shun this category, putting it in the “too hard” pile due to the nature of rapid change.
I think it’s time the narrative is re-examined, or at the very least not taken at face value without further thought. In today’s world, change is a given, not an outlier. So the question is how can we spot these inflection points in change, and ensure our investments themselves won’t be disrupted? One approach is to take an idea from Amazon. Jeff Bezos has famously said to focus on the very few things that won’t change – customers’ preference for low prices for instance – and assume everything else will."
Full letter here: Hayden Capital 3Q 2017 Investor Letter
More hedge fund letters: Hedge Fund Third Quarter 2017 Investor Letters
The Wall Street Journal published an interview with Fidelity's Joel Tillinghast:
The brief interview comes as the value-focused fund is changing the criteria of its "low priced" universe of stocks:
"Now the fund is expanding its universe; as of November 2017, it will change its definition of “low priced” and seek opportunities in what it perceives as undervalued small-cap and midcap stocks of high-quality companies."
Head over to Valuewalk for the Saba Capital Robinhood 2017 slide deck.
The fund is looking to capitalize on historically low credit volatility through select equity/credit pair trades.
Two new letters from talented hedge fund managers:
Business Insider has some notes from Baupost's latest investor letter.
- Baupost is holding roughly 40% of its assets in cash and is returning $2 billion to investors at year end, according to a person familiar with the firm.
- The firm's funds made almost no money in the third quarter of this year, but are up about 3% on the year, according to the person familiar with the matter.
Legendary trader and speculator was recently interviewed by Barry Ritholtz on the Bloomberg Masters in Business Podcast.
You can find the full podcast interview here:
Victor Niederhoffer: Lessons of Making and Losing a Fortune (Masters in Business Podcast)
For more on Victor Niederhoffer, refer to this 2007 profile in the New Yorker:
The Blow-Up Arist (New Yorker Profile)
There are also some bits and pieces of a nineties documentary on Youtube. Niederhoffer was interviewed after he the Asian financial crisis blow-up.
Video: Victor Niederhoffer after he lost everything in the 1997 Asian Crisis
In-depth profile of Ray Dalio by Bloomberg Magazine.
Jobless, Dalio started Bridgewater in 1975 out of the second bedroom of his Manhattan apartment. Ever since he’s had a nose for steering his business toward ever more lucrative work. At first he advised companies on risk management. Then he managed bond and currency portfolios for them.
With the upcoming release of his Principles book, Dalio is seeking to cement his legacy.
“The last act in the biography of the hero is that of the death or departure,” Campbell wrote in The Hero With a Thousand Faces. For his part, Bridgewater’s founder is looking toward the end of his journey. “Life exists in three phases for me,” Dalio says. “There’s the first phase in which you’re learning and dependent on others; there’s the second phase in which you’re working, and others are dependent on you; and then there’s this third phase where no one is dependent on you, and you’re free.”
Full article here: Dalio’s Quest to Outlive Himself