#hedgefunds

[glacialmartyrlycanthrope]

philippe laffont

philippe laffont

💼 1. Championing Private-to-Public Shift

Philippe emphasized at a recent podcast that many large private companies should consider going public, highlighting benefits like increased transparency and broader wealth creation opportunities

[investmentees]

r/ T-Shirt

The prophet Roaring Kitty aka Deep Fucking Value has posted to his favorite community, highlighting his $116M stake, is his favorite company.

[jaaneymann]

stockmarket tweet compilation pt. 2 because the hits keep coming

[gale-gentlepenguin]

So I kind of have the general Gist that some guys made Gamestop a high stock. But why is this making the hedge funds lose money. I am a bit lost.

Okay so a lot of people don't know the details about how the stock market works. But I am going to summarize as best as I can.

With stock trading, one can buy and sell stock.

What that means is that if you like a company, you can buy a share of that company for a price, and if more people buy it or want to buy it, the price will go up. You can sell the stock later to cash out.

This method is the most common and people want the stock they buy to be worth more so that they can cash it in for more later.

Now there is something called Shorting a stock, or Short selling

What that means is, someone thinks a company is going to go down in value. That person can basically borrow a stock and sell it for the price it is at now, then later if  it goes down in value, they can buy back the stock they borrowed, for a lower price and they made a profit for selling it earlier. Its like the opposite of regular buying.

Now Shorting stock is something very common with hedge funds, and when they short a stock, its basically saying that the company is going down the crapper. (its going to go out of business and be worth almost nothing). Gamestop was one of the companies that these Hedgefunds were shorting the stock of. 

But, gamestop didn't drop in value, it skyrocketed. Because a bunch of redditors convinced enough people to buy. Which increased the value of the stock.

Now here is the REALLY interesting part about buying and selling stock.

If you buy the stock and it drops to zero, you only lose the money that you bought the stock for. It can't go lower then zero.

Shorting a stock is the opposite. The price of a stock going up means there is theoretically no bottom. The price they have to pay back could theoretically keep going up. That debt has to be paid back. And these hedge funds short sold thousands of stocks for 10 dollars a share, and that value of the stock is now over 300 dollars and RISING. So suffice to say, thats billions lost for these elites, and that money is distributed to the people that bought into it.

So, the irony of using an app called Robin Hood to trade stock, and using a stock thats slogan is “Power to the players.” 

[zieeeej]

Get your wallets ready because I have a great deal to offer!

[thechauwei]

The Kung Fu manual to Hedge Funds

It has become quite fashionable to sprinkle some hedge funds to diversify your portfolio or better still "hedge" against the market. So you think OK it's not too bad to put an average hedge fund since that will still fulfill the two qualities I just described. No, it doesn't work that way, the average hedge fund underperforms passive investing because of the fees so you might as well not invest in the first place. Or you end up in a popular fund like Madoff and lose your money. The point is, investing in average hedge funds does not get you average returns. You end up somewhere between zero and lousy returns, more likely closer to the former.

There are no lack of advisors or consultants or private banks out there who will help you pick the best hedge funds. Or tell you to just hand money to them so they can do the hard work. (Tip: hedge fund investing is a lot of work. Even if you outsource the work to the experts you still have to know what questions to ask them to make sure they are doing the work) So I am not going to tell you how to pick the best funds out there. That's right, I am NOT going to teach you how to select the funds that will make the most returns, or have the best risk-adjusted returns, or can best protect your portfolio in a downturn, or the next fund which will invest in the next Apple or AliBaba. (Tip: I'm not sure if anyone else knows FOR SURE how to do any of the above. If I knew, I certainly would not tell anyone else. OK maybe the guys arrested for insider trading knows). If you are still reading this, then you must be thinking then why I am wasting my time reading this?! I'm going to share my experiences on how to identify bad hedge funds or more generally lousy investment pitches related to hedge funds.

This is the hedge fund version of my guide to wine -- I can tell when a bottle of wine is really bad (it's not just those sub $10 supermarket wines, I once turned back a bottle at Per Se in NYC), even though I have to admit I can't really tell the difference between a $50 and $500 bottle. But once you can sieve out the worst (or bottom quartile) then your odds of hitting a winner are substantially improved.

Kung Fu Manual: a secret book passed down from Master to Disciple which teaches you ways to cut through the crap in this treacherous world

[secondaryartifacts]

[rjzimmerman]

Villains or visionaries? Hedge funds short companies they say 'greenwash'

Tens of trillions of global investment dollars are pouring into companies toutin...

If you know what short selling is, then this article will interest you and surprise you. Short selling is an investment technique. For example, assume Company X is selling a pharmaceutical drug that allegedly cures some disease (name it). Word is out that the drug isn’t as effective as promised, although Company X and its tribe of supporters are controlling the narrative. Most of us think Company X is doing great. Assume its stock is selling for $100, but the short sellers believe that it is way overvalued. So, the short seller borrows 1000 shares from any shareholder, then sells those shares and realizes $100,000 ($100 per share times 1,000 shares). The short seller waits, and sure enough, doubts creep into the market and the stock drops to $40 by the time the short seller is required to return the shares to the original lending shareholder. The short seller buys the shares at $40, for an aggregate of 450,000. Short seller has made $60,000 profit on the transaction. Short seller sold the shares she/he borrowed for $100,000, but only had to spent $40,000 to buy them back. Bingo!

This article tells us that some short sellers are out there, hunting for companies who may be green-washing, or touting ESG values (environmental, social and governance) that are overblown. Once the market realizes that some of these companies are full of ESG shit or are green-washing, then they pounce.

Excerpt from this story from Reuters:

Tens of trillions of global investment dollars are pouring into companies touting robust environmental, social and governance credentials. Now short-sellers spy an opportunity.

Such hedge funds, often cast as villains of the piece because they bet against share prices, scent a profit from company valuations they believe are unduly inflated by ESG promises or which they say ignore risks that threaten to undermine the company’s prospects.

Investments defined as “sustainable” account for more than a quarter of all assets under management globally, according to the Global Sustainable Investment Alliance. About $31 trillion has been invested, buoyed by analyst reports that show companies with strong ESG narratives outperform their peers.

Some short-sellers, including Carson Block of Muddy Waters, Josh Strauss of Appleseed Capital and Chad Slater of Morphic Asset Management, argue share prices can be bolstered by corporate misrepresentation about sustainability, or so-called “greenwashing”.

“Greenwashing is absolutely rampant now,” says Slater, whose fund bets on both rising and falling share prices. If companies fail to engage with long-term investors, he sees a red flag.

“From the short side, it’s quite interesting.”