Seeking Alpha

Hedgefund Manager

 
View as an RSS Feed
View Hedgefund Manager's Comments BY TICKER:
Latest  |  Highest rated
  • The Asset Management Industry: 3 Dividend Plays To Buy, 1 To Avoid [View article]
    Interesting, note that the EV as a % AUM metric is related to EV/Sales.

    Sales is approximately equal to AUM * average management fee so
    EV/Sales = EV/(AUM*management fee + other services)

    Now, note that Legg Mason and AB have large "other serivces"-- revenue streams for brokerage, backoffice, and sell-side business. Also, their average fee may be higher-- and fees will definitely lower if performance does not improve. That's likely why they look cheap on your metric.

    So it's much cleaner and more direct to compare the companies to EV/Sales. Based on EV/Sales, AB is the most expensive: the other 3 are considerably cheaper.
    Jan 2 11:32 PM | Likes Like |Link to Comment
  • Eugene Profit Positions For 2012: Loading Up On Legacy Large Cap Infrastructure Tech [View article]
    No we both know that you implied that, and you are entitled to your perspective. Investing in a good mutual fund is a good option for many people, especially for those that have time constraints with their job, family and so on.

    Doing-it-yourself requires that you have the time, interest, and passion to do the required digging and monitoring.
    Dec 31 09:14 PM | 2 Likes Like |Link to Comment
  • Eugene Profit Positions For 2012: Loading Up On Legacy Large Cap Infrastructure Tech [View article]
    Well, you should feel good -- but it's more about your comparative investment edge than acumen. As Lynch notes in Beating the Street, individual investors have a few distinct edges- (i) you are not answerable to / second-guessed by a risk or investment committee, (ii) you can enter securities without changing the price (acquiring 10,000 shares is different than acquiring 1,000,000 shares), and (iii) there are fewer institutional constraints (position size limits, diversification requirements, market cap limits and other risk limits etc).

    Similarly, institutions have a number of advantages that come with size and more economic resources. Definitely, use your edge to your advantage.

    Good article Eugene- hope to read more from you.
    Dec 31 07:03 PM | 4 Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Thanks very much. These are great questions. Let's see

    1) It's year-end and quarter-end, so the trades at the close (so-called "market on close" orders) are being done this week.These trades are to facilitate any client redemptions for the quarter, tax-loss selling for the fund, and "window-dressing" the portfolio for the year-end report. Bonuses are often based on yearly return as of 4pm today, so I guarantee you everyone is logged onto Bloomberg right now lol.

    2) We used to be able to measure that by volume- institutions would trade large block trades. Now with dark pools, "high frequency" or "algorithmic" trading etc, funds can mask their trading more effectively. They tend to break up their 1,000,000 share trades into many 500 share trades so they blend in with everyone else in the market.

    3) That varies by fund- if you have a specific fund I can see if I can research it. Generally, there are many more restrictions on mutual funds than hedge funds. There's a low price limit (about $5/share), a position disclosure requirement, and some other requirements. Each fund's individual prospectuses detail their specific limits. The prospectus for mutual funds are available on the firms websites. For hedge funds- those may require some digging.
    Dec 30 03:31 PM | 1 Like Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Thanks much and happy investing in 2012!
    Dec 30 03:08 AM | Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    You're right, there's some chicken and egg there. But expect BAC to surge on news of a European fix. While we don't know the timing (next week, month, year, etc), we do know that's a big overhang on the shares. So waiting is not a bad way to protect yourself from further downside, just note the opportunity cost: you'll be giving up a good part of the upside as well.

    I want to reiterate- this trade is not for everyone. It's a good potential play for diversified long-term investors. Short-term traders should not consider this, in my opinion- too many unknowns over the short-term. Long-term picture is considerably more clear.
    Dec 29 04:22 PM | Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Actually, I quantified the upside above. The upside is three times the downside-- that's the investment thesis.
    Dec 28 02:08 PM | Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Let's agree to disagree- you cannot time the bottom nor do you need to.

    I covered the anatomy of a value investment in some depth here- http://seekingalpha.co...

    "We've got Walter Schloss's archives, and it looks like -- we haven't got the numbers yet -- a large percentage of Walter Schloss's returns have come also over time from knowing that you're buying something worth buying. And then when it goes down, not getting frightened and dumping it, but continuing to buy. And then selling on the way up. Looks like that does a lot better than just averaging down."
    Dec 28 02:04 PM | Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Thanks and that's exactly right- I have a quote from a Columbia Business School professor in my RIM Part II article that emphasizes this important point.

    Can the price decline in the near-term? Sure, but in the long-run I believe this will prove to have been a good time to enter into the stock. Similar to when Buffett entered GS in October 2008: his warrants were for an exercise price of $115. One week later, GS traded at $62. At the time, many said Buffett lost his mind. By March 2009, GS traded at $150, and many said Buffett got a sweatheart deal.

    We can't time the absolute bottom, but we can feel comfortable we are pretty close to it.
    Dec 27 07:33 PM | Likes Like |Link to Comment
  • The Asset Management Industry: 3 Dividend Plays To Buy, 1 To Avoid [View article]
    Thanks for your comments. As with all finance shops, AB management is smart but that is somewhat tangential. For revenues to increase, fund performance needs to improve and that does not occur overnight. The issue with fund outflows is that they don't return until performance picks up -- 3 years or so.

    Here's a favorite Warren Buffett quote
    "Success in investing doesn't correlate with I.Q. once you're above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing." Warren Buffett
    Dec 27 07:27 PM | Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Fortunately, the days of government investment in banks have passed. But you're right- Hank Paulson's shotgun wedding between Merrill and BofA in 2008 was a huge burden for BofA. Had BofA been allowed to walk away from Merrill, they'd be a much stronger bank today.

    Once there is clarity about BofA's loan portfolio, the shares should recover.
    Dec 27 02:48 PM | Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    I use Bloomberg for work, but cited Yahoo as the source so that you can verify the numbers yourself.
    Dec 27 02:45 PM | 2 Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Thanks, yes I think the market is having flashbacks to 2008. But the facts have changed, as you noted- BofA is much better capitalized today. They were well capitalized in 2008, before their purchases of CFC and Merrill (gasp- why on Earth did they do that?)
    Dec 27 02:44 PM | Likes Like |Link to Comment
  • Bank Of America: An Attractive Play For A Diversified Long-Term Investor [View article]
    Investing requires comfort with probable outcomes. It's important to think in scenarios- both upside and downside. The best investors - the Buffett's and Lynch's of the world- are right 55% of the time. That's a nice way of saying they are wrong 45% of the time.

    I run from any investment thesis that does not acknowledge where the thesis could go wrong.
    Dec 27 02:42 PM | 3 Likes Like |Link to Comment
  • 4 Top Value Investments Of The Oakmark Select Fund [View article]
    Thanks for your comments. Difference of opinion- that's what makes markets. We'll check back the quarter after V.me launches to see how the market reacted between today and then.
    Dec 26 10:23 PM | Likes Like |Link to Comment
COMMENTS STATS
40 Comments
17 Likes