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  • On Whitney Tilson's Returns and Alpha [View article]
    Carhart's methodology determines which style the fund manager follows and then calculates whether the manager has any stock picking skill.

    If you want to see whether the fund manager has the "correct" style then you can just use CAPM to calculate his "alpha". We don't like this methodology though, we are interested in fund managers who can really pick stocks. That's where marginal value is.
    Jan 6, 2011. 09:37 AM | Likes Like |Link to Comment
  • The Search For an Investment Formula: Seth Klarman vs. Joel Greenblatt [View article]
    Klarman clearly says that formulas based on fundamentals such as price-to-earnings (PIE) ratios, price-to-book-value ratios, sales or profits growth rates, dividend yields, and the prevailing level of interest rates don't work. We guess he was trying to recite what CAPM was saying. Unfortunately even Fama gave up CAPM and has been using the 3-factor model.
    Jan 3, 2011. 08:35 AM | Likes Like |Link to Comment
  • Best Hedge Funds: Jim Simons' Medallion Fund [View article]
    Very interesting.

    Do you currently use this strategy to manage any funds?
    Jan 2, 2011. 09:56 PM | Likes Like |Link to Comment
  • The Search For an Investment Formula: Seth Klarman vs. Joel Greenblatt [View article]
    He returned all the capital plus 35+% annual capital gains to his original investors in 2003. Unless he had a printing press that can print billions of dollars, there is no way he was a fraud.

    His strength is clearly in short-term investing. I don't understand why people gave him money to invest in long-term (3-10 year holding periods) stocks. They could have just waited a couple of months and imitated his long picks from the 13F filings.
    Jan 2, 2011. 03:24 PM | Likes Like |Link to Comment
  • Best Hedge Funds: Jim Simons' Medallion Fund [View article]
    Not really. You can explain a couple of percentage points of abnormal returns by luck/coincidence. You can't explain 30% alpha for 20+ years by luck.

    We analyze hedge fund managers' performance to determine whether they have any skill and their results can be imitated by using publicly available filings.

    P.S. Nice article. Just noticed that you wrote it.
    Jan 2, 2011. 03:05 PM | Likes Like |Link to Comment
  • Best Hedge Funds: Jim Simons' Medallion Fund [View article]
    The profits of Jim Simons prove that the markets aren't efficient. There are a lot of investors who think markets are efficient and the best way to invest is index funds.
    Jan 2, 2011. 08:18 AM | Likes Like |Link to Comment
  • Best Hedge Funds: Jim Simons' Medallion Fund [View article]
    Yes. It is closed to new investors since 1993.
    Jan 2, 2011. 08:11 AM | Likes Like |Link to Comment
  • On Whitney Tilson's Returns and Alpha [View article]
    It's not alpha if you consistently invest in value stocks. It's alpha if you try to time your investments. Do you really want to pay 2-and-20 to a hedge fund manager who simply invests in value stocks? Do yourself a favor and reward hedge fund managers for the things that you can't do (i.e. picking better performing stocks among the universe of value stocks).
    Dec 23, 2010. 09:39 AM | Likes Like |Link to Comment
  • On Whitney Tilson's Returns and Alpha [View article]
    James,

    We used Carhart's four factor model which adjusts for size, value, and momentum styles. As a result, it doesn't matter whether value stocks are out of favor or not (we adjust for that). During the past decade value stocks were hugely successful, as a result Tilson's alpha is only mid-single digits. Warren Buffett managed to beat the market by 6% per year during the past decade, yet his alpha was zero. Why? Because he couldn't pick the winners among the value stocks. Whitney Tilson did. That's why this is a very positive article about Tilson's performance.

    For more about how to calculate alpha, please visit this link we provided in the article:
    www.insidermonkey.com/.../
    Dec 22, 2010. 09:19 AM | Likes Like |Link to Comment
  • 7 Stocks Insiders Are Buying Like Crazy [View article]
    We aren't very familiar with insiderscoop.com.

    We will prepare a list of companies with large transactions in terms of percent of the company bought. Most of these will be small/micro cap stocks though and will have limited liquidity.
    Dec 21, 2010. 05:25 PM | Likes Like |Link to Comment
  • 7 Stocks Insiders Are Buying Like Crazy [View article]
    We can prepare a list ranking insider purchases by transaction size. However, consensus is usually a better indicator than transaction size as a percentage of outstanding shares.
    Dec 21, 2010. 03:30 PM | 1 Like Like |Link to Comment
  • Hedge Fund Manager Roberto Mignone's Portfolio and New Stock Picks [View article]
    Great observation. Maybe we should create a hedge fund manager "monkey" index, showing how independent hedge fund managers are.
    Dec 21, 2010. 02:52 PM | Likes Like |Link to Comment
  • On Whitney Tilson's Returns and Alpha [View article]
    It's posted on Insider Monkey website. Seeking Alpha editors might post it here too.

    You will be surprised by the results.
    Dec 21, 2010. 02:44 PM | Likes Like |Link to Comment
  • David Einhorn: Big Banks Pick Pockets of Pension Funds [View article]
    We are long-term bullish on Turkish markets. We like banking stocks, especially Garanti Bankasi. The main problem with investing in Turkish markets is volatility. Another global crisis and banking stocks might go down more than 50%. Exchange rate volatility compounds that problem as well. So, you shouldn't be surprised to lose 75% of your investments in case there is another crisis. But, if you can handle the volatility, we expect it to be a very rewarding investment. Maybe we should write an article about investing in Turkey.
    Dec 21, 2010. 02:42 PM | 2 Likes Like |Link to Comment
  • On Whitney Tilson's Returns and Alpha [View article]
    There is a graph in the article depicting his month by month return. The y-axis shows his cumulative return. The x-axis shows the date. In 11 years, he returned...
    Dec 21, 2010. 09:25 AM | Likes Like |Link to Comment
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