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Ted Barac

 
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  • The Unintended Consequences Of Hedge Fund Fees [View article]
    Thanks for the comments, Krystof, and kudos for your philanthropic slant on fees. A couple of points:

    1.). The lack of publicly available hedge fund performance data is a result of the prohibition of "general solicitation" for hedge funds, which doesn't allow hedge funds to share information with the general public. That changed in September 2013 when rule 506c came into place. Rule 506c allows for general solicitation under certain conditions for some firms, but the additionally burdensome requirements and regulatory risks associated with doing so are such that most hedge funds aren't taking advantage (I am, but I am the exception).

    2.). The private placement exemption that many hedge funds use to avoid some burdensome registration requirements only allows for 100 investors. So, if your investors are only investing $50k each, the size of your fund would be capped at $5 million. Not an attractive dynamic for most hedge fund managers.

    The laws for hedge funds are complex and one can easily not comply for completely honest/inadvertent reasons. For that reason, it is imperative that anyone running or starting a fund get detailed advice and counseling from an experienced investment law lawyer (i.e don't rely on my comments for any guidance on these laws...not that anyone would!!).
    Nov 15 10:10 AM | Likes Like |Link to Comment
  • The Unintended Consequences Of Hedge Fund Fees [View article]
    Agreed, Nigel, and great point about the perception of charging less. It can be perceived as admitting that you're not as good and there does seem to be a luxury-goods pricing dynamic across the industry (you can't charge less as it may damage the brand). The investment management world is a strange and dysfunctional place!
    Nov 13 11:17 AM | Likes Like |Link to Comment
  • The Unintended Consequences Of Hedge Fund Fees [View article]
    Thanks for the kind words, Miguel. I think a performance-fee only incentive is even worse from an incentive point-of-view (exacerbates the issues I discussed), but 0/20% is obviously better than 2/20% from a cost perspective for the investor.
    Nov 13 11:08 AM | Likes Like |Link to Comment
  • The Unintended Consequences Of Hedge Fund Fees [View article]
    Great points, Nigel. I agree that alpha is a zero-sum game and size can make alpha generation more difficult, That said, taking 20% or more of profits in the up years (plus a flat management fee of 2%) requires such substantial alpha generation just to break-even (and can be such a misaligned incentive) that I think it can create even a worse headwind for investors than size does..

    All other things being equal (size, quality of the fund manager, etc.) a lower fee structure with a flat fee is best because the actual incentive of the performance fee is a detriment to investor interests, in my opinion. The higher the overall fee structure (regardless of the mix of management/performance) the more the odds are stacked against the investor (again, all other things being equal, which they never are).

    For example, if the benchmark is up 10%, a 2/20 fee hedge fund needs to generates 15% gross returns just to break-even on a net basis. That's a lot of alpha before you're even breaking even.
    Nov 13 04:27 AM | Likes Like |Link to Comment
  • The Unintended Consequences Of Hedge Fund Fees [View article]
    Thanks for the comment, TI. Appreciate your thoughts and agree that it comes down to fund selection (finding above average funds) for those who are paying the fees.
    Nov 12 09:40 PM | Likes Like |Link to Comment
  • Softbank Vs. Mr. Market On Sprint: Place Your Bets [View article]
    Weak Q3 subscriber and revenue figures, as expected. In fact, I considerably lightened up on my holding, post-results, anticipating that the digested results would be viewed more negatively -- potentially providing a more attractive entry point (particularly considering the absence of any immediate positive catalysts). This has not proved to be the case, as the shares have held up well (up 1.27% to $6.77).

    Apart from the weak revenue and subscriber results (as was expected), net debt also increased substantially (as was also expected). Consolidating Clearwire's debt (as was done in the comps in the article) while adding the cash outflow/payment to Clearwire shareholders and the cash burn of the quarter brought Sprint's net debt up to c. $23bn (compared to $16.5bn used in the pro-forma comp. of the article).

    Using Q3 ann'd revenue, 2013 mid-guidance EBITDA, the higher market capitalization (stock is up c. 8% to $6.77 from the $6.29 used in the article), and the Q3 net debt levels, gives meaningfully higher valuation ratios for Sprint: EV/revenue and EV/EBITDA of 1.43x and 9.54x, respectively.

    While these valuation ratios are higher than those used in the comps of the article, I believe that they are still attractive when put into the context of Sprint's longer-term growth potential and the Clearwire acquisition's substantially negative impact on these ratios. On this second point, the ratio changes resulting from the Clearwire acquisition show one of the flaws of these ratio calculations and comparisons (as was discussed in the article).

    More specifically, the Clearwire acquisition arguable brought multi-billions in long-term value to Sprint; however, for immediate ratio purposes, it only added substantially to net debt and EV while diluting EBITDA and not substantially impacting revenues.

    Disclosure: Long Sprint. Position may change at any time without notice.
    Oct 30 01:34 PM | Likes Like |Link to Comment
  • 5 Common 'Junk' Bond Investing Mistakes [View article]
    Thanks for the comment, jbzw, and I totally agree that the choice is a personal one that's specific to each individual's circumstances.
    Oct 15 03:26 AM | 1 Like Like |Link to Comment
  • 5 Common 'Junk' Bond Investing Mistakes [View article]
    Thanks for the comment, TheMoneyMadam,

    I agree that having a fixed-maturity is advantageous, if you expect interest rates to rise (as I do). With respect to knowing what you own, these funds are so diversified that you basically just own exposure to the broad high-yield market (with no substantial concentration in any one issue or issuer).

    Also, I actually think that you are much better able to get out the door quickly with these very liquid ETF's compared to trying to sell an individual H.Y. bond during times when the high-yield bond market is selling off.

    Finally, I think that whether or not a bond is selling at a premium or discount is not as important as the actual yield (YTW) resulting from both the price and the coupon. In other words, a very high coupon bond trading at a premium can yield more than a low coupon bond trading at a discount.
    Oct 14 05:04 PM | 1 Like Like |Link to Comment
  • 5 Common 'Junk' Bond Investing Mistakes [View article]
    Agreed, Pinot44, for most retail investors it makes very little sense.
    Oct 14 11:26 AM | 1 Like Like |Link to Comment
  • Orange Is The New Green [View article]
    Nice article, Mike. Thanks. What EBITDA number are you using for AT&T?...I calculate about 5.9x EV/EBIDA using $42.7bn in last-quarter-ann'd adjusted EBITDA.
    Oct 11 11:56 AM | Likes Like |Link to Comment
  • Seeking Career Alpha (Sometimes, To Do The Things You Love, You Leave The Ones You Love Behind) [View instapost]
    Best of luck, Samir! Your new employer is lucky to have you.
    Oct 10 08:11 AM | 1 Like Like |Link to Comment
  • Softbank Vs. Mr. Market On Sprint: Place Your Bets [View article]
    Thanks for the comment, milehr. I think there were many reasons to believe that it was a screaming buy back then (and I was buying and writing bullish articles on the name at the time), but a good result doesn't necessarily mean a good decision (or vice-versa) and a case could certainly be made that the price was accurately pricing in the risks at the time.
    Oct 4 11:09 AM | 2 Likes Like |Link to Comment
  • Softbank Vs. Mr. Market On Sprint: Place Your Bets [View article]
    I haven't looked at the options, but if the premiums are, indeed, low it could be an attractive play.
    Oct 4 11:06 AM | Likes Like |Link to Comment
  • BlackBerry Is Far From Dead. Right Sized, It Will Have A Profitable Future [View article]
    I'm confused, sfinvestor. You say you "work for the CFO", but then say you hate BBRY management. Wouldn't that make you BBRY management? Worse, wouldn't it make your comments about what happened with the audit committee (which you present as facts and not speculation) a violation of your employment contract, if not, securities laws? Did you mean to say that you once worked for the CFO?
    Sep 21 04:23 PM | Likes Like |Link to Comment
  • Now Is The Time To Be Fearful [View article]
    Jake, you can send an email to corrections@seekingalp... and they can amend the grossly inaccurate statements, regarding Buffett, that are included in your article. Please, at least, correct where you replace the words "Healthcare costs in the U.S." with "Obamacare" and misquote the article that you referenced (an article which was already proven to be misleading even before your wording change). The actual quote from the article you referenced was "Healthcare costs in the United States are like a tapeworm eating at our economic body".


    Links and excerpts, below, showing the inaccuracy of the remarks.

    1.) "Buffett said the stories took his comments out of context and added the “scrapped” wording.

    “I've never suggested nor thought Obamacare should be scrapped,” said Buffett, who has supported Obama's political campaigns. “I support it. It relates to providing medical care for all Americans. That's something I've thought should be done for a long, long time.”

    2.) Buffett's office told PolitiFact that the blog reports do not reflect his views. Buffett "has never said or thought that Obamacare should be scrapped," said Debbie Bosanek, Buffett's assistant. She said she showed him our research and that he said our analysis "covered it very well."

    http://bit.ly/1a7n7wf
    http://bit.ly/14neoW4
    Sep 19 05:06 PM | 6 Likes Like |Link to Comment
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