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Will Whitney Tilson's Kids Go To College?

Mar. 06, 2018 8:21 AM ETAMZN, QQQ, BRK.A, BRK.B, META, GOOG, GOOGL, HHC26 Comments


  • We admire accomplished value investor Whitney Tilson and his success in the investment business.
  • The Harvard MBA recently recommended never shorting stock and disclosed he owns Berkshire Hathaway, Amazon, Alphabet and Facebook.
  • The holdings are for his kid's college savings portfolios.

Value investor and finance whiz Whitney Tilson came out swinging March 1st, declaring that short selling is too difficult and dangerous and that he has learned his bearish lessons. He also announced he had recently purchased a perma-bull stake in Berkshire Hathaway (BRK.A) (BRK.B), Howard Hughes (HHC), Facebook (FB), Amazon (AMZN) and Google (GOOG) (GOOGL) for his kids' college savings plan... Aka: the whole 529 ranch recently bought "BHHHFAG."

We admire Tilson's guts investing in this concentrated portfolio which is 2/3 of FAANG plus a whopping helping of Berkshire Hathaway (50% of the portfolio) and a hefty side of Howard Hughes (25% of the college savings fund). We do think the acronym of the portfolio could cause some tense moments for his family office in the near term.

The final 25% will be invested in Facebook, Alphabet, and Amazon. At today's prices, one has to wonder whether Tilson secretly harbors some angst towards his offspring - in this essay we conclude that his love is strong but his timing could always be off.

Valuewalk.com did a good job of explaining the following table - peaks and troughs in the overall market can greatly affect the swings in a concentrated portfolio. When stocks fall, correlations head towards one.

Maybe the investments in these names at a CAPE of 32 for the overall market points to some love lost, potentially, at the venerable Tilson family head office. Or, Tilson has finally moved to a growth at reasonable prices model, which after all has worked well for all of the stocks in the 529 portfolio over time.

After evaluating his portfolio below, you will agree that Tilson's love for his children is strong, though maybe his investments on their behalf are riskier than they seem given how far we are into the current business cycle. We

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WWW.JAGUARALPHA.COM          Protecting and preserving capital (purchasing power) over the long term is more important to me than growing capital. Main research focus relates to investment risks and how to hedge against them inexpensively. In most market environments I'm a fan of buying undervalued stocks of good companies and holding for long periods of time. In today's environment, delta hedging via options and risk management is more of the focus. When the facts change, so will my focus. I don't give "tips" or make recommendations... unbiased analysis on etf's stocks and bonds but do not tell readers whether to buy, sell, or hold. Some articles will list ten well known stocks and describe our general investment theme without "picking" stocks -- this leads to confusion for those trying to "rank" my analysis. By definition, these articles analysis and rants are meant to help readers analyze data sets and make their own decisions. Generally, we are permabulls. However, we focus on risks and hedging them in these articles because many stocks go to zero. We've seen it happen and want to teach not only from successes but also from our many failures.Interests include researching cheap stocks of high quality companies, GARP stocks, Magic Formula names, and stocks trading below intrinsic value. Participate long only without hedge when overall bull market is trading for a CAPE under 20 (Tobin's Q under .8X) or when blood is in the streets (not dip buyers), but strive to cut losers early when the facts change and refuse to marry long or short positions unless a "holding period of forever" makes sense. Hunches must be backed up by disciplined systems. In fully valued markets, we prefer hedging via index options and light commodity trading/trend following. Not interested in participating in latest fad or bubble. Prefer to short the bubble, but only after evidence suggests the bubble has popped. Prefer to hedge any long positions in frothy markets utilizing a balanced long short equity approach in fairly valued markets. In undervalued markets, we need confirmation from market conditions and valuations in order to invest 100% long (or more) using in the money call options for leverage. Covered calls, calendar spreads, and other options strategies for capturing theta decay. Cut losers on short side by using ITM put options instead of stock, trend following strategies if trading commodities (for diversification). Fundamental analysis but also technical analysis. Mathematical, disciplined trading strategies. Strive first off to be right about the overall direction of the market (bull or bear). Hold lots of cash when people are being greedy. Nothing we publish here is a recommendation to buy or sell any security. Please consult your financial advisor before buying or selling any security.

Analyst’s Disclosure: I am/we are long GOOG, BRK.B, BRK.A. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

long QQQ puts

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