Whitney Tilson On Value, Reinvention, And The Hedge Fund Business (Podcast)

by: Behind The Idea

In a bonus podcast, hedge fund industry veteran Whitney Tilson shares his thoughts on the future of value investing and what aspiring fund managers need to know.

We talked about what it takes to succeed as an active manager as well as the psychological pitfalls all investors need to avoid.

The key question aspiring money managers need to ask themselves: Am I skilled, or just a bull market genius?

By Mike Taylor

It's almost boring at this point to observe that a lot of concentrated, value-oriented fund managers have struggled in recent years. Financial journalists are writing obituaries for the careers of many of the stars of early 2000s like David Einhorn, Bruce Berkowitz, or Bill Ackman. And as many disciples of Buffett on Seeking Alpha know, cheap stocks haven't necessarily been so friendly to the retail crowd, either, as heady valuations, growth stocks, and momentum have led the market higher for much of the recent bull market.

Whitney Tilson

(Source: Kase Learning)

Amid the tumult, Whitney Tilson closed his hedge fund, Kase Capital Management, in 2017. He has reinvented himself as an educator by founding Kase Learning, which offers courses and seminars on the nuts and bolts of investing and hedge fund management.

On November 6, Mr. Tilson and I recorded this podcast, in which, he dissects his former career and offers his perspective on the way forward for the hedge fund industry.

Mr. Tilson is known for his media-friendliness (he's written for Seeking Alpha for more than a decade), and I found him to be uncommonly candid and unreserved for a money manager. I think our conversation will prove helpful to those on Seeking Alpha who wonder what it's like to take the plunge and launch a fund, or who simply would like a peek at the mental and emotional gymnastics required to compete in this tough business. Have a listen:

  • The difference between entrepreneurship and portfolio management -- 1:00
  • The quiet genius portfolio manager vs. the marketing side of raising money -- 7:45
  • How not to blow yourself up -- 12:00
  • Tilson's regrets about his hedge fund career -- 18:00
  • The future of concentrated, long-short value investing -- 24:00
  • What Tilson tells students who may not be ready to start their own fund -- 32:00
  • The danger of cognitive bias and psychological traps -- 45:00
  • The Kase short selling conference and what Kase Learning is all about -- 60:00

Daniel and I will be in attendance at the Kase Learning Conference on short-selling December 3. Stay tuned for our coverage, and if you're also going, come say hello.

We hope you enjoy the podcast. Our four-part series on Amazon (NASDAQ:AMZN) continues next week with one of our most popular guests, Professor Aswath Damodaran, as he shares his views and what he's learned from analyzing Amazon for two decades. We will then be speaking with Priya Anand of The Information, a leading tech site, to hear about her reporting on the company and where the company might go. Here's the full schedule:

We host Behind the Idea on libsyn. We're also available on SoundCloud, Google Play, Stitcher, and Spotify. If you have any favorite articles you want covered, guests you want to join Behind the Idea, or any feedback about our podcasts, email us at btipod@seekingalpha.com.

Editor's Note - please find a transcript for this podcast here. Note that the transcript is not perfect, but we think it can be helpful as a guide to the conversation.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Whitney Tilson is long BRK, HHC, AMZN, FB, and GOOG.