Ran into ING US (VOYA) while hunting for cheap price to book investments. It has turned into a bit more interesting than just that metric and indeed may be an aig-style investment.

A background:
ING US is a financial services company that until recently was part of the Dutch company ING Groep NV. It, like many global financial services companies, went to the brink of catastrophe in 2008 and more specifically received a $13.5B tarp-like capital injection from the the Dutch State. Since then, ING has been selling assets to repay the bailout, most recently with the IPO of ING US (to be renamed
VOYA Financial in 2014).

Key points of a long view here include: 1) forced selling by ING's parent 2) a stabilizing retirement, insurance & asset management business:

Time to Buy Big Banks? (BAC/C/WFC/JPM)

When searching for investment ideas, one thing that seems to work is the search for the weak hand. Relatively uninformed investors, or simply those who are making non-economic and indeed incorrect assumptions are often a good starting point to research the other side.

With that mind, the fact that the U.S. Mint has run out of small gold bullion coins to sell is particularly interesting. This is a mini gold craze which parallels the institutional interest but is unique because:

1. The small denomination implies mostly retail interest, e.g. those who don't have that much money to begin with. They are therefore forced to buy the small denomination.
2. The illiquid/indirect nature of the buying. One can buy GLD etf to get the same exposure with much higher liquidity. Given the world avoids anarchy (and even then), no one is forced to accept gold as payment and therefore is by definition fear-based buying.

I recently came across this old paper about a meeting between Ed Thorp and Warren Buffett in the late 1960s. Buffett had recently closed his famous partnership after the bull market in the past few years left few undervalued securities to buy. Afterwards, former clients asked him to evaluate a money manager: Ed Thorp.

Compound interest is the first (popular) discussion that's worth repeating:

if the Manhattan Indians had been able to invest the $24 for which they sold Manhattan in 1626 at, say a net return of 8%, their heirs could buy it back now (1968) with all the improvements

This is just the beginning, however:

Reading Liaquat Ahamed's Lords of Finance this weekend, I came across this bank run:

"[The Bank of England's] reserves fell from over $130 million on Wednesday, July 29, to less than $50 million on Saturday, August 1,when the Bank, attract deposits and conserve its rapidly diminishing stock... announced it had raised its interest rates to an unprecedented 10 percent. 

Yes, it sounds like the Black Wednesday that we know in 1992. Bank of England spent billions of pounds to raise rates to 10% and higher in a costly and futile attempt to prop up its currency and stay in the ERM. Soros made his billions and indeed his name by making over a billion dollars for his investors.

But this is not recent - the year is 1914. Full quote is below:

Given that hedge fund assets are 8-10% as large as mutual fund assets, is the asset class too big to outperform? 

Soros's argument is that given the prevalence and power of hedge funds as an asset class, they cannot outperform. It is almost a tautology that not everyone outperform the market, but has this alternative asset class reached such a stage?

The following is an interview with tt1254, an analyst who quit and started his own fund. He is also available to answer your questions, ask away.

Are you a professional and want to do an interview? View our interview template here and then email me your responses to [email protected]

1. Tell us a little bit about yourself:

Recent graduate from undergrad who started an equity fund after a year or so in s&t at a bb. Was ultimate goal since second year of undergrad and having interned in m&a, s&t, pe, realized investing in public markets best fit. First stock buy was VV (same as SPY) on Sept 1st, 2008.

2. What experience/class in school best prepared you to start your own fund?

Econ 101 – less about supply/demand curves and more about incentives that drive human behavior. Psych 101 is a close second.

With the n-th iteration of Euro-crisis now including taxes on depositors, felt it good to re-link an old video of Larry Summers (see below)

While events are changing by the hour and so the agreement may be revised to be less severe, I can't help but believe that the the EU continues to make the same mistakes by valuing political decisions over the economics.

Over the weekend, I read this article about Andy Zaky, a well-known aapl (bull) analyst who raised $10mm and lost all of it. This is not unique, as traders/funds all over have fallen on the aapl road-kill highway. Nonetheless, Zaky is unique because he often lost money when aapl was going up and going down.