This made me chuckle, from the FT.
Dear investor in Lex Advanced Long/Short Advisers,
Time is an arbitrary concept. We draw your attention to this unappreciated point as we report performance year to date. Lala is active across the asset spectrum and we have seen what we at Lala call “complex” or “wrong-directional” movements in every asset category. This has depressed returns in this arbitrarily-defined reporting period, but our portfolios are set to capture significant alpha as the normal sequence of trading vectors resumes.
October’s sudden volatility is a riddle, wrapped inside a mystery, wrapped around a large rock which fell on us and – we should mention – many others. Shorting Treasuries has not created alpha in the timeframe we had anticipated, even before the sharp, painful rally of October 15. Not unlike our friends at the Paulson Advantage Fund (down a quarter this year, we note with sympathy), our event-driven fund was also driven, off a cliff, by AbbVie’s wrong-directional decision to cancel its merger with Shire.
We remain confident that the Lala process anticipates just those macroeconomic trends where there is no historical record of reliable prediction by anyone, ever. So our forecast date for the return of higher rates and volatility in 2014 has moved by a single-digit, to 2015. We will not, however, be passive in the remainder of 2014, waiting for our theses on 2015 to play out. Annual numbers are, after all, used for marketing, a circumstance the general partners at Lala accept with regret.
Happily, the unsustainable trading conditions this year have left other funds in a similar position, leagues below our high-water marks. Going forward, the predominant market dynamic is therefore clear. We and all our friends will chase whatever assets have had a half-decent 2014, in order to capture implied right-directionality. Apple has added almost $100bn in market capitalisation since October 15. Lala will therefore temporarily set aside its rigorous quantitative approach, and ride the Tim train. You pay us for performance. We chase it.
