So i understand that MM are mostly trading quarters and turnover is super high but if you find a stock that you expect would be able to beat several consecutive quarters can you hold that stock for the long haul or would risk models there prevent it?
Pretty new to this stuff and would love to know
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Yes, very often
Disclosure - I don't work for a HF but have been trying to break in so have done a lot of research over the last year (same disclosure I posted the other day!). If someone else can confirm that I actually am saying the right stuff, please let me know...
As the other person said, yes you do, but within the construct of the MM model (to your point). While a tiger cub may have the thesis "my proprietary analysis of the unit economics + tam + competitive positioning shows the street has both growth and margin/fcf potential wrong over a long time period, and the business model is super duper great that it can do that, so we go long", it translates into lets buy and hold for +1 year (or at least they originally plan on that) and wait for the market's perception of the stock / those key drivers to more closely align with ours.
At a MM, you can have the same perspective, but because you operate within the context of that tight risk model, you will trade around that position much more frequently and especially around catalyst events (namely earnings) as you attempt to more closely track the KPIs that drive this stock's performance over both the short term and long term. So while it may be a long, you can size it down significantly if you believe that into next earnings there may be a softer KPI print (like ARR, or margins, or new users, w/e it may be), despite the LT thesis still being the same in your mind. In the MM construct, you need to more closely follow those ebbs in expectations/ earnings prints by the greater market while you try to extract alpha over consecutive short periods of time. The original stock thesis can work in both environments though
Very very helpful. Thank you!
How granular are they getting with their revenue builds?
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