Best Investor Letters

Very curious to hear what are investor letters that the folks here read or have read and greatly influenced them. To start off mine:

Nomad Partnership Letters

Buffett Letters 

ShawSpring Partners letters 

Rob Vinall Letters

What else out there is interesting to read and has reshaped how you view investing and the world in general!

Comments (13)

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  • Analyst 3+ in HF - EquityHedge
Jan 7, 2022 - 1:20pm

THE CULTURE AT ELLIOTT

Elliott has grown from $1 million to over $14 billion in 32 years with remarkably consistent results, a consequence of the firm's continuous risk management discipline which permeates the entire organization. The culture at Elliott, and the way we try to create value and reduce risk, have spread from the founder to employees by both teaching and self-selection. Investment professionals cannot come to Elliott thinking that after a few years of training they will have a pool of money to manage on their own for a large payout. We do not believe in granting "options" like that.

We frequently are asked how decisions are made at Elliott. The reality is that decision making at the firm is both hierarchical and the product of understanding the firm's process through hundreds of mutual learning episodes. Decisions are a collaborative effort, but the senior folks are as responsible, and involved, as the line managers. We believe in a team approach, but we also realize that great teams have great coaches, captains and field players. A team is not a democracy but is consensual, and succeeds only by working together collaboratively. On a good team, balls are passed to the spot where a teammate is supposed to be, without looking. Thousands of iterations guide those passes, knowing how both people will react to what each other is doing and thinking. That is why the answer to the question, "do you approve every trade?" is "those that we have to." If the answer had been "yes," it would have signaled an inability to pass on the principles and elements of Elliott's way of looking at the world.

The essence of the hedge fund idea is to trade with an open, fresh, skeptical, deeply analytical and independent approach. A hedge fund should be the one which says that the emperor has no clothes, no matter how many experts disagree. One of the risks of this business, to be sure, is that it can be deeply embarrassing when the emperor turns out to be fully garbed and you are the only one who yells "naked!" But, an attempt to exercise truly independent thinking is essential, and it is something we prize at Elliott. Too many people in the hedge fund community think that being institutional is going along with the crowd. We think that "groupthink" gets in the way of providing the result we seek, namely moderate consistent returns in any market environment.

If there is one cultural element that does the best job of explaining Elliott's longevity and success, it is the quality of obsessively questioning what we could be missing and what we might be doing wrong. Confidence is a delicate balance; money managers need enough confidence to actually make buy or sell decisions, but failing to understand what is actually knowable is a sure-fire path to ruin. Overconfidence is something that is difficult (but not impossible) for successful money managers to avoid. At Elliott, we understand our roots and how difficult the world is.

From inception to today, we and our growing team realize how devilishly difficult it has been to preserve and protect private capital historically. We were not fooled by a long stretch of seemingly benign economic conditions, and we did not get duped by rocket scientists and their mathematical wizardry into suspending our critical faculties or common sense. A cornerstone of long-term money management survival is humility, because it limits position size and leverage, and is also useful in restraining your reliance on the world staying just so. If an investment approach ignores the lessons of history and treats any particular tax, regulatory or governmental regime as eternal, it will be unlikely to preserve private capital over long periods of time. Even if we try hard not to rely on the world staying as it appears to be, we will still be occasionally surprised.

Elliott's culture is well-suited for today's complicated world, which of course always existed but was brought into stark relief by last fall's crisis. We think our ethos provides a robust set of tools to deal with the realities and challenges of preserving our own and our investors' capital through thick and thin.

RED 27

According to the Financial Times of June 22, a "co-founder of a leading credit hedge fund" who had "decided against buying Lehman debt" said "You can't analyze Lehman by looking at its assets and liabilities or assessing the business model. Lehman is like betting on red 27 on the roulette table."

This statement concisely crystallizes the difference between what we do at Elliott and the norm at many other funds. Some managers want to invest in situations only where they can look at a balance sheet, assess the business model, and compete with the dozens, hundreds, or even thousands of people who do exactly the same thing in the identical space. But other firms want to do something different and special, requiring connecting widely spaced dots through experience and understanding of processes. At Elliott, we call them "magical mystery tours" without irony. We like such journeys, because when we identify them they promise to be multi-layered, full of deep hard analytical work, long workout timeframes, lots of lawyers' bills, many brain cells damaged or destroyed, many discoveries both painful and wonderful, and no guarantee of making money. We are willing to engage in complicated opaque situations if they are uncorrelated. This mindset is what distinguishes us from most others. We like having people think that our style is like betting on red 27. It keeps the crowds down.

Jan 7, 2022 - 1:30pm

Just bear in mind that people's submissions are biased toward the way they think about investing. Here is mine: 

Ruane Cunniff Goldfarb investor day transcript (once a year)

Greenhaven Road

Hayden Capital

Ensemble Capital

Giverny Capital (basically Ruane Cunniff because it's run by David Poppe)

Polen Capital

Tollymore Partners

Fundsmith annual letters

  • Prospect in IB - Gen
Jan 10, 2022 - 12:25am

Ask the team for access yourselves, no one with them is going to leak

Funniest
Jan 14, 2022 - 8:35pm

Every letter is the same shit

1. Our concentrated high conviction portfolio had a good / bad quarter but don't get too excited because things change

2. Everyone but us is crazy and we are the only rational/prudent operators in the markets

3. Our process is good and here are some ideas we like that probably wont work

4. Random musing on markets

5. As always we love our LPs and feel free to reach out but don't really

Jan 14, 2022 - 11:32pm

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