Which Investors Do You Follow Closely?

I recently read Kyle Bass' investor letter and also watched a video that featured Michael Platt on Bloomberg TV and in general think both guys are absolutely brilliant. Watching them and following Bass for a while got me thinking..Who do all of you guys think are the smartest investors out there? Who do you like to follow? Which investor letters are must reads, etc. (this can be HF managers, MF guys, even talking heads)

Here are the links to a recent Bass video on CNBC and the Michael Platt Video:
Bass: http://video.cnbc.com/gallery/?video=3000061932
Platt:

 

oh my god kyle bass here kyle bass there Funny how nobody at my office gives a dime about Mr. Bass and his agenda. Yet, every time I log on to WSO, Zero Hedge, etc, everyone's talking about him like he's some messiah. I mean I respect the guy and his views, but this recent 'Kyle Bass' fad (don't know what else to call it) on the internet reminds me of Justin Bieber and his teenage girl fans :p

Array
 

I am following:

Hugh Hendry Mike Novogratz Anthony scaramucci

Clever got me this far Then tricky got me in Eye on what i'm after I don't need another friend Smile and drop the cliche 'Till you think I'm listening I take just what I came for Then I'm out the door again
 

I think that hedge funds (so long as government does not bail them out) are one of the best additions to the capitalist model is some time. They are comprised of brilliant people, they do their homework, question everything, and are excruciating honest. It's the only way to win consistently- to be a iconoclastic contrarian. Some of the guys I like to follow (no particular order):

David Einhorn Marc Faber Jim Rogers Kyle Bass Jim Chanos Hugh Hendry Ray Dalio

And to ERGOHOC- Kyle Bass is not new. He just has done a raft of new media, so you are starting to see him again on zerohedge and youtube. I first heard of him in early 2009 after he made a killing in the CDS market. Now he is talking about his latest CDS positions primarily against Japan.

Bene qui latuit, bene vixit- Ovid
 
Aero:
Do you guys actually take action and invest based on what these guys say, or just read/watch for interest/entertainment?

I've always wondered that when I hear about people 'following' investors.

I never blindly follow another investor no matter his track record.

Usually I listen to these guys, read their blogs, and I get a 'feel' of how they feel about the economy at a given time. Ultimately after you do this for awhile, you'll get your own 'feel' of where things may be heading. Sometimes your feelings will be so confident that you'll want to act on it. And that is exactly what I'll do.

I think there are certain cycles in the market that a lot of big investors can naturally feel or see. Sometimes they are right, sometimes they are dead wrong.

 
Aero:
Do you guys actually take action and invest based on what these guys say, or just read/watch for interest/entertainment?

I've always wondered that when I hear about people 'following' investors.

Taking action on other peoples advice is definitely the fastest way to blow up. You need to understand the full rational of your investments in order to properly determine when to close the position. In reality, it is much harder to determine what to sell than to determine what to buy imo (given a long term fundamental approach).

The value in following other successful investors is to learn their thought process. That is why I like Marks, Rogers, Klarman, Buffet etc. They all give valuable insight in how they make decisions. Their actual decisions are of less importance to me.

 

Kinda surprised there's no mention of Seth Klarman. In addition to most of the names above I'd add Joel Greenblatt, Marty Whitman, Steven Romnick, Walter Schloss (not that he's terribly active these days)...most of the value managers.

To me, it's not necessarily trying to find ideas but more about how they think about a situation or some insight into an industry. At the end of the day the investment process is really the swing factor in being successful or not.

 
futurectdoc:
Graham-Dodd, I'm a value guy so it pays to ignore other people, I.e. My portfolio is very financial heavy now, I've been buying all fall, but my time horizons are long

Graham and Dodd explicitly stated that value investors should shy financials as there is no way to accurately value their books. So if you are a Graham-Dodd guy and are heavily exposed to financials, you are doing it wrong.

 
Best Response

My feeling is that at current prices financials are almost definitely mispriced, but that does not necessarily mean underpriced. On the one hand, most large financials have much better "earnings power" than their current valuations would suggest, which would lead one to believe they are underpriced. That being said, if the European debt crisis is as bad as many believe, there could be a huge group of European financials that fail which would almost definitely lead to a credit crunch and would make US financials much riskier than their current valuations would suggest. Some (read BAC) may even have to sell equity to raise capital in a negative euro zone outcome, which would cause financials to plummet, indicating that they are currently overpriced.

Regardless, I believe they will all be at a very different price in one year than they are today. That being said, I do not have a strong opinion on which direction they will go in so I tend to stay equal-weight on financials, picking those that seem to me to be the most undervalued. We'll see if it works... I still could get hosed but like to maintain market-weight exposure.

 
in_the_money23:
My feeling is that at current prices financials are almost definitely mispriced, but that does not necessarily mean underpriced. On the one hand, most large financials have much better "earnings power" than their current valuations would suggest, which would lead one to believe they are underpriced. That being said, if the European debt crisis is as bad as many believe, there could be a huge group of European financials that fail which would almost definitely lead to a credit crunch and would make US financials much riskier than their current valuations would suggest. Some (read BAC) may even have to sell equity to raise capital in a negative euro zone outcome, which would cause financials to plummet, indicating that they are currently overpriced.

Regardless, I believe they will all be at a very different price in one year than they are today. That being said, I do not have a strong opinion on which direction they will go in so I tend to stay equal-weight on financials, picking those that seem to me to be the most undervalued. We'll see if it works... I still could get hosed but like to maintain market-weight exposure.

Sounds like a good time for a straddle

 
<span class=keyword_link><a href=//www.wallstreetoasis.com/wall-street-mentors-finance-mock-interviews>Wall Street Mentors</a></span>:
Ashton Kutcher

im following Demi's vag...ok that was gross

Soros - he rarely gives interviews and now that his fund is private i dont think he'll only speak about Open Society Jim Rogers - i like rogers...but nothing new coming from his mouth lately Kyle Bass - I dont agree with his Japan speculation...he bases all his focus on the xenophobic nature of the society

 
damonkey890:
How do you guys sign up for these google alerts to follow your favorite investors? Or how else do you follow them? I like a lot of the people mentioned but don't see a way of getting their writings directly.

Also I'll add John Mauldin to the list.

Watch TV or read online. Zerohedge, Bloomberg, Financial Times, The Daily Crux.

If you're subscribed to this site I assume you know sites that publish real-time information..

 

They're looking for honesty. Presumably if you're asked this question, you're applying for some sort of role either in trading or asset management, and you would be following the market. It would be wise to know what some good hf managers are invested in. Buffet wouldn't be a bad answer if you know what he's invested in (coke, wells, amex, etc.).

 

I follow:

Howard Marks - for his ability to see past the immediate future - and insight into different strategies at each level of the capital structure.

Phillip Falcone - rarely says anything anymore, but what he does say is controversial and normally related to his current crazy endeavour.

Hugh Hendry - UK based HF manager, he is the ultimate contrarian investor

Buffet - predictable but he just makes incredibly good sense

 

Whitney Tilson/T2 is a good one because they publish a lot of their research. They're part of the same "value club" with Einhorn, Loeb, etc and have a lot of overlap in terms of positions.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
 

Don't mean to hijack but Tilson shorting Netflix, his reasoning is because they can't compete with Hulu... Netflix comes already downloaded on most LED tv's now...

The answer to your question is 1) network 2) get involved 3) beef up your resume 4) repeat -happypantsmcgee WSO is not your personal search function.
 

Well we can start another thread but there's a lot more to his argument than not being able to compete with Hulu. A big driver of Netflix's margins currently are contracts with two major content providers that were locked in before people realized how big streaming was going to be; a key point in his thesis is that they'll need to: a) renegotiate these contracts at a much higher rate and b) buy content from a wider range of providers going forward, most of whom are now savvy to how much their streaming content is worth and how much it is cannibalizing DVD sales.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
 

I thought the reasoning was that their cost structure isn't sustainable--that they can't keep streaming at the $7.99 price point and continue to have content that people want. I hear that, but I'm not sure that it matters--people want streaming and will pay more to be able to get the content that they want on demand (I know I would), and NetFlix has the best-developed brand and infrastructure to deliver streaming. I think the short can win in two ways:

1) Shorter-term: If their contract renewal is at a materially higher rate, but they can't sign deals for new content (I'd pay $30/month if they consistently had content I wanted to watch, but if they keep their current crappy selection and double the price I might not keep the service)

2) Longer-term: if we move to direct distribution by content owners, or an environment where NFLX doesn't really have any market power as a distributor. The overall effect of e-commerce is to reduce transaction costs and cut out middlemen, and NFLX is really just a middleman between content owners and consumers. In this view, they will ultimately have a reckoning like the OTAs are having with the airlines right now.

I think 2 is likely, but it's a pretty long-term phenomenon. In the mid-term, you lose in the short if NFLX builds its network, signs more content deals (even at the cost of having to go to a higher price point), and builds itself into something closer to the "traditional" e-commerce model. I think there's a pretty decent chance that this happens.

What do others think?

 

Hoover, I think you've got it right. Tilson is very explicit about the fact that Netflix is a great company with a great product and strong management, but its margins are very vulnerable and its current multiple is excessive.

There have been many great comebacks throughout history. Jesus was dead but then came back as an all-powerful God-Zombie.
 
makers mark:
http://www.marketfolly.com/

Market folly is a great blog to follow to keep up on investors and their positions. If they don't include the investor's write up or rationale in a post, you can often search and find it.

I was gonna post that same link. I've found it incredibly interesting & helpful in generating my own investment ideas as well.

I don't accept sacrifices and I don't make them. ... If ever the pleasure of one has to be bought by the pain of the other, there better be no trade at all. A trade by which one gains and the other loses is a fraud.
 

Following great investors like Einhorn or Berkowitz makes a lot of sense. The proof is in backtesting what a "follow" strategy would have returned since 2000. AlphaClone let's you backtest thousands of follow strategies, or clones, for any one manager or any combination.

http://alphaclone.com
 

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Man made money, money never made the man
 

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