thepupil

Why would you think that? They take less market exposure and alpha for a diversified index of hedge funds is and has been trending toward zero to negative for about twenty years, plus there are fees. To expect hedge funds to keep up with a 100% net long market that's up 30% would be to roll back about 2 decades of industry decline in alpha generation. Gross Returns = Beta * Net Exposure +/- alpha Net Returns = Gross Returns - Fees The people in the thread are for the most part running 80-100%+ net long, so return from beta = 30% for the US folks and mid 20's on a global basis; the people in the thread don't charge themselves fees. The hedge fund universe might run 30% net exposure in aggregate. I have no idea whther this number is 10% or 30% or 50%, but I assure you it's not 100% (most hedge funds hedge). So let's just assume 30%. Then the hedge fund universe in a year like 2019 should make about 10% from beta +- zero alpha in aggregate, minus some fees. I believe the 8.5% number includes all manner of hedge funds: long/short, global macro, fixed income arb, event driven, etc. so we may even be overestimating their equity exposure. 8.5% seems about right given what the market did. imagine if you invested in every actively managed mutual fund, doubled the fee burden and shorted out 70% of the market exposure. You'd do pretty terribly. hede fund indices should pretty much never put up high absolute returns in a given year. EDIT: here's some data for ya https://www.hedgefundresearch.com/family-indices/hfri-500-hedge-fund-indices#

2019 Consolidated IBKR account: 22.6%. Got rid of my Fido taxable and rolled that back into IBKR, have another IRA that's all in TGONF (12% or so return) and a work 401K that's completely in Vanguard Emerging Markets, which returned about 18%, so my overall investments did slightly worse than IBKR accounts. I'd regard this to be a pretty terrible relative result that will more or less wipe away a few years of S&P 500 outperformance. Reasons for underperformance are easy to spot; my biggest positions lagged the market in a big way. My largest positions (on a notional basis) are hedged Berkshire, hedged VNO, Tetragon Financial, none of which did all that great, all of which I'm excited about continuing to hold. Over the past 6.5 years, consolidated IBKR accounts is about 13.3% / year (literally right on top of the S&P 500), which includes a taxable account at 11.5%/year, an IRA at about 14.8% / year and a another IRA at 17.1% / year. The IRA's have always been super concentrated. The taxable started out long/short and ended up with me just using hedges and call options to limit drawdown rather than shorting.

you could also buy Scottish Mortgage, 37 bps fee, liquid 7 billion pound market cap global growth fund. it's obviously done very well lately given its growthy/techy. I'm more biased to the AVI type of stuff. https://www.bailliegifford.com/en/uk/individual-investors/funds/scottish-mortgage-investment-trust/performance/portfolio/ There's templeton EM fund, for just plain old EM at a slight discount (and higher than ETF fee). F&C for global growth (similar to Scottish Mortgage) Again this falls in the "low cost, liquid, diversified investment in UK without investing in the UK". Here's a list of the UK closed end funds >200mm pound market cap in order of market cap SMT LN Equity SCOTTISH MORTGAGE INV TR PLC FCIT LN Equity F&C INVESTMENT TRUST PLC RCP LN Equity RIT CAPITAL PARTNERS PLC HICL LN Equity HICL INFRASTRUCTURE PLC ATST LN Equity ALLIANCE TRUST PLC 3IN LN Equity 3I INFRASTRUCTURE PLC INPP LN Equity INTERNATIONAL PUBLIC PARTNER UKW LN Equity GREENCOAT UK WIND PLC TRIG LN Equity RENEWABLES INFRASTRUCTURE GR MRC LN Equity MERCANTILE INVESTMENT TRUST MNKS LN Equity MONKS INVESTMENT TRUST PLC PCT LN Equity POLAR CAPITAL TECHNOLOGY TR TEM LN Equity TEMPLETON EMERGING MARKETS-O WTAN LN Equity WITAN INVESTMENT TRUST PLC FGT LN Equity FINSBURY GR&INC TRUST-ORD CLDN LN Equity CALEDONIA INVESTMENTS PLC CTY LN Equity CITY OF LONDON INVESTMENT TR WWH LN Equity WORLDWIDE HEALTHCARE TRUST P SEQI LN Equity SEQUOIA ECONOMIC INFRASTRUCT MYI LN Equity MURRAY INTERNATIONAL TR-O TRY LN Equity TR PROPERTY INVESTMENT TRUST SSON LN Equity SMITHSON INVESTMENT TRUST SYNC LN Equity SYNCONA LTD HVPE LN Equity HARBOURVEST GLOBAL PRIVA BPCR LN Equity BIOPHARMA CREDIT PLC PIN LN Equity PANTHEON INTERNATIONAL PLC ASL LN Equity ABERFORTH SMALLER COS-ORD JMG LN Equity JPMORGAN EMERGING MKTS-ORD FCSS LN Equity FIDELITY CHINA SPECIAL SITUA BNKR LN Equity BANKERS INVESTMENT TRUST GCP LN Equity GCP INFRASTRUCTURE INVESTMEN PNL LN Equity PERSONAL ASSETS TRUST PLC EDIN LN Equity EDINBURGH INVESTMENT TRUST BBGI LN Equity BBGI SICAV SA VEIL LN Equity VIETNAM ENTERPRISE INV LTD-C FEV LN Equity FIDELITY EUROPEAN VALUES PLC HGT LN Equity HGCAPITAL TRUST PLC HRI LN Equity HERALD INVESTMENT TRUST PLC JAM LN Equity JPMORGAN AMERICAN INVEST-ORD TMPL LN Equity TEMPLE BAR INVESTMENT TRUST JEO LN Equity EUROPEAN OPPORTUNITIES TRUST GSS LN Equity GENESIS EMERGING MARKETS BGSC LN Equity BMO GLOBAL SMALLER COMPANIES APAX LN Equity APAX GLOBAL ALPHA LTD AGT LN Equity AVI GLOBAL TRUST PLC OTV2 LN Equity OCTOPUS TITAN VCT PLC BRSC LN Equity BLACKROCK SMALLER COMPANIES HSL LN Equity HENDERSON SMALLER COMPANIES JII LN Equity JPMORGAN INDIAN INV TRUST FSV LN Equity FIDELITY SPECIAL VALUES PLC SDP LN Equity SCHRODER ASIA PACIFIC-ORD JFJ LN Equity JPMORGAN JAPANESE INV. TRUST BGFD LN Equity BAILLIE GIFFORD JAPAN TRUST LWDB LN Equity LAW DEBENTURE CORP PLC-ORD NESF LN Equity NEXTENERGY SOLAR FUND LTD PEY LN Equity PRINCESS PRIV EQTY HOLD LTD PLI LN Equity PERPETUAL INCOME & GROWTH-O FSFL LN Equity FORESIGHT SOLAR FUND PLC ICGT LN Equity ICG ENTERPRISE TRUST PLC SOI LN Equity SCHRODER ORIENTAL INCOME IEM LN Equity IMPAX ENVIRONMENTAL MARKETS BRWM LN Equity BLACKROCK WORLD MINING TRUST TPOU LN Equity THIRD POINT OFFSHORE INVESTM PSSL LN Equity POLLEN STREET SECURED LENDIN SCIN LN Equity SCOTTISH INVESTMENT TRUST BBH LN Equity BB HEALTHCARE TRUST PLC VOF LN Equity VINACAPITAL VIETNAM OPPORTUN SAIN LN Equity SCOTTISH AMERICAN INV COMP JLEN LN Equity JLEN ENVIRONMENTAL ASSETS GR JESC LN Equity JPMORGAN EUR SMALLER COMPANI TFIF LN Equity TWENTYFOUR INCOME FUND LTD MRCH LN Equity MERCHANTS TRUST PLC SLS LN Equity STANDARD LIFE UK SMALLER CO MUT LN Equity MURRAY INCOME TRUST PLC EWI LN Equity EDINBURGH WORLDWIDE INV TR ATT LN Equity ALLIANZ TECHNOLOGY TRUST PLC SLPE LN Equity STANDARD LIFE PRIVATE EQUITY UEM LN Equity UTILICO EMERGING MARKETS TRU OCI LN Equity OAKLEY CAPITAL INVESTMENTS BSIF LN Equity BLUEFIELD SOLAR INCOME FUND DGN LN Equity ASIA DRAGON TRUST PLC BGS LN Equity BAILLIE GIFFORD SHIN NIPPON THRG LN Equity BLACKROCK THROGMORTON TRUST HFEL LN Equity HENDERSON FAR EAST INCOME LT GABI LN Equity GCP ASSET BACKED INCOME FUND CGT LN Equity CAPITAL GEARING TRUST-ORD TRG LN Equity TR EUROPEAN GROWTH TRUST PLC JPGI LN Equity JPMORGAN GLOBAL GROWTH & INC NAS LN Equity NORTH ATLANTIC SMALLER COMP JCH LN Equity JPMORGAN CLAVERHOUSE IT SONG LN Equity HIPGNOSIS SONGS FUND LTD DIG LN Equity DUNEDIN INCOME GROWTH INV TR SIGC LN Equity SHERBORNE INVESTORS GUERNSEY SWEF LN Equity STARWOOD EUROPEAN REAL ESTAT NAIT LN Equity NORTH AMERICAN INCOME TRUST NBLS LN Equity NB GLOBAL FLOATING RATE INC RICA LN Equity RUFFER INVESTMENT COMPANY LD BIOG LN Equity BIOTECH GROWTH TRUST PLC/THE HONY LN Equity HONEYCOMB INVESTMENT TRUST P JEMI LN Equity JPMORGAN GLOBAL EMERGING MKT BHMG LN Equity BH MACRO LTD BUT LN Equity BRUNNER INVESTMENT TRUST PLC EAT LN Equity EUROPEAN ASSETS TRUST PLC LWI LN Equity LOWLAND INVESTMENT COMPANY DIVI LN Equity DIVERSE INCOME TRUST PLC/THE AAIF LN Equity ABERDEEN ASIAN INCOME FUND L ATR LN Equity SCHRODER ASIAN TOTAL RETURN JAI LN Equity JPMORGAN ASIAN INVEST-ORD ADIG LN Equity ABERDEEN DIVERSIFIED INCOME AAS LN Equity ABERDEEN STANDARD ASIA FOCUS BGEU LN Equity BAILLIE GIFFORD EUROPEAN GRO BCI LN Equity BMO CAPITAL & INCOME INVESTM PAC LN Equity PACIFIC ASSETS TRUST PLC BRGE LN Equity BLACKROCK GREATER EUROPE INV BGLF LN Equity BLACKSTONE/GSO LOAN FINANCIN USA LN Equity BAILLIE GIFFORD US GROWTH TR RSE LN Equity RIVERSTONE ENERGY LTD BRFI LN Equity BLACKROCK FRONTIERS INVEST JRS LN Equity JPMORGAN RUSSIAN SECURITIES CCPG LN Equity CVC CREDIT PARTNERS EUROPEAN HINT LN Equity HENDERSON INTERNATIONAL INCO JMF LN Equity JPMORGAN MID CAP INV TRUST SUPP LN Equity SCHRODER UK PUBLIC PRIVATE IIT LN Equity INDEPENDENT INVESTMENT TRUST FAIR LN Equity FAIR OAKS INCOME LTD BHGG LN Equity BH GLOBAL LTD-GBP SHRS BGUK LN Equity BAILLIE GIFFORD UK GROWTH FU SQN LN Equity SQN ASSET FINANCE INCOME FUN FAS LN Equity FIDELITY ASIAN VALUES PLC FEET LN Equity FUNDSMITH EMERGING EQ TRUST PCFT LN Equity POLAR CAPITAL GLOBAL FINANCI SST LN Equity SCOTTISH ORIENTAL SMALL COS PCGH LN Equity POLAR CAPITAL GLOBAL HEALTHC ANII LN Equity ABERDEEN NEW INDIA INVESTMEN ABD LN Equity ABERDEEN NEW DAWN INV TRUST HEFT LN Equity HENDERSON EUROPEAN FOCUS TRU LTI LN Equity LINDSELL TRAIN INV TRUST TIGT LN Equity TROY INCOME & GROWTH TR BPET LN Equity BMO PRIVATE EQUITY TRUST-O AEMC LN Equity ABERDEEN EMERGING MARKETS IN JPE LN Equity JPMORGAN ELECT PLC-MGD GRWTH SHIP LN Equity TUFTON OCEANIC ASSETS LTD MWY LN Equity MID WYND INTERNATIONAL IT TORO LN Equity CHENAVARI TORO INCOME FUND L NCYF LN Equity CQS NEW CITY HIGH YIELD FUND HNE LN Equity HENDERSON EUROTRUST PLC-ORD JPEL LN Equity JPEL PRIVATE EQUITY LTD SJG LN Equity SCHRODER JAPAN GROWTH FUND MNP LN Equity MARTIN CURRIE GLOBAL PORT HHI LN Equity HENDERSON HIGH INCOME TR-ORD JZCP LN Equity JZ CAPITAL PARTNERS LTD IBT LN Equity INTERNATIONAL BIOTECHNOLOGY JMC LN Equity JPMORGAN CHINESE-ORD VSL LN Equity VPC SPECIALTY LENDING INVEST JPS LN Equity JPMORGAN JAPAN SMALLER CO TR MTU LN Equity MONTANARO UK SMALLER COS INV SCRF LN Equity SME CREDIT REALISATION FUND KIT LN Equity KEYSTONE INVESTMENT TRUST FJV LN Equity FIDELITY JAPAN TRUST PLC JMI LN Equity JPMORGAN SMALLER COSIT PLC SCP LN Equity SCHRODER UK MID CAP FUND PLC UTL LN Equity UIL LTD CCJI LN Equity CC JAPAN INCOME & GROWTH TRU STS LN Equity SECURITIES TRUST OF SCOTLAND SCF LN Equity SCHRODER INCOME GROWTH FUND WPC LN Equity WITAN PACIFIC INVESTMENT TR USF LN Equity US SOLAR FUND PLC

You could buy AVI global, the old British Empire Trust*, which is a diversified closed end fund of funds that over time will generate the return of the ACWI ex US +or-, would be diversifying to your other holdings with its emphasizing s on Japanese special situations and discounted funds. It charges 85 bps + the underlyings have fees, so that is a warning and contradictory to your ask, I am more recommending it because it is truly set it and forget it and you’d be investing in the U.K. without really investing in the U.K. the U.K. has an abundance of diversified closed end funds that are of decent scale and charge not entirely egregious fees. https://www.aviglobal.co.uk/content/uploads/2019/11/AVI-Global-Trust-Annual-Report-2019.pdf *why did they ever change that cool name? Foreign & Colonial had to change their name. British Empire Trust did not!

US listed, >$100mm market cap, down 30% or more year to date. 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A USANA HEALTH SCIENCES INC UPWORK INC AXOVANT GENE THERAPIES LTD PROSHARES ULTRASHORT S&P500 LAREDO PETROLEUM INC LIFETIME BRANDS INC NEXTIER OILFIELD SOLUTIONS I SAGE THERAPEUTICS INC THERAPEUTICSMD INC KULR TECHNOLOGY GROUP INC GANNETT CO INC MOVADO GROUP INC DYNAVAX TECHNOLOGIES CORP B&G FOODS INC GLYCOMIMETICS INC HOUGHTON MIFFLIN HARCOURT CO CONSOL COAL RESOURCES LP AGROFRESH SOLUTIONS INC CHEETAH MOBILE INC - ADR DRX DLY 20+ YR TREAS BEAR 3X FIESTA RESTAURANT GROUP RANPAK HOLDINGS CORP CYTODYN INC CASTLIGHT HEALTH INC-B ENDURANCE INTERNATIONAL GROU SIGNET JEWELERS LTD COOTEK CAYMAN INC-ADR FORTEM RESOURCES INC TRIPADVISOR INC NEKTAR THERAPEUTICS 360 FINANCE INC -ADR CONDUENT INC QEP RESOURCES INC CBL & ASSOCIATES PROPERTIES NATURAL GROCERS BY VITAMIN C SUCCESS ENTERTAINMENT GROUP TURTLE BEACH CORP CORP AMERICA AIRPORTS SA BITAUTO HOLDINGS LTD-ADR OWENS-ILLINOIS INC CARRIZO OIL & GAS INC DIAMOND OFFSHORE DRILLING DENBURY RESOURCES INC CONCERT PHARMACEUTICALS INC GASLOG LTD CIVEO CORP GOLAR LNG LTD TITAN INTERNATIONAL INC LIONS GATE ENTERTAINMENT-A CALLON PETROLEUM CO CHINA XUEFENG ENVIRONMENTAL BRIGHT MOUNTAIN MEDIA INC AKCEA THERAPEUTICS INC ATLAS AIR WORLDWIDE HOLDINGS CARS.COM INC INOVIO PHARMACEUTICALS INC ABIOMED INC ALDEYRA THERAPEUTICS INC CNX RESOURCES CORP ARBUTUS BIOPHARMA CORP INOGEN INC SOUTHWESTERN ENERGY CO RIBBON COMMUNICATIONS INC SIGA TECHNOLOGIES INC LIVENT CORP RETROPHIN INC SOHU.COM LTD-ADR RITE AID CORP NATURAL RESOURCE PARTNERS LP BOINGO WIRELESS INC MARKER THERAPEUTICS INC CHEMOURS CO/THE EQM MIDSTREAM PARTNERS LP INFORMATION SERVICES GROUP PROSHARES ULTRASHORT QQQ NEMAURA MEDICAL INC DASAN ZHONE SOLUTIONS INC CONCRETE PUMPING HOLDINGS IN PROSHARES ULTPRO SHRT DOW30 POTBELLY CORP SM ENERGY CO BLOOM ENERGY CORP- A FARFETCH LTD-CLASS A AVALON GLOBOCARE CORP GRITSTONE ONCOLOGY INC BIOCERES CROP SOLUTIONS CORP PINGTAN MARINE ENTERPRISE LT STAMPS.COM INC MACY'S INC AERIE PHARMACEUTICALS INC CAPITAL SENIOR LIVING CORP OVERSTOCK.COM INC AKAZOO SA VOCERA COMMUNICATIONS INC TRUECAR INC ENLINK MIDSTREAM LLC IROBOT CORP POWER SOLUTIONS INTERNATIONA OPKO HEALTH INC RESIDEO TECHNOLOGIES INC MERIDIAN BIOSCIENCE INC VAPOTHERM INC GAMESTOP CORP-CLASS A GRUBHUB INC RESOLUTE FOREST PRODUCTS FLUOR CORP WINS FINANCE HOLDINGS INC EQUITRANS MIDSTREAM CORP UXIN LTD - ADR DIREXION DLY SM CAP BEAR 3X GAMIDA CELL LTD XERIS PHARMACEUTICALS INC MERIT MEDICAL SYSTEMS INC RTI SURGICAL HDS INC PROQR THERAPEUTICS NV CLEAR CHANNEL OUTDOOR HOLDIN XT ENERGY GROUP INC CERAGON NETWORKS LTD FLUENT INC ORBCOMM INC CLOVIS ONCOLOGY INC ANGI HOMESERVICES INC- A TUNIU CORP-SPON ADR ZEONS CORP US SILICA HOLDINGS INC PROSH ULTRAPRO SHORT S&P 500 DIREXION DLY S&P 500 BEAR 3X GTY TECHNOLOGY HOLDINGS INC WEIDAI LTD-ADR SAN JUAN BASIN ROYALTY TR AVEO PHARMACEUTICALS INC ELOXX PHARMACEUTICALS INC TARGET HOSPITALITY CORP ORGANOGENESIS HOLDINGS INC NUCANA PLC-ADR CALYXT INC TRIVAGO NV - ADR 2U INC MARTIN MIDSTREAM PARTNERS LP FERROGLOBE PLC DERMTECH INC BENEFITFOCUS INC PENN VIRGINIA CORP EQT CORP HIGHPOINT RESOURCES CORP PLAYAGS INC SANDRIDGE ENERGY INC FOSSIL GROUP INC GRAN TIERRA ENERGY INC ANTERO MIDSTREAM CORP CELCUITY INC AUTOLUS THERAPEUTICS PLC MICHAELS COS INC/THE COOPER-STANDARD HOLDING CYTOSORBENTS CORP OASIS PETROLEUM INC TENNECO INC-CLASS A QUTOUTIAO INC-ADR DIREXION DAILY FIN BEAR 3X GTT COMMUNICATIONS INC UNITI GROUP INC LIBERTY TRIPADVISOR HDG-A RIGNET INC QURATE RETAIL INC-SERIES A UNITY BIOTECHNOLOGY INC CALIFORNIA RESOURCES CORP NII HOLDINGS INC NAMI CORP NCS MULTISTAGE HOLDINGS INC YIREN DIGITAL LTD UNION BRIDGE HOLDINGS LTD DIPLOMAT PHARMACY INC COVIA HOLDINGS CORP NOBLE CORP PLC LIVEXLIVE MEDIA INC P G & E CORP CONSOLIDATED COMMUNICATIONS X FINANCIAL-ADR CYTOMX THERAPEUTICS INC FIVE PRIME THERAPEUTICS INC BRIGGS & STRATTON RPC INC CONSOL ENERGY INC 22ND CENTURY GROUP INC QUAD GRAPHICS INC TAILORED BRANDS INC PROSHARES ULTRAPRO SHORT QQQ ATARA BIOTHERAPEUTICS INC ABEONA THERAPEUTICS INC DULUTH HOLDINGS INC - CL B RANGE RESOURCES CORP GULFPORT ENERGY CORP NEW AGE BEVERAGES CORP SILVERBOW RESOURCES INC NOVO INTEGRATED SCIENCES INC RING ENERGY INC SENSEONICS HOLDINGS INC EXTRACTION OIL & GAS INC PROSHARES VIX SHORT-TERM FUT IPATH SERIES B S&P 500 VIX PUMA BIOTECHNOLOGY INC JIANPU TECHNOLOGY INC- ADR RAYONIER ADVANCED MATERIALS NIO INC - ADR KINIKSA PHARMACEUTICALS-A FINCERA INC SCHOLAR ROCK HOLDING CORP SUMMIT MIDSTREAM PARTNERS LP EVELO BIOSCIENCES INC LAIX INC - ADR CHESAPEAKE ENERGY CORP OBSEVA SA BP PRUDHOE BAY ROYALTY TRUST MONTAGE RESOURCES CORP EVOLENT HEALTH INC - A PEABODY ENERGY CORP TUANCHE LTD-ADR ALTEROLA BIOTECH INC BIOCRYST PHARMACEUTICALS INC VALARIS PLC NESCO HOLDINGS INC XYNOMIC PHARMACEUTICALS HOLD EXTERRAN CORP ARLO TECHNOLOGIES INC DRX DLY S&P BIOTECH BEAR 3X CHINA TRAVEL RESORT HOLDINGS DRX DLY GOLD MINERS BEAR 3X GREEN DOT CORP-CLASS A CENTENNIAL RESOURCE DEVELO-A DRX DLY OIL & GAS BULL 3X KUSHCO HOLDINGS INC AURORA MOBILE LTD-ADR EROS INTERNATIONAL PLC AT HOME GROUP INC FLUIDIGM CORP FANG HOLDINGS LTD - ADR TYME TECHNOLOGIES INC AJIA INNOGROUP HOLDINGS LTD FORUM ENERGY TECHNOLOGIES IN INTELSAT SA CASA SYSTEMS INC COMSCORE INC AMNEAL PHARMACEUTICALS INC TILRAY INC-CLASS 2 COMMON ALTUS MIDSTREAM CO -A MULIANG AGRITECH INC VELOCITYSHARES 3X INV CRUDE DIREXION DLY JR GOLD BEAR 3X VELOCITYSHARES 3X LG NAT GAS TUPPERWARE BRANDS CORP APTINYX INC PACIFIC DRILLING SA BETTER CHOICE CO INC ANTERO RESOURCES CORP ANAPTYSBIO INC NINE ENERGY SERVICE INC EXELA TECHNOLOGIES INC MALLINCKRODT PLC DIREXION DAILY SEMI BEAR 3X CYMABAY THERAPEUTICS INC WHITING PETROLEUM CORP ADAPTIMMUNE THERAPEUTICS-ADR PROSHARES ULTRA VIX ST FUTUR NOBLE VICI GROUP INC AMERICAN BRIVISION HOLDING C ROAN RESOURCES INC PARTY CITY HOLDCO INC MARIMED INC SOLID BIOSCIENCES INC FTS INTERNATIONAL INC MCDERMOTT INTL INC NOVAVAX INC SEADRILL LTD MOGU INC-ADR VELOCITYSHARES 2X VIX SH-TRM CONTURA ENERGY INC FUELCELL ENERGY INC SINCERITY APPLIED MATERIALS

Why not just use P/E which does conform to GAAP? the more bearish like to use price to sales because margins/tax rates/interest rates have all moved in a way that is favorable to earnings. the more bullish like to use PE as simple TTM and forward PE's appear to be, for the most part, reasonable under any historical context and pretty cheap in today's rate environment. The truth is probably somewhere in between. Corporations are probably over-earning, but to assume complete mean reversion in margin, interest burden or tax rates, is likely to make one overly bearish of stocks. There have been legitimate shifts in sector composition that hsould lead to structurally higher margins, the trend in lower tax and interest burden appears structural to a certain extent, etc. etc. Google should have a higher long term margin than the top index components of 2000, 1990,1980, etc. At least in my opinion.

I wouldn’t call something where a significant part of the return comes from closing the gap to intrinsic value a compounder though. A compounder for me is a stock that grows intrinsic value at a high and fairly consistent rate. In order to do so, they will need to earn high returns on capital, Because over the long run, the returns from you stock investment should about equal the returns of invested capital of the business you are invested in. I doubt that a bank (ITAU) in a volatile economy like a Brazil can be a compounder in that sense. Actually most companies in EM won’t work either, because their ROIC isn’t high enough, despite being located in high growth countries. I respectfully disagree that EM banks (and EM companies in general) can't be "compounders". EM Banks are some of the most sought after franchises in the world. it's a slow day before thanksgiving so just giving the old Bloomberg a spin, based on some random cherry picked EM banks. Itau has returned 16% / year since 1994 (in USD), 6% over the past 10, 8% over the past 5, 11.5% over the past one. It made a 15% ROE in 2008 (that's the trough), was in the 30's in the early 2000's, and has averaged 18-20% over the past 5 years. Credicorp has returned 13.6% / year since 1997 (in USD), 14.5% over the past 10, 9% over the past 5, -1% over the past year. It had a low ROE in the early 2000's (2-6%) but has averaged mid to high teens in every year since. HDFC Bank has returned 23.3% / year since 1995 (in USD), 18.3% over the past 10, 19% over the past 5, 35% over the past 1. Its ROE has consistently been in the high teens to 20%. there's a reason it trades at 4.5x book!!! BDO Bank in the Phillipines has returned 14.7% since 2002 (in USD), 18.6% over the past 10, 9% over the past 5. it has a more pedestrian historical ROE in the low double digits. Bank Mandiri in Indonesia has made 20% a year since 2003 (in USD), 10% over the past 10, 5.6% over the past 5. high historical ROE's Now we get a little crazy Guaranty Trust Bank in Nigeria has made 22.1% / year (in USD) since 2002, 8% in the past 10, -7.4% / year in the past 5. It made a 13% ROE in 2009, otherwise 20-30's. It trades for 4.5x and a 10% divvy yield plus the currency has sucked, so the last few yhears have been very bad. Sberbank has made a 16% annualized return since 1998 (in USD), 8% in the past 10, 24% / year in the past 5. Its ROE dropped to 3% in 2009 and 10% in 2015, otherwise low 20's for 2+ decades. There are examples in those where one could point to "see they went through tough times so it's not a consistent compounder", but they also have been through massive economic turmoil without catastrophic dilution and long term returns for all of them are very high. Not saying the future will be like the past, just saying that there are examples of companies who TVBVPS, dividends, and ROE's have shown consistent growth/resiliency/etc. in EM banks.

I don't want to hijack the thread with my "look to emerging markets" bluster, but to the extent anyone beleives in mean reversion... Stolen from a friend on LinkedIn 1988-1993: EM 545%, US: 129% 1993-1998: EM: -38%, US: 191% 1999-2007: EM: +420%, US:+38% 2008-today: EM: 11%, US: 160%

I would echo others sentiment that it could be more fruitful to look at the hated and potentially misperceived than the already successful with a huge TAM and wonderful management. For example, in 2011, you could buy Lockheed Martin for 7-8x earnings (I know because I did*). The bear case simple then "sequestration/decrease in defense spending as we came off the wars, huge pension deficit, F-35 delays". The bull case was simple too: pension is 80-90% covered in cost plus contracts, the f-35 is a like a katrillion dollars of future revenue, US will still buy a lot of defense stuff, it's buying back 10% / year. Fast forward to today (8 years, not quite 10 years). Revenue has gone from $47 billion to $58 billion (not huge growth but no decline). Net income has increased from $2.7 billion to $6 billion (more or less doubled). Earnings per share has gone from $8-->$21 (buybacks!) and the multiple has gone from 8x to 18.6x. Over the past 8 years, Lockheed Martin without really growing much, without really requiring any crazy insight beyond (they are buying back shares, it yields 5.5%, and it's the biggest defense contractor responsible for the biggest defense project ever) made 26% / year and 576% with dividend re-invested. Now Salesforce.com has returned 25.5% a year in that time frame too, but at least to me, it was a different (and potentially easier) analysis that Lockheed Martin was cheap in 2011 than Salesforce was. In other words, it may be more accessible to the layman, to make a prediction that lockheed will be around and profitable and earnings won't go down toooo much (they ended up going up) than Salesforce will multiply its sales by 7x and its EBITDA by 25x over the next 7 years, so even if I'm paying 7x sales and 100x EBITDA, I'll make money (which is what happened). All that said I don't have many ideas that are hated and priced to potentially deliver 4x returns and definitely not in the US. Very big picture, if I had to pick somewhere to look, it would be Asia and emerging markets (it's not a coincidence my previous recco's are discounted holdco's of fast growing asian tech companies), not US based beloved compounders. Buy something that is cheap, has gotten hurt by currency and/or multiple compression, that has long term tailwinds. I wrote up Jardine Strategic recently. Just to take something I haven't really done a lot of work on, Jardine Cycle and Carriage for example, has compounded at 18% / year since 2000. Its 5 year return is -3.3% / year. It trades at a reasonable multiple (12-15x). It owns lots of businesses which will benefit from ASEAN's growth. It'll probably be earning more in 10 years than today and people may like non-USD and EM more so than today. you don't have to go too wacky with the growth and multiple to get to 15% / year. All the EM guys I speak to say that Ayala Corp is the best governed company in the Phillipines. I don't know much about it, but tangible book/share has gone from 190-->506 since 2012. the stock has made 2% a year in dollar terms for the past 5 years. it appears to trade for 12x earnings and has a $9 billion market cap. Or to go a completely different direction, again in a very contrarian way just for shits and gigs. What can be more hated than European banks. Let's take Credit Agricole. 0.58x book, <10x earnings, 5.5% yield. Can you get to a 15% / year owning freaking credit agricole. Maybe. I mean it has 28% deposit share of a large economy. it owns Amundi which is Europe's largest asset manager. they say they're going to make 5 billion euro in 2022, so 7x out year earnings. I have no idea if that happens, just saying that if europe doesn't end up completely blowing up or if the environment changes (10 years is a long time) maybe you make 4x. maybe they'll make 7 billion in 2029 and it trades for 15x (that'd be a 3x) and share count reduction / divvies get you the rest of the way. *I also sold waaaaay too early at $140-$150 IIRC

here's a fun contrarian one (I don't own). Softbank. It trades for a 60% discount to NAV. Let's say in 10 years sentiment changes and it trades for a mere 25% discount or even (gasp!) a 0% discount. This would add 600-950 bps of return/year from discount narrowing. So can Softbank grow its value by 6-9% from here? Many would shudder and say "it will decline in value from here, not grow". Well, let's see about that: 47% of assets are in the largest Chinese e-commerce company, growing revenue 30% across a variety of inititatives (core e-comm, cloud, payments, etc). 20% of assets is a large japanese telecom (myeh) 13-14% ish each in leveraged exposure to the Vision Fund (whoa nelly!), ARM, and Sprint then those in themselves are levered. with 17% holdco level debt. While certainly not without risk, I think it's important to consider the upside tail. Softbank is only an $80 billion company. Its stake in AliBaba alone is worth $125 billion. Many credible market participants think Alibaba is cheap and has a very long runway (some also think anything from china is automatically not to be trusted). You can do similar, less extreme math with Prosus / NAspers as more pure plays on Tencent.

haha, I bought a lot in June*, and am reducing today as well. I don't think I'll ever love SPB so I got rid of that and sold my remaining JEF down to a still big position, but no longer supersized (from ~14%--->10% ish) any JEF shareholder of recent years has learned to fade the hard rallies given the stock likes to randomly go down 30%+ whenever the market so much as sneezes, so when you make 25% in a few months and get distributed a little bit of your cost in SPB, you do the same. *proof! https://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/luk-leucadia/msg373322/#msg373322

what I see as the two most straightforward warren hedges: Long term oil/natural gas futures call options. I refuse to believe she could do it, but a fracking ban can only do one thing to prices. Alternatively call options on highly levered traditional production companies like CalRes or offshore drillers or canadian/Russian/wherever E&P. Potentially even something like BTU, fracking kills coal. Killing fracking prolongs coal. XLV puts/risk reversals/put spreads. I like this in that i’d Be comfortable cheapening the cost by selling calls on a basket of US blue chip healthcare stocks. They don’t seem to discount the disruption potential or seem undervalued /coiled springy, Ultimately I just think warren is potentially terrible for US and global corporate earnings power, so broad based hedges may be the best solution.

In Haiku Form: Half of NAV Pays a Growing Div Dead Money In Institutional Money Manager Form: Contributing to our YTD underperformance relative to indices is our longtime position in Closed-End-Fund X, which we have held since 2013. Since its poorly timed 2007 IPO, CEF X has delivered an 11.5% annualized total net asset value per share growth and currently sports a sustainable low double digit ROE, despite having consistently had a large percentage of NAV in cash over the past three five and ten years. Despite this solid investment performance, CEF X trades for approximately half of its stated net asset value, much of which consists of third-party audited interest in insitutional alternative investment funds. Additionally, the Fund pays a dividend equal to 20-30% of recurring earnings, which on the depressed share price is equivalent to a 6% yield. Fund management, which owns close to one third of the fund's shares, has further returned to cash shareholders by purchasing over one-third of shares outstanding over the past decade. We blame the lack of market enthusiasm on poor liquidity in the name, an unfavorable external management structure, as well as concerns over the fund's exposure to high-risk structured credit/CLO equity, which comprises 14% of net asset value. We view all of these risks as more than priced in and are happy to continue to be paid to wait for a potential re-rating over the next few years. Catalysts include the forecasted IPO of the company's largest asset and continued diversification and growth of the Fund's investments.

https://www.google.com/amp/s/www.independent.co.uk/news/business/news/regus-valued-at-up-to-pound16bn-in-second-attempt-at-flotation-700023.html%3famp

If I’m the founder of a fast growing business, I know Masoyoshi will take care of me if things go south. Have a little vision guys! Extend your time horizon to 300 years!

they are including the equity portfolio, fixed income portfolio and cash, as part of the insurance operations. Since the end of 2007, we estimate that Berkshire has averaged a nearly 7% annual rate of return on its insurance investment portfolio while holding an average of 20% of its portfolio in cash. Berkshire has been able to produce investment returns that significantly exceed its insurance company peers as the combination of the company’s long-duration float and significant shareholders’ equity allow it to invest the substantial majority of its insurance assets in publicly traded equities, while its peers are limited to invest primarily in fixed-income securities. We believe these structural competitive advantages of Berkshire’s insurance business are enduring and will likely further expand.

I would value BNSF and BE separately and not have to deal with this issue outside of that. I value them at UNP and XLU multiples (earnings/revenue/tangible book/book etc.) and multiply by 0.5x and 0.75x for scary bear case and bear case. 1.0x for "the market's assessment for what this type of business is worth". Throughout my ownership of Berkshire (about 8 years) Berkshire has traded at a discount to NAV (when I mark up BE and BNSF) and been growing earnings faster than the market. I piggy back off others work for thoughts on the quantum of that discount. I discount the DTL related to securities almost completely. KO and WFC won't be sold. losses from new stock picks can be realized to realize other winners). Berkshire is my and my family's largest postition, so I care a lot about the company, but I jsut don't spend time on figuring this type of stuff out (25% tax rate or 18% tax rate or 10% tax rate. Sorry. the US corp rate is 21%, so I'd just take that and apply some haircut. valuation is a range, not a point, as are earnings.

thinking about it some more, the key is actually can each of those (BE and BNSF) outspend their tax depreciation, not their accounting depreciation....I think. Anyways, I know why the difference exists, but am not rigorous enough to project how that will change over time, because I more or less choose to value those subs on comps at market value in base case NAV and haircut them in the bear case NAV.

The delta between the cash paid for taxes and income tax expense relates to the increase in the deferred tax liability. the deferred tax liability has 2 major components: 1. Increase in DTL related to unrealized gains on investments: To the extent that Berkshire defers realization of gains indefinitely on large positions (I think this applies to some, but not all of the material equity positions), we can assume that this tax expense has very low present value. 2. Increase in DTL related to the companies, primarily Burlington Northern and Berkshire Energy. Page 96 of the most recent 10-K shows the breakdown between the two (obviously things will change in the subsequent quarters, but it gives you a feel). $18 billion of the $60 billion DTL ( about 30% again as of 12/2018) is related to unrealized gains on the equity portfolio. About 50% ($28/$60 billion) relates to property plant and equipment. This is associated with Berkshire Energy and Burlington Northern. This is helpful https://ftalphaville.ft.com/2016/04/29/2160510/warren-buffett-a-dream-deferred/ Essentially, the key input for determining the "correct" cash tax rate for the railroad and utility is if they are able to keep increasing their ability to re-invest. Will they keep the asset base high such that they keep running on the treadmill of outspending depreciation expense. Burlington Northern's D&A is about $2.3 billion / year. It's capex has been $2.6B (2010) - $5.6B (2015) and averaged above $3B or so, so a delta between the cash tax rate and income tax expense rate appears sustainable for now. Berkshire Energy's depreciation is running at about $3 billion. It's capex is running at $6 billion (2010: $2.5 billion, 2014: $6.5 billion, LTM: $6 billion). Again there appears to be a sustainable difference between capex and depreciation. I think that explains the high level, but I could be wrong on the exact particulars. Honestly, I don't pay a whole lot of attention to it. I just use what the market values class 1 railroads and large high quality utilities as proxies for value for each of those and assume that Berkshire doesn't sell all of its unrealized investments at a gain very quickly. My rang of intrinsic value is squishy and my sizing is non-binary so being super precise on that hasn't been an emphasis for me.

in the Maryland burbs of DC, it's highly segmented. the further out and higher price point you go, the less appreciation. Close to DC and red hot Amazon'd Arlington and under $1mm is moving nicely. for arlington, from what I hear, anything under $1.5 mm moves quickly Any single family home that's close to the city and/or walkable to a metro/retail and under say $1.3 million moves within 4-5 days of listing. We lost out on 2 bidding wars before buying a house 3 days after it listed above ask with almost no contingencies (we paid for a pre-inspection). low rates, low inventory, high incomes = high prices and high competition. It's not clear to me that a recession would change this. there are more millionaires and households making >$200K in relatively recession resistant fields (healthcare, non-profit managment, lobbying, defense, tech) than single family homes in desirable areas. There is virtually no rental inventory of SFH in the close-in neighborhoods, so if you have anything like a 5+ year time horizon, want to live in a SFH with a yard in good school district, you're buying. Plenty of rental multi-family available, of course (and new supply being created). Median income in our zip is $150K and in our cencus tract is $250K+. Even if rates go up a bit, that still buys the median home (~$900K-$1.1 million), so it all feels "affordable" and sustainable to me at the "entry level" pricing, but I could be wrong. the $2mm homes are much more luxurious, have a big builder/renovator margin built in and are more vulnerable to economic conditions, in my opinion. Basically this https://www.wsj.com/articles/buying-a-home-no-matter-the-market-11565885850?mod=searchresults&page=1&pos=3 DC burbs has 2/5 "seller's markets" in the country by county (Montgomery MD and Loudon VA) All that said outside of Arlington/Amazon area, actual appreciation for established neighborhoods seems to be at reasonable rates (we bought at an implied 2-3% / year above last 2010 sale price) , it's rather the speed and degree of risky behavior that makes it feel hot. Gentrifying hoods are higher beta and have done better/appreciated more quickly. They also have a different level of crime/school quality.

To be clear I actually think berkshire is very undervalued, just saying that berkshires relative outperformance probably increases in a downmarket so I think people piling in now is potentially a bit of market timing

I agree. Being long berkshire is kind of shorting the market, it’s the anti-valeant which was a glorious bull market vehicle. With respect to Ackman, the guys up 50% and in the process of rebuilding his reputation and track record. PSH trades for a 30% discount. In addition to genuinely thinking its undervalued, I imagine that buying Berkshire and simultaneously repurchasing PSH shares is a pretty sure fire way to crystallize and de risk gains and make money in the intermediate term. Buying Berkshire through PSH at a 30% discount is really attractive to me. He should go 100% BRK lol.

here's some heresy for ya. forget about adding any more managerial responsibility to the home office, even if Berkshire is famously decentralized. Berkshire should buy Berkshire, and not mess around. IPO 10% of BNSF and Berkshire Energy to increase the "public" portfolio by $130-$140 billion and put a more verifiable value on these. Blow out of KHC at a 50% discount and lose $16 billion for tax purposes Blow out of AAPL at market Cash +$15 billion (IPO) + $4 billion (KHC) +$51 Billion = $70 billion $122 billion at quarter end plus $70 billion from selling KHC, AAPL, and taking minority stakes in BNSF and BE public. = $190 billion pro-forma cash. Tender for 27% of company ($150 billion) of stock at a 10% premium and highlight how freaking cheap and overcapitalized the company is, then we can talk about bringing more companies under the umbrella. Use all cash flow to retire stock until the market assigns a proper value to Berkshire.

Looking at the bonds the fund holds, don't see a bias toward december pay bonds at all. the yield to maturity was 0.7% as of 6/30, which is stale because prices have gone up and yields going down. I think the yield to maturity is somewhere between 0.4% and 0.7%, perhaps, 0.6 or something. The overall point stands. If you index in the bond market outside the US, you're buying negative yielding debt. This is a problem with Target Retirement funds, in my view.

I'm not aware of many (any?) fund managers buying negative yielding debt. It's all institutions that have non-economic motivations (central banks, banks for regulatory reasons, etc). A notable instance of economically minded investors owning negative interest rate debt is anyone who owns an international bond index fund. https://investor.vanguard.com/mutual-funds/profile/overview/vtabx For example, VTABX has an SEC yield of 0.45%, a maturity of 9.7 years, and duration of around 9 ish as well, that's because it owns a bunch of JGB's, bunds, etc. So there's an example of $130 billion of folks retirement money that is investing in this stuff.