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alpha asset strategies

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  1. Thanks for the link @Gregmal . Kuppy definitely has an impressive track record over the past few years. According to his letter, it looks like his current fund's inception date was 2019. I'm just curious about what happened to his previous fund(s) from like 2010 through 2018. I agree that one can definitely get some "home run" ideas from Kuppy - and some ideas with major downside risk. As always, I guess the key is to size positions appropriately.
  2. @Gregmal you mentioned that Kuppy's fund performance has been pretty solid. Can you elaborate on his historical returns? For the most part, I enjoy Kuppy's blog and interviews. However, I have read that after a red hot start from like 2003 to 2008, he basically blew up his fund during the GFC. I've always been curious about his performance since then. He definitely seems to follow more of a high risk / high return type investment process. Thanks!
  3. Yes!!!! Was just talking about this with my cousin who is considering a career in finance. I was telling it that it is almost taboo to talk about female fertility due to the PCness. I told her that if you really want to pursue a career in finance as a woman, you kind of have to be aware of the un-talked about price as something like 70-80% of the female PE executives have children who are autistic. I was not aware of this until a senior female PE executive told me this. @BG2008 "you kind of have to be aware of the un-talked about price as something like 70-80% of the female PE executives have children who are autistic." This statistic is fascinating to me. Do you have any sources and / or potential causes of this phenomenon? Thanks!
  4. He's a collector. Like an old stuffy guy who collects model trains or Picassos except he collects real railroads etc. He's not going to split it up. I'll bet that the 331,000 share price is a reminder that it once traded at $7 or something for that crappy textile company. Still a great guy and can't thank him enough. I think BG2000 "hit the nail on the head"; Buffett is undoubtedly an "empire builder". As such, he has little desire to shrink the company via spin-offs, stock repurchases, etc. Investors have obviously seen some nominal share repurchases, but I often wonder just how far the stock would need to fall before Buffett would make some major repurchases (ie. 10%+)?
  5. I think the PE / VC bubble is definitely starting to deflate. However, I'm even more amused with your title for this topic.
  6. I can't stop laughing from reading this. My vote is that you won this contest already.
  7. racemize- Thanks for sharing this. Your essay was very clear and educational. Great stuff!
  8. There is a small, family owned manufacturer in my area that has run into similar problems as a result of their pension plans. This company is a union shop that typically employs between 50 to 100 employees. They have been in business for over 70 years. There are probably at least 20 family members - some of whom do not work there - who own at least a small piece of the company. I'm pretty good friends with a few of the minority owners, and I have several friends who are long-term employees of the company. Furthermore, years ago I worked for the consulting firm that did the actuarial and administrative work for the company's pension and 401(k) plans. As a result, I have a decent insight into the company's situation. It is my understanding that the company had basically been debt-free for decades. I do know that things were booming during the late 90's - the pension plans were over-funded, the company had major profits, etc. Unfortunately, when the recession and market collapse hit during 2000 through 2002, the company's fortunes changed drastically. Foreign imports led to increased competition, they had major layoffs, the pension assets took a major hit, etc. Also, I can't remember the specific details, but for whatever reason pensioners became eligible to take their retirement benefits in a lump sum. Many retirees chose the lump sum option, because they feared the demise of their former employer - I don't think many of the retirees fully understood how the PBGC protects pension benefits of failed companies. In any case, it was certainly "touch-and-go" with company for several years during the early 2000's, but they still remain in business today - and still employ at least 50 employees. Here is the interesting thing. The company actually defaulted on their pension obligations 2 or 3 different times during the 2000's - the large number of lump sum withdrawals (after the large investment losses during the early 2000's) decimated that funding status of the pension plans. To this day, the PBGC has liens totaling $7 to $10 million filed against the company. Some of these liens have been in place for 10+ years now. I spoke with one of the minority owners of the company about this situation a few years back. He told me that the business was still profitable, had no debt (other than PBGC liens) and refused to file bankruptcy as a result of the PBGC liens. I asked why the company wouldn't just obtain bank financing to pay off the PBGC liens - I'm relatively confident that the company could obtain such financing since they own their buildings and a decent amount of acreage. My friend replied that the PBGC is much more flexible, lenient and easy to deal with than a bank would be. He said that the PBGC would NEVER put them out of business. He told me that the pension plans had been terminated, and that the PBGC would be paid off whenever it happened. This company also has a non-profit, charitable giving division - they have been very generous to the surrounding communites over the years. I recently located the company's non-profit (Form 990-T) tax filing online. The non-profit division owns shares in the manufacturing company. In the past, the non-profit division was basically funded from dividends paid by the manufacturing company, although the dividends had ceased after the PBGC liens. On this tax filing, the accountants indicated that the shares of the manufacturing company had negative equity (presumably as a result of the PBGC liens). With all this being said, from what I've witnessed over the past 15+ years with this local company, it certainly seems as if this company still has "going concern" value despite the substantial PBGC liens. A few years ago, my friend indicated that the company was doing between $15 to $20 million in annual revenue. As a shareholder, I would have to think there would be substantial equity value if / when the PBGC liens are paid off or at least paid down substantially - given that the company has no other debt. With regard to the company that you describe, I'm assuming that it is a publicly-traded nano cap company (rather than a private company)? In the case of a pension default, I'm not sure if that would force them into bankruptcy, or if they could pay off the pension shortfall like the private company that I described. Does the company that you describe have any other debt (ie. bank debt, etc.)? I agree with you that pension assets are often invested too conservatively.
  9. I agree 100%. Berkowitz's current investment style seems to be more of a "gunslinger" approach rather than a value investing approach. I just don't see a whole lot of margin of safety with investments like SHLD and Fannie / Freddie (which will most likely be either a homerun or a $0).
  10. That article will surely give Mr. Meyer's fund plenty of exposure.........just not the exposure that he likely wanted. I wish I could buy a call option on the number of phone calls he will receive this week from concerned investors.
  11. http://www.bloomberg.com/news/articles/2016-07-26/the-curious-case-of-joseph-meyer-a-little-giant-of-hedge-funds What does everyone think?
  12. I've been thinking more about this discussion. Virtually every single investment has at least a minimal possibility of ruin - 100% loss. For example, even Berkshire Hathaway has a tiny possibility - probably much less than 1% - of going bust. The same could even be said of investing in T-Bills (ie. in the event of some unthinkable worldwide catastrophe in which the US Government collapses). As such, from a practical standpoint I cannot think of any financial investment where Kelly would suggest an investment of 100% or more of bankroll. After all, isn't Kelly structured so that it guarantees to protect against financial ruin (assuming all assumptions / probabilities are accurate)? Please correct me if I'm wrong? This may be turning into more of a theoretical vs. practical discussion. However, from a practical standpoint, I just cannot "wrap my head" around Kelly ever suggesting a 100% (or more) of bankroll investment into a financial investment due to the possibility of a Black Swan event (which would lead to financial ruin).
  13. I need to investigate this further. It appears that the formula that I was using - as well as the indicated website - assumes a binary outcome (ie. only 2 possible outcomes - either win or lose everything). Most investments obviously have more than 2 possible outcomes. Is that the reason for the discrepancy?
  14. Answer: You'd invest 2.25 of your bankroll. I.e. you'd have to lever 2.25 on 1 if leverage is free. Jurgis- I think your math is incorrect with regard to the above example; isn't the correct answer around 67.50% of your bankroll (based on Kelly Criterion)? The answer 67.5% is based on the bad formula (see fbad in my post). 67.5% is actually incorrect answer. Are you sure about that? This website agrees with my math: http://www.albionresearch.com/kelly/default.php I was always taught that Kelly could never be more than 100% of bankroll.
  15. Answer: You'd invest 2.25 of your bankroll. I.e. you'd have to lever 2.25 on 1 if leverage is free. Jurgis- I think your math is incorrect with regard to the above example; isn't the correct answer around 67.50% of your bankroll (based on Kelly Criterion)?
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