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nkp007

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    Buying and selling without moving stock price - limit orders vs. algos

    in General Discussion

    Posted

    I've been using limit orders for as long as I have been investing, but as the amounts I am dealing with have gotten larger and with some of the companies I have invested in having low trading volume, I kept noticing that when I put in limit orders the order executes ~ 100 shares and the price jumps up to the next cent. I'm guessing the market sees the order sitting there and the algos take over to pump up the price knowing there's a temporary floor.

     

    I started experimenting with IB's adaptive algo and it has been really useful so far. You can essentially set a limit order using adaptive algo and it will automatically break your order size down into much smaller increments and make incremental bids up to your limit price. In addition, I think it hides your order size so the market doesn't realize the full size of your bid since the algo is taking things down in 100 share increments.

     

    For example, I put in a large limit order earlier this week and the stock jumped from like $8.50 to $8.67 and I executed 10% of the order before thinking this is ridiculous. I then used the adaptive algo and the order executed within a three cent spread over 15-20 minutes.

     

    https://www.interactivebrokers.com/en/index.php?f=19091

     

    Would love to hear how others approach this problem. I got tired of the market seeing my entire order and taking advantage of me.

    Outstanding Investor Digest

    in General Discussion

    Posted

    Does someone have the transcripts from the BRKA meetings that were published by OID? Surely someone somewhere has them.

     

    they are copyrighted, hopefully, one of these days, author will make the available.

     

    OID is inactive, the website no longer exists, the phone lines are down. Besides, how does copyright anyhow prevail over the contents of a public meeting whose contents were transcribed, not created by OID? No expert in copyright law, but this seems odd to me. Wouldn't the copyright belong to the original speakers i.e. Buffett and Munger?

     

    OID took great care to create and published  the transcripts from their notes, so you will have to ask them. Buffett didn't provide it to them. I'm not defending them just stating the facts.

     

    Not to mention I paid $200+ (or whatever it was) for a 10-issue subscription, received one issue, then they ghosted on everyone. No guilt about the damn transcript.

    Whitney Tilson is shutting down his hedge fund

    in General Discussion

    Posted

     

    I think being too giddy, something that plagues a lot of managers, has harmed him. In the GM thread several people were discussing this with Einhorn too. I've never understood how some people so frequently go bullish, to bearish, to bullish or whatever on a specific name or sector so regularly. At a certain point you are gambling.

     

    He was never really a contrarian IMO, more of an idea gatherer. I wanna say Pabrai also does this frequently, as do probably a lot of no name managers and investors. The guy was well connected. But I question whether he fully internalized all the work being done on a basis frequent enough to keep up with it. No question he loves investing. He's also a really nice guy from what I've heard, although I've never met him. But his investment results seem to be all over the place fundamentally, informationally dated a lot of the time, and unoriginal(as in someone else's idea). Combine that with smart guy ADD(having to be constantly active with a portfolio), and idk, I can kind of see why he got whipsawed. Reacting instead of acting.

     

    The criticisms I've heard are kind of consistent with your last statement. He kind of became a braggart, and promoted himself(as well as being promoted by others) as this super investor when a lot of people didn't think he deserved that credit. LL for instance, he did victory lap after victory lap on, when the ironic thing was that it wasn't even his idea to begin with! And then after the thing tanks to the low teens, there must have been at least 3-4 times when "Tilson covered his short and is now long", only followed by "Tilson is reshorting LL", and then "Tilson is adding to his short", which comes back to basking in the sun light and probably over-analyzing to the point of flip flopping so regularly.

     

    I've actually learned a ton from reading his work and especially his reflections on a lot of his mistakes. He's incredibly candid with all of this, especially for a hedge fund guy. Hedge funders are notorious for being non-engaging, antisocial dick heads who avoid regularly engaging with the general public. Tilson was the antithesis of that which was hugely refreshing.

     

    Really well said. I think the bolded parts are key. He has all the intelligence necessary to be a great investor and I was able to utilize many of his ideas by just buying and holding. Investing ADD is real and looking at stock prices every day will make the smartest people dumb. If he looked at his share prices once every six months instead what was likely multiple times a day, he would still be in business.

    Whitney Tilson is shutting down his hedge fund

    in General Discussion

    Posted

    I think:

     

    1) Tilson will continue his awesome analysis and release presentations. Seems like his passion, even on a personal level.

     

    2) Just don't short. It sucks and upside is limited unless you're using some asymmetric vehicle.

     

    Edit: Below quote from his latest letter. WOW. Held a short as it went up 7x against him?

     

    Michelle Celarier with an in-depth look at Tesla: Elon Musk vs. the Haters, http://www.institutionalinvestor.com/article/3756165/investors-pensions/elon-musk-versus-the-haters.html. It was my worst short ever in 2013-14 (from $35 to $205; thank goodness I was long Netflix, which rose a similar amount during the same time frame). Ever since I covered, I’ve been warning all of my short selling friends that it’s a bad short at any price. To be clear, forced to go long or short Tesla here, I’d go short, but we investors aren’t forced to make any investments. Here are my quotes in the article:

     

     

    3) Tilson / Ackman look like fools now. But they always come back harder than they left. I look forward to their future ideas. I'll continue listening to what they put out because sometimes they are very, very right and they are always very analytical.

    Amazon's new HQ poll

    in General Discussion

    Posted

    100% Chicago. Great universities (Northwestern, UChicago, etc.), great downtown area with public transport and tons of apartment capacity, two major airports, tons of add'l talent via midwest universities (Wash U, U of Illinois, Wisconsin, U of Indiana, etc etc), affordable cost of living / high quality of life, Amazon will get tons of incentives, lots of companies already in Chicago to poach from.

    The demise of a value investor

    in General Discussion

    Posted

    Quoting him for posterity. I have been following him for a few years and was envious of his returns, but couldn't quite grasp the process.

     

     

    Goodbye

     

    February 9, 2016 Goodbye, INTRO

    17 Mile

     

    Goodbye

     

    February 9, 2016

     

    Dear Reader/Follower,

     

    Sadly, and embarrassingly, I must announce that I am shutting down 17 Mile. In my case it is a proverbial ‘liquidation’ of the portfolio and strategy that I have operated since June 15, 2014.

     

    I am looking for zero sympathy. The only reason I am ‘announcing’ this is that I have run the 17 Mile blog publicly in order to exert as much performance pressure on myself as possible. So, with the ‘strategy’ having now collapsed, it is only fair that this collapse is made public.

     

    What Happened

     

    From the outset I have described my ‘strategy’ as ‘Loeb-style events + Druckenmiller aggressiveness’. I was fortunate to start off with good performance from 6/15/14 thru early November 2015, but I knew all along that I would have to prove myself thru a period of significant difficulty. As my energy holdings began to decline from mid-November into early December, I believed that time was upon me. As such, I not only welcomed it, but relished it. I love challenges, and there is nothing more challenging and exhilarating than battling it out with the market.

     

    NAV went from $18.63 on an intra-day basis the first day of trading in November…but went on to decline to below $10 (the 6/15/14 starting level) in early December. While obviously disconcerting, I believed there to be so much value in the portfolio at those depressed levels that I sincerely thought I would be back at new highs in no time once the tax-driven forced selling abated in my ‘high quality’ energy midstream assets. The portfolio ended the year over $13 on a mid-December bounce back, but selling intensified as the New Year hit, driving the portfolio down to $10.53 at the end of January.

     

    Despite further pain, I had managed to trade around the volatility in January in order to not only limit the performance damage but to put myself in good position for the ‘inevitable’ comeback in midstream. Selling continued into February however, but I believed it to be just another part of the ‘bottoming process’ and thus continued to average down.

     

    After ETE’s after-hours 8K last Friday I knew there was a good chance yesterday would be a bad day, but thought it could likely mark the final bottom. So when ETE and WMB declined by more than 30% in the opening 30 minutes of trading on extremely high volume, I was ecstatic because it had all of the markings of a final capitulation bottom. I made my final purchases in the opening hour, but knew that it was do or die for the 17M strategy…ETE and WMB had to bottom right then and there. At first I thought I was dead on…WMB rallied from $10 to $13 in less than an hour, while ETE rallied from mid-$4’s to $5.30 over the same time frame. But then the worst possible outcome played out: both securities faded into the bell, with ETE hitting new lows for the day. This left me with no choice but to reduce exposure to the point where it would take a modern miracle to dig out of the performance hole.

     

    But performance is not the sole reason for shutting down…

     

    Why Goodbye

     

    I need to say goodbye for a whole host of reasons – not simply bad performance. Chief among them is that I have let the 17 Mile project consume my life. I work in the business, so having 17 Mile on the side only served to compound the normal time/attention-intensive nature of the industry. And running a highly aggressive strategy only further compounds the issue…case in point recent events. It’s no way to live – and even if I were successful with the ‘strategy’ over time, I cannot spend the rest of my investment days living in fear of collapse.

     

    Second – After 5.5 years of what I considered to be an investment ‘residence’ of sorts, I believed I had built a framework tailored to my own investment style. The good performance from June 2014 thru October 2015 validated my ‘style/strategy’ because it embodied the core elements of what I believed made me a ‘good’ investor. In other words, because the performance was not generated via a few lucky trades, but via a consistent methodology (what I believed to be at the time), I thought I was on the right track.

     

    I do not believe my ‘style/strategy’ has been invalidated by the collapse in a couple of bad picks, but rather by the fact that I have been ABSOLUTELY DEAD WRONG on so many individual equity opinions since June 15, 2014. The portfolio I held at inception – if held thru today – would not be in much better shape than the current portfolio. And while of course it is relatively unfair to discount profits taken in the interim (i.e. VRX was $119 at inception and originally sold over $240 in July/August 2015), that ‘buy and hold’ fact is frightening.

     

    In other words, I need to go back to the drawing board.

     

    Third – While I would love to blame my inability to conduct really in-depth due diligence on my ‘lack’ of resources, frankly I am not entirely sure I am even cut out for it. Previous attempts have proved utterly futile, if not highly counterproductive. My ‘crutch’ to this is/was what I believe/believed to be my relatively good ‘feel’ for situations and ability to absorb opinions from those who are experts where I am not. But to be this far off in my personal judgement and judgement of ‘expert opinion’ (i.e. with recent holdings) is an enormous shock to the system.

     

    Where To/Conclusion

     

    The solution may be as simple as smaller position sizing and overall less aggressiveness. But A) I cannot just jump to that conclusion and start over after obliterating performance; and B) I need to readjust my investment life. It is not healthy to be this obsessed with something and do this poorly. Less time on Twitter and staring at screens, and more time getting to know businesses.

     

    The blog/Twitter has been just a tremendous platform for getting to know other investors, and I plan to stay in regular touch with those I am in regular contact with. But the day-to-day – or heck, hour-to-hour – monitoring of something that is so enormously distracting as Twitter is just not healthy, at least for me. So that activity will be reduced in dramatic fashion…

     

    Lastly, for the time being the blog will go dark (I’ll give it a couple of days). I need to figure out what I am doing, get into a better routine, etc; and I may use it for private documentation.

     

    If we have not interacted before over email or Twitter, please feel free to get in touch at seventeenmile@yahoo.com and/or @hfm17mile.

     

    Sincerely,

     

     

     

    17M

    Your biggest misses in 2014

    in General Discussion

    Posted

    Biggest miss: Fannie/Freddie prefs. Was up 2x +, sold at slightly lower than cost basis.

     

    Lessons learned from this:

     

    1) Position sizing is important. The position grew to 20% of my portfolio even though it started as a small part of my portfolio.

     

    2) Your downside isn't your cost basis, it's the current market price. I should have realized at some point the upside was 2x, and the downside was total. I was so caught up in holding until a decision was made that I didn't recognize the market was giving me an opportunity to cash out at least part of my stake. Ideally, would have sold half given what was knowable at the time.

     

    Sometimes the market gives you opportunities to buy in / cash out at attractive prices. Not everything needs to be played to fruition. Sometimes selling on optimism / exciting master plans is the way to go.

     

     

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